Investor's guide to Blue Ridge Capital's positions in 3Q 2013

Part 5
Investor's guide to Blue Ridge Capital's positions in 3Q 2013 (Part 5 of 11)

Blue Ridge Capital bought Cliffs Natural Resources shares in 3Q13

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According to 13Gs Blue Ridge Capital filed last month, the hedge fund disclosed new positions in Zulily (ZU) and PBF Energy (PBF). The filings stated that Blue Ridge currently owns 6.05% in Zulily, with 799,811 shares, and a 7.82% stake in PBF, with 3,095,000 shares.

A November 13G filing showed that Blue Ridge increased its position in Avis Budget Group (CAR) and at present owns a 6.17% stake, with 6,613,700 shares.

For more information on Blue Ridge Capital and its investment strategy, please see the last part of this series.

Blue Ridge Capital’s top new buys in 3Q 2013 per its 13F filing were American Homes 4 Rent (AMH), Tesla Motors Inc. (TSLA), Cliffs Natural Resources (CLF), and BlackBerry Ltd. (BBRY). The hedge fund exited its positions in Owens Corning (OC), Equinix Inc. (EQIX), and Realogy Holdings Corp. (RLGY).

Blue Ridge Capital’s two largest stock holdings are Priceline.com Inc. (PCLN) and American International Group Inc. (AIG), which account for 4.88% and 4.52% of the hedge fund’s portfolio, respectively.

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Why buy Cliffs Natural Resources (CLF)?

International mining and natural resources company Cliffs Natural Resources Inc. (CLF) occupies a 0.35% position in Blue Ridge’s 3Q 2013 portfolio.

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Cliffs Natural Resources saw its stock dive almost 30% last year, mainly due to falling coal and iron ore prices and declining demand for global steel production. In 3Q 2013, the company posted a 23% increase in profit due to cost-cutting and higher iron ore prices.

Going forward, Cliffs expects China to maintain its healthy steelmaking pace, driven by broader economic growth and the positive impact of domestic lending policy reforms. Robust Chinese steel production is expected to remain a source of healthy demand for Cliffs’ Eastern Canadian Iron Ore and Asia Pacific Iron Ore businesses. Cliffs also anticipates the demand for its U.S. Iron Ore and North American Coal businesses to remain healthy, despite lower year-over-year steel production in North America.

Despite volatile iron ore prices, analysts are bullish about the company due to its strong fundamentals, and they consider it a good buying opportunity at the current lower prices.

Cliff is a major global iron ore producer and a significant producer of high- and low-volatile metallurgical coal.

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