|New Threads Only:|
|New Threads & Replies:|
Forum List » Guru News and Commentaries|
Guru News, Stock picks and commentaries
Short-Seller Jim Chanos Buys Long Positions Starbucks and Occidental Petroleum in Q3
Posted by: Holly LaFon (IP Logged)
Date: November 15, 2012 09:57PM
Jim Chanos, founder and president of hedge fund Kynikos Associates, has a better eye for when a company is verging on failure than poised for growth. Thus, he dedicates most of his fund to short positions. Famous examples include his prescient calls on Enron and Baldwin-United, which he shorted.
Chanos also has $292.3 million in long positions, the two newest of which, according to his updated third quarter portfolio, are Starbucks (SBUX) and Occidental Petroleum Corp (OXY). He identifies both optimal long and short positions through fundamental analysis.
Chanos bought 142,000 shares of Starbucks in the third quarter for $50 per share on average, a 2.5% weight in his portfolio. Starbucks’ stock increased 5% year to date.
Starbucks is the premium coffee, tea, food, and beverage-related accessories company that operates primarily through company-owned retail stores.
In the fourth quarter, reported Nov. 1, the company had an 11% year-over-year revenue increase to a record $3.4 billion, with global comparable store sales increasing 6% and Americas comparable store sales increasing 7%. Earnings per share were $0.46, compared to $0.47 the previous year, which included a $0.10 non-routine gain.
The company’s operating margin expanded 60 basis points to 15.4% from 14.8% the previous year, which included a 100 basis point non-routine gain. Starbucks in the fourth quarter increased its dividend 24% to $0.21 per share.
In November, the company announced a radical move into tea with the purchase of Teavana Holdings Inc. (TEA) for approximately $620 million in a deal expected to close by year end.
Starbucks has a P/E of 28.5, close to a two-year low. It also has a P/B of 7.6 and P/S of 2.9.
Occidental Petroleum Corp (OXY)
Chanos paid $87 per share on average for his second new buy, Occidental Petroleum Corporation. Its stock price has declined 21% year to date.
An international oil and gas exploration and production company, Occidental Petroleum Corp also owns OxyChem, a North American chemical subsidiary.
In the third quarter announced Oct. 25, the company reported $5.97 billion in net sales, down from $6.01 billion a year previously. Net income fell to $1.38 billion from $1.77 billion a year previously. Diluted earnings per common share also declined to $1.69 from $2.17.
Earnings fell in Occidental’s oil and gas segment due to lower product prices and higher costs, partially offset by higher oil volumes. Earnings at its chemical segment also declined due to lower prices across most product lines. On its midstream segment earnings increased, reflecting higher margins in its marketing and trading businesses, partially offset by lower gas processing and pipeline businesses income.
Occidental is trading at relatively low valuations: a P/E close to a 10-year low at 10.5, P/B ratio close to a three-year low at 1.6 and P/S ratio at 2.6 close to a three-year low.
In the third quarter, Chanos also added to, reduced and sold out of other positions. See his portfolio here. And check out his undervalued stocks, top growth companies and high yield stocks.
Guru Discussed: Jim Chanos: Current Portfolio, Stock Picks
Stocks Discussed: SBUX, OXY, TEA,
Disclaimers: GuruFocus.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on GuruFocus.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The gurus may buy and sell securities before and after any particular article and report and information herein is published, with respect to the securities discussed in any article and report posted herein. In no event shall GuruFocus.com be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on GuruFocus.com, or relating to the use of, or inability to use, GuruFocus.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. The gurus listed in this website are not affiliated with GuruFocus.com, LLC. Stock quotes provided by InterActive Data. Fundamental company data provided by Morningstar, updated daily.