More From Santiago Solari
Key analysis of Lithia’s used vehicle operations
The larger share of CPOs and core vehicles in its sales mix drives Lithia’s significant lead in same-store gross profit per vehicle.
Luxor Capital Establishes New Stake in Cheniere Energy
In February 2015, Cheniere Energy announced that its 4Q14 and full-year results reported a net loss attributable to common stockholders of $158.6 million, or $0.70 per share.
What Do Fundamental Bulk Shipping Indicators Say?
The BDI (Baltic Dry Index) is a leading indicator for the bulk shipping industry. It’s a measure of the cost of shipping major bulk commodities on a number of shipping routes.
Why Teradyne’s offerings provide value to end-user markets
This article takes a look at Teradyne’s (TER) product line and how it adds value to its customer base.
MeadWestvaco to spin off its specialty chemicals business
In January 2015, MeadWestvaco, announced that its board had approved the plan to spin off the specialty chemicals business from the rest of the company.
JAT Capital Eliminates Exposure to SanDisk Corporation
JAT Capital sold its position in SanDisk Corporation (SNDK) in 4Q14. The position had represented 1.2% of the fund’s third-quarter portfolio.
An Update on Fairholme’s Positions in Fannie Mae and Freddie Mac
Berkowitz believes that Fannie Mae and Freddie Mac entities are highly valuable and expects them to generate earnings of at least~$21 billion a year.
Magnetar Raises Its Position in Williams Companies
Magnetar raised its stake in Williams Companies during the fourth quarter by purchasing 1.5 million shares. It represents 2.59% of the fund’s 4Q14 portfolio.
Fundamental Industry Trends that Investors Should Know
While air freight and logistics service operators have benefited from the recovery in the US economy, M&A has been the major growth driver for the industry in recent years.
Highlights of Fairholme Capital’s 4Q14 Portfolio
Fairholme Capital’s collective funds hold in excess of ~$7.0 billion in net assets, of which roughly 94% is concentrated in FAIRX.
Fairholme Lowers Its Stake in Leucadia National Corporation
Due to its long-term value-oriented investment style and its interests in diversified businesses, Leucadia National is known as Baby Berkshire.
A Bird’s-Eye View of Orbitz Worldwide’s Full Year Performance
In fiscal 2014, Orbitz posted double-digit revenue growth on the back of strong hotel bookings. It experienced a 10% year-over-year growth in total revenues to $932 million.
An overview of PVH’s business by geographies
We’ll look at PVH’s operations by geographies. It markets its products in over 100 countries through wholesale partners. It has over 4,700 retail locations.
What investors need to know about PVH’s operations
In the apparel industry, operators are focusing on the retail side of their business. Through retail operations, companies generate higher margins.
Berkowitz’s Fund Establishes Stake in Sears Canada
To counter competitive pressures, Sears Canada sold leases worth $400 million in 2013 and reduced its workforce by 3,000 employees.
JAT Capital Exits Stake in Comcast
In its fourth-quarter 13F, JAT Capital revealed that it had sold its stake in Comcast (CMCSA).
What’s the Outlook for Star Bulk Carriers?
If dry bulk demand picks up, Star Bulk Carriers (SBLK) with its large fleet would be in a position to capitalize on the upswing.
Chesapeake Energy is Fairholme Capital’s new position
Fairholme purchased ~537,000 shares of Chesapeake Energy Corporation (CHK) for $12.3 million in 3Q14. It now accounts for 0.16% of the portfolio.
Exploring MeadWestvaco’s packaging business
MeadWestvaco’s packaging operations can be broken down into three categories. The primary raw material used in operations is third-party sourced wood fibre.
Delta Air Lines Reports Mixed Traffic Results in August
Delta Air Lines expects its situation to ease by 1Q15, when it can reap the benefits of declining oil prices, fleet restructuring, and cost-saving initiatives.
AQR Capital and Renaissance Technologies Raise Stakes in LUV
Among hedge funds that made significant buys in 2Q15 was value investor Cliff Asness’s AQR Capital Management. It increased its stake in LUV by ~4 million shares to 9.7 million shares.
Some Activist Investors Are Betting that SBLK Has Hit Bottom
Hedge funds like Caspian, Oaktree, and Monarch are going against the crowd by pinning their hopes on the assumption that SBLK’s share price has reached its floor.
