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Guru Sells That Are Near New Lows: FSYS, GIS, HAWK, TLAB

February 03, 2011 | About:
Looking at 52 week low stocks that have guru sales can be a warning that perhaps the original guru thesis didn’t work out. If you’re considering buying into these stocks, you’ll want to be very sure of your thesis and take into consideration any risks that the bailing investors may have found. These four stocks are especially noteworthy because they don’t have any recent guru purchases. Additionally, HAWK and TLAB had sales from two different gurus. These two especially are flashing a big yellow light. GIS was even worse. It had sales from four gurus, which should be a flashing red light.

Fuