Blue Ridge Capital Maintains Its Position in Sensata Technologies



Blue Ridge Capital’s unchanged position in Sensata Technologies

Blue Ridge Capital’s position in Sensata Technologies (ST) accounted for 4.19% of its total 4Q14 portfolio and was worth $345 million. According to aggregated 13F data, 15 hedge funds had ST in their top ten holdings in the fourth quarter of 2014. A total of 90 hedge funds added to their position in ST in 4Q14 and 44 hedge funds created new positions in ST.

Among those funds that held shares of ST in their portfolio in 4Q14, in terms of dollar value invested, Blue Ridge Capital ranked sixth. T. Rowe Price, Janus Capital Management, and Vanguard were the other top filers with holdings in ST.

Reasons why hedge funds pick Sensata Technologies

For 1Q15, Sensata reported EPS of $0.65, which was in line with consensus estimates and revenue of $750.66 million, which fell short of estimates by $2.22 million. Considering segment-wise performance, while the performance sensing segment contributed 24.3% to overall revenue, the sensing solutions segment contributed 30.9% to the total revenue.

In terms of outlook, ST in the earnings release said that “The Company anticipates net revenue of $755 to $795 million for the second quarter 2015, which, at the midpoint, is 35% higher than second quarter 2014 net revenue of $575.9 million. The Company further anticipates adjusted EBITDA of $180 to $192 million for the second quarter 2015. In addition, the Company expects adjusted net income of $119 to $129 million, or $0.69 to $0.75 per diluted share for the second quarter 2015. This guidance assumes a diluted share count of 171.5 million for the second quarter 2015.”

Martha Sullivan, president and CEO of ST, in the earnings release said, “Despite increased foreign exchange headwinds, we remain on-track for 2015 to be a year of strong double-digit growth.”

Sensata Technologies versus benchmarks

From a portfolio management perspective, the primary reason behind investing in a particular stock over a benchmark, or engaging in active investing over mere replication of a benchmark portfolio, is to earn excess returns.

According to the above chart, ST’s stock price has outperformed the benchmarks, such as its competitors Emerson (EMR) and BorgWarner (BWA) and the other ETFs holding ST. With YTD (year-to-date) returns of 7.47%, ST outperformed all of its benchmarks. Investors seeking to gain portfolio exposure to Emerson can consider ETFs such as the Select SPDR S&P 500 (SPY) and the iShares Core S&P 500 ETF (IVV). EMR makes up 0.21% and 0.22% of SPY’s and IVV’s portfolio.

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