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John Burbank of Passport Capital Buys KMI, HFC, ALU, LMT, GR
Posted by: Holly LaFon (IP Logged)
Date: August 14, 2012 04:02PM
John Burbank is an investor noted for his 23% annualized returns since founding his hedge fund, $17 billion Passport Capital, in 2000. In his second-quarter letter, He said that he was “very bearish today on much of the world.”
Nevertheless, he bought 73 new stocks, a significant turnover for his portfolio of 152 stocks. Of these, the largest are: Kinder Morgan (KMI), HollyFrontier (HFC), Alcatel Lucent (ALU), Lockheed Martin (LMT) and Goodrich Corp. (GR).
Kinder Morgan (KMI)
Burbank bought 2,061,070 shares of Kinder Morgan (KMI) at an average price of $35.50 in the second quarter of 2012. Burbank’s top two buys are involved in oil, something he mentioned in his letter: “While the price of surplus of global labor and domestic housing presents no near-term U.S. inflation risks, oil is rapidly rising to defeat the printing-press strategy for overleveraged sovereigns and increase deflationary concerns.” He is also long Brent Crude.
Kinder Morgan is the third-largest energy company by enterprise value in North America with 75,000 miles of pipeline and 180 terminals.
Kinder Morgan Inc has a market cap of $27.84 billion; its shares were traded at around $34.81 with a P/E ratio of 36.5 and P/S ratio of 3.4. The dividend yield of Kinder Morgan Inc. stocks is 4%.
Burbank bought 1,222,900 shares of HollyFrontier (HFC) at an average price of $31 in the second quarter. The price has risen 32% since then to a new 52-week high of
HollyFrontier is engaged in refining petroleum. HollyFrontier has a market cap of $7.96 billion; its shares were traded at around $40.42 with a P/E ratio of 5.4 and P/S ratio of 0.5. The dividend yield of HollyFrontier stocks is 1.6%. HollyFrontier had an annual average earnings growth of 22.5% over the past 10 years. GuruFocus rated HollyFrontier the business predictability rank of 3-star.
HollyFrontier’s second-quarter profit more than doubled, and revenue rose 62%. The growth was largely due to expanded operations.
Alcatel Lucent (ALU)
Burbank bought 18,864,400 shares of Alcatel Lucent (ALU) at an average price of $1.68 in the second quarter. The stock’s price has dropped 32% to trade for $1.15 per share on Tuesday, less than half of book value. The stock is down almost 90% from its price five years ago.
Alcatel builds next generation networks, delivering integrated end-to-end voice and data communications solutions to established and new carriers, as well as enterprises and consumers worldwide. Alcatel Lucent SA (ADR) has a market cap of $2.76 billion; its shares were traded at around $1.16 with a P/E ratio of 7.6 and P/S ratio of 0.1.
Alcatel’s revenue per share has been declining at a rate of 6.7% annually over the last ten years. The company is facing a deteriorating macros environment and competitive pricing environment in certain regions, it said.
Lockheed Martin (LMT)
Burbank bought 274,600 shares of Lockheed Martin at an average price of $86 in the second quarter of 2012. It has increased 6% since.
Lockheed Martin is a global enterprise principally engaged in the research, design, development, manufacture and integration of advanced-technology systems, products and services. Lockheed Martin has a market cap of $29.55 billion; its shares were traded at around $91.3 with a P/E ratio of 10.1 and P/S ratio of 0.6. The dividend yield of Lockheed Martin stocks is 4.4%. Lockheed Martin had an annual average earnings growth of 13.5% over the past 10 years. GuruFocus rated Lockheed Martin the business predictability rank of 4.5-star.
Goodrich Corp. (GR)
Burbank bought 165,300 shares of Goodrich (GR) at an average price of $126 in the second quarter. Goodrich Corporation is a global supplier of systems and services to aerospace, defense and homeland security markets. It was acquired by United Technologies (UTX) on July 26, 2012, for $127.50 per share, or $16.5 billion in cash.
See the rest of John Burbank’s buys and sells and other holdings in his portfolio here. Also check out the Undervalued Stocks, Top Growth Companies and High Yield stocks of John Burbank.
Guru Discussed: John Burbank: Current Portfolio, Stock Picks
Stocks Discussed: KMI, HFC, ALU, LMT, GR,