Factors to Consider When Investing in Crude Tankers
Due to the capital-intensive nature of the tanker business, crude tankers tend to have high debt levels on their balance sheets. In lean times when contango narrows, it will likely result in value destruction.
How Have Hedge Funds Played Crude Oil Tankers?
Trade activity among institutional investors with exposure to crude tankers revealed mixed activity in 2Q15. Certain crude tanker companies on average have generated returns of 38% so far in 2015.
Crude Oil Contango and Carry Trade: What Investors Should Know
Recent events such as rising US production and the Iran nuclear deal have added to the oil glut. Contango is currently at $8.50 per barrel, which makes it an attractive trade for speculators and arbitrageurs.
Why Are Oil Tankers Sailing High in 2015?
Oil tankers have outperformed shipping peers, generating in excess of 50% year-to-date on a total return, or price return plus cash returns, basis.
What Investors Should Know about the Trucking Industry
The condition of the trucking industry provides a basis for reading the status of the economy. Over 65% of the freight in the US is transported on trucks.
Magnetar Sells Position in Western Refining
In January 2015, Western Refining grew its retail operations by adding 31 stores in Southern Arizona. Revenues in 4Q14 were relatively stable at $3 billion.
Orbitz’s Cash Flow Generation and Credit Profile
Orbitz Worldwide (OWW) has an established track record for generating positive operating cash flows. Its existing cash balance is $188 million.
Expedia Plus Orbitz Will Equal Largest Online Travel Company
On February 12, Expedia announced its acquisition of Orbitz in an all-cash transaction worth $1.6 billion, or $12 per share. The deal is under regulatory review.
Magnetar Purchases New Stake in Restaurant Brands International
Magnetar Capital added new stake in Restaurant Brands International (QSR) in 4Q14. The position represented 0.73% of its holdings at the end of the year.
Magnetar Disposes of Stake in Baker Hughes
In 2014, Baker Hughes repurchased $600 million in shares, 71% more than in 2013. The company declared a quarterly dividend of $0.17 per share.
Magnetar Eliminates Exposure to MetLife
MetLife (MET) is a global insurance company that operates in several countries around the world. It reported operating earnings of $1.6 billion in 4Q14.
Magnetar Capital’s Top Exits in 4Q14
Established in 2005 by Alec Litowitz and Ross Laser, Magnetar Capital has grown by more than five times in terms of assets under management.
Magnetar Capital Raises Its Stake in Actavis
In the fourth quarter, Magnetar increased its exposure to Actavis. It bought 42,107 shares in the pharmaceutical firm. It represents 1.5% of the fund’s 4Q14 portfolio.
Magnetar Adds New Stake in Applied Materials
In 4Q14, Magnetar established a new position in Applied Materials. The position accounted for 2.66% of the fund’s fourth quarter portfolio.
Magnetar Capital’s New Position in Devon Energy
During 4Q14, Magnetar purchased around 1.4 million shares in Devon Energy (DVN). The position represented 1.61% of the fund’s portfolio.
Magnetar Capital Initiated New Positions in 4Q14
Magnetar Capital was established in 2005 by Alec Litowitz and Ross Laser. Currently, the hedge fund manages assets in excess of $12 billion.
Magnetar Increases Its Position in TransCanada
In 4Q14, Magnetar Capital added to its position in TransCanada by purchasing 2.6 million shares. It accounts for 6.68% of the fund’s fourth quarter portfolio.
Magnetar Raises Its Stake in Alibaba
In 4Q14, Magnetar Capital increased its position in Alibaba (BABA) by purchasing 1.7 million shares. Currently, the position accounts for 7.6% of the fund’s portfolio.
Luxor Capital Cuts Its Stake in AMC Networks
AMC Networks is a pioneer in the cable television programming industry known for delivering high quality programming content to its audience.
Luxor Capital Reduces Position in Constellation Brands
Constellation Brands is a leading international beverage alcohol company with a broad portfolio of premium imported beer, wine, and spirits brands.
JAT Capital Significantly Reduces Position in Facebook
In 4Q14, JAT Capital cut its stake in Facebook (FB). The position represented 2.58% of JAT Capital’s fourth-quarter portfolio.
Engaged Capital Raises Stake in Rovi Corporation
Engaged Capital’s relationship with Rovi dates back to April 2013, when the fund first invested in the company.
JAT Capital Sells Stake in Hertz Global Holdings
In 4Q14, JAT Capital sold its stake in Hertz Global Holdings (HTZ). The $196-million position had represented 3.2% of the fund’s third-quarter portfolio.
JAT Capital Adds New Position in Alliance Data Systems
With annual revenues of $5.3 billion, Alliance Data Systems is a leading provider of customized marketing and loyalty solutions.
Fairholme Lowers Its Stake in St. Joe
In 4Q14, St. Joe’s revenues fell by more than half from 4Q13 to $15.7 million, as real estate sales dropped by 76% and timber sales fell by 85%.
Bank of America Gets Reduced Stake From Fairholme Capital
Bank of America’s credit quality improved during the quarter, as provisions for credit losses fell by $117 million from 4Q13 to $219 million in 4Q14.
Fairholme Decreases Its Position in Lincoln National Corporation
Lincoln National’s top line growth remained strong, as revenues grew by more than 18% YoY to $3.7 billion in 4Q14.
Fairholme Capital Reduces AIG Stake
AIG reported lower net income, from $2 billion in 4Q13 to $655 million in 4Q14, due to an after-tax charge of ~$800 million for debt retirement activities.
Fairholme Capital Bids Adieu to New York Community Bancorp
In fiscal 2014, NYCB grew its multifamily loan book, making a record ~$7.6 billion in loan originations while keeping asset quality metrics intact.
Fairholme Capital Exits Stake in KKR
For the fourth quarter of 2014, KKR reported a net loss of $0.6 million, compared to net income of $277.9 million in 4Q13.
Fairholme Bulks Up its Position in Sears Holdings
Eddie Lampert, chairman and CEO of Sears Holdings, has made it clear that he intends to create value through monetizing the company’s real estate assets.
Fairholme Cuts Chesapeake Energy from its Portfolio
In 4Q14, Chesapeake Energy sold certain assets in the southern Marcellus and eastern Utica Shales for net proceeds of $5.1 billion.
How Cadence generates a steady revenue stream
Aggressive acquisitions and a focus on systems enabled Cadence to grow its revenues at a faster pace than its competition in the last five years.
Why EDA is integral to the semiconductor industry
Semiconductor companies utilize the services of chip designers such as Cadence in order to tackle time-to-market pressures.
Cadence delivers end-to-end solutions in EDA and IP
Looking at its EDA products through the Virtuoso platform, Cadence provides support for laying out transistors, wires, and chips for a variety of designs.
Key overview of Cadence Design Systems’s operations
About 90% of Cadence’s revenues come from contracts over multiple periods, allowing the company to generate a steady, predictable stream of revenues.
Berkshire Hathaway reduces its exposure to National-Oilwell Varco
Headquartered in Houston, Texas, National-Oilwell Varco (NOV) provides oilfield services and equipment used in oil and gas drilling and production.
Berkshire Hathaway’s new stake in John Deere
Although Berkshire Hathaway had been accumulating shares in John Deere since 3Q14, the fund chose not to disclose it to the public in order to avoid copycat moves.
MeadWestvaco overfunds pension plan – RockTenn benefits
A few days after the merger was announced, a law office announced it was investigating potential claims made against the board of MeadWestvaco.
Third Point ups its stake in Amgen
Amgen is one of the leading biotech firms with market capitalization of $116 billion and revenues in excess of $20 billion.
Third Point initiates new position in Phillips 66
Third Point established a new position in Phillips 66 (PSX) through the purchase of 5 million shares for a total value of $359 million.
Lear acquired automotive leather supplier Eagle Ottawa
With annual sales of approximately $1 billion, Eagle Ottawa is the world’s largest supplier of premium automotive leather.
Lear’s margins beat expectations in both of its segments
Lear’s core unadjusted operating earnings increased by 26% to $929.2 million. The uptick was due to higher sales volumes coupled with reduction in average total costs.
A snapshot of the Heritage Brands business
PVH’s Heritage Brands leads the market for neckwear and dress shirts. Heritage Brands has more than 50% of the market share in neckwear.
Lear: A global leader in automotive seating and electrical systems
Lear (LEA) has a strong market position in providing automotive seat systems, as it is one of only two primary independent suppliers with global scale and complete component capabilities.
How Lear became one of the largest automotive parts suppliers
Lear (LEA) is one of the largest automotive parts suppliers with FY14 revenues of $17.7 billion.
Why Lear’s 2015 outlook is promising
Lear has outpaced industrial production growth in recent years, and the company expects that this trend will continue in 2015.
MeadWestvaco and RockTenn: The making of a packaging giant
If the merger goes ahead, the combined entity would overtake Stora Enso to become the second-largest player in the packaging industry.
MeadWestvaco-RockTenn merger: Changing the packaging landscape
The merger between RockTenn and MeadWestvaco would create a $16 billion industry powerhouse that would rank only behind International Paper.
Calvin Klein’s financial performance and growth opportunities
Calvin Klein’s North American operations had a 2% increase in same-store sales growth. However, the international operations decreased by 4%.
Assessing Tommy Hilfiger’s business performance
PVH Corp. (PVH) gets ~44% of its revenue from Tommy Hilfiger’s business division. It’s the largest of all three of the reporting segments.
Tommy Hilfiger—the proven lifestyle brand
Tommy Hilfiger was founded in 1985. Along with Calvin Klein, it’s one of PVH’s two flagship brands. For 2013, Tommy Hilfiger’s global retail sales were $6.4 billion.
Why the future lies in e-commerce and direct sales
Online retail sales increased 16.2% sequentially to cross $78 billion in 3Q14. E-commerce continues to outpace total retail sales.
Reviewing PVH’s leverage and liquidity profile
As a result of higher debt levels, PVH’s leverage is measured by debt to EBITDA. It spiked to 4.75x at the end of full-year 2013.
PVH’s merger with Warnaco consolidated Calvin Klein
On February 13, 2013, PVH Corp. (PVH) completed the acquisition of Warnaco Group. The total consideration was $3.1 billion.
Analyzing the Calvin Klein business
Products sold under the Calvin Klein banner had gross revenue of $7.8 billion in 2013. Of the revenue, PVH reported $2.8 billion.
Lithia Motors, DCH Auto Group create a powerhouse auto retailer
In October 2014, Lithia completed its acquisition of DCH Auto Group for an estimated price of $669.5 million.
Understanding Lithia Motors’s Finance and Insurance business
Lithia’s same-store revenue grew 16.9% year-over-year to $120.4 million in the nine months ending September 30, 2014, driven by increased vehicle sales.
Analyzing Lithia’s throughput contribution and earnings
Lithia’s income from operations in the nine months ending September 30, 2014, was $165.9 million, up from $137.9 million in the previous year.
Outlook and valuation of Lithia Motors
Morgan Stanley analysts upgraded Lithia Motors to overweight from underweight, following a sell-off resulting in a ~30% drop in Lithia’s share price.
Analyzing Lithia Motors’s leverage and liquidity profile
The combined entities of Lithia Motors and DCH Auto Group are expected to generate free cash flow of $135 million in 2015.
Glenview Capital builds up position in Lithia Motors
Lithia targets mid-sized regional markets for domestic and imported vehicles, protecting the company from losing market share to leading industry players.
Event-driven strategies have proved expensive
The event-driven strategy entails making use of leverage to invest in debt securities of distressed firms or companies going through a spinoff.
Is Teradyne fairly valued relative to its peers?
Presently, ten analysts have given Teradyne a buy rating, and four have issued a neutral rating, for a consensus target price of $22.17.
Teradyne’s momentum may translate to strong full-year results
Teradyne is set to have 15% year-over-year growth in sales to $1.6 billion in 2014. This growth is driven by share gains in the SoC and memory test markets.
Teradyne boasts encouraging market share gains
Teradyne has about 26% share of the $470-million memory testing market. The company expects to gain 3 to 5 points of share this year.
Teradyne and the future of the semiconductor industry
The forecast suggests a 26.5% growth in global semiconductor test equipment sales, Teradyne’s (TER) primary area of operations.
A key analysis of Teradyne’s revenues and earnings
In 2013, Teradyne survived a weak demand climate for the app processor market. The company’s revenues recovered due to strong SoC product volume growth.
Glenview Capital raises its stake in Teradyne
Glenview Capital Management increased its stake in Teradyne (TER) by 4 million shares from its 3Q14 position to nearly 12 million shares.