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.
Third Point adds stake in Citigroup
Citigroup is the third largest US bank with assets of $1.9 trillion and ~200 million customer accounts worldwide.
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.
How Does Wall Street View American Airlines?
Out of the total analysts surveyed by Bloomberg, 64.7% of analysts have a “buy” rating on American Airlines, ~35.3% of the analysts have a “hold” rating, and no analysts have a “sell” rating.
Trying Times for Railroads, but Institutional Investors Hang On
During slowdowns, manufacturers cut production. As a result, freight volumes hauled by railroads, airplanes, truckers, and shipping firms tend to be adversely affected.
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.
Getting a Read on the Railroad Industry
Railroads have seen a boost in intermodal traffic recently due to heightened international trade, continued investment in growing intermodal rail networks, and a shift from trucks to railways.
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.
JAT Capital Lowers Stake in Tesla Motors
In the fourth quarter of 2014, JAT Capital reduced its stake in Tesla Motors (TSLA). The position accounted for 5.83% of the fund’s 4Q14 portfolio.
Magnetar Capital Increases Its Stake in Plains Group Holdings
During 4Q14, Magnetar Capital increased its position in Plains Group Holdings. It represents 2.36% of the fund’s portfolio at the end of the fourth quarter.
Starboard Value raises activist stake in MeadWestvaco
Starboard Value is a New York-based activist hedge fund that takes large, long-term positions in companies that it believes to be undervalued or mismanaged.
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).
Hedge Funds Were Right about Air Freight and Courier Services
1Q15 aggregate filings from institutional investors revealed a net bearish position in stocks belonging to the air freight and logistics industry.
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.
Passport Capital Invests over $127 Million in Banks in 4Q14
The investment in banking stocks appears to be based on the view that such stocks could outperform the market given a rise in short-term interest rates.
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.
A Valuation Perspective on Southwest Airlines
Over the last three years, Southwest has been able to grow both its revenues and earnings meaningfully, facilitated by the low fuel price environment and prudent capacity management.
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.
What Does Wall Street Think about Southwest Airlines?
Of the 20 Wall Street analysts covering the stock, 13 have rated Southwest Airlines a “buy,” and three have rated it a “sell.”
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.
Southwest Airlines: Institutional Investors Shied Away in 2Q15
2Q15 institutional investor filings show the vast majorty of asset managers weren’t bearish on airlines such as Southwest Airlines (LUV). Publicly traded US airline stocks have collectively lost 7.43% to date.
Is Delta Air Lines Undervalued?
Delta Air Lines has traded at a discount to its peers over the last five-year period. With a debt-to-equity ratio of 0.8x, DAL’s leverage is somewhat elevated in comparison to its peers.
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.
Courier Service Providers Report Strong Second-Quarter Earnings
Over the last week, air freight and courier service providers registered the largest gains among subindustry groups within the iShares Transportation Average ETF (IYT).
Does It Make Sense to Add JetBlue to Your Portfolio?
JetBlue Airways trades at a forward EV-to-EBITDA multiple of 5.35x, which is in line with its peer average.
Are Railroads Trading at Fair Valuations?
Railroads have underperformed the overall market and have yielded negative returns year-to-date. But the industry has outperformed the market over the last ten years on a total 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.
Do Air Freight and Logistics Stocks Trade at a Fair Multiple?
The industry’s trailing 12-month PE (price to earnings) multiple of 22.46x is at a slight premium to the S&P 500 trailing PE of 20.6x.
Hedge Funds with Sizeable Holdings in Air Freight and Logistics
Filers with significant holdings in air freight and logistics service providers either maintained their existing exposure or made slight adjustments to their portfolio weights.
Is it Worth Making an Active Bet on Bank of America?
Bank of America (BAC) was added to its portfolio because the fund expects BAC to generate returns that are superior to the benchmarks listed in the table below.
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.
Magnetar Capital Establishes a New Position in McDonald’s
In 4Q14, Magnetar Capital initiated a new position in McDonald’s (MCD). It represented 0.76% of the fund’s fourth quarter portfolio holdings.
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 Capital Reveals Activist Stake in Orbitz Worldwide
In March 2015, Magnetar Capital purchased 6.27 million shares of Orbitz Worldwide, Inc. (OWW), giving the hedge fund a 5.6% stake in the company.
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.
Highlights of Magnetar Capital’s 4Q14 Position Decreases
Magnetar Capital’s portfolio remained highly concentrated in energy stocks, which represented over 60% of its 4Q14 US long portfolio value.
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.
Magnetar Capital’s Increased 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.
Luxor Capital Reduces Its Position in Twenty-First Century Fox
Twenty-First Century Fox, a diversified global media and entertainment company, is home to a number of cable, broadcasting, and film networks and properties.
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 Lowers Stake in Akamai Technologies
In 4Q14, JAT Capital reduced its exposure to Akamai Technologies (AKAM). AKAM accounted for 1.27% of JAT Capital’s portfolio at the end of the quarter.
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.
Highlights of Luxor Capital’s Fourth Quarter Positions
Luxor Capital’s investment style is a long-term value-oriented approach and its portfolio has a balanced mix of both equity and fixed income securities.
Must-Know Overview of Rovi Corporation
Rovi Corporation (ROVI) provides content discovery and personalized, interactive experiences to the entertainment media market.
Glenn Welling’s Fund Pressures Rovi’s Board
According to Bloomberg News, Engaged Capital is seeking to alter Rovi Corporation’s cost structure and implement various strategic initiatives.
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.
Highlights of JAT Capital’s Fourth-Quarter 13F Positions
Companies belonging to the technology sector represented over 50% of JAT Capital’s US long portfolio.
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.
A key analysis of Cadence’s profitability
Cadence’s R&D expenses as a percentage of sales increased by 100 bps, owing to higher intellectual property–related research and development spending.
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.
How recent acquisitions have benefited Cadence
In June 2014, Cadence completed the acquisition of Jasper Design Automation, the market leader in the fast-growing sector of formal analysis.
Factors that will shape the EDA industry
Gordon Moore predicted that chip complexity would double roughly every year. Moore’s Law has held up well, as chip complexity doubles every year and a half.
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’s cash flow and capital allocation strategy
Cadence’s $691 million debt is manageable, given its $1 billion cash and liquid investments. CDNS has a $250 million credit line and strong free cash flow.
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.
Glenview Capital increases its position in Cadence Design Systems
Glenview Capital increased its position in Cadence Design Systems by 3.25 million shares, bringing its position to 17.7 million shares in the company.
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.
Third Point’s fourth quarter portfolio: Tale of the tape
Third Point takes positions in mismanaged or distressed companies and then maximizes shareholder value by making them into leaner and more efficient entities.
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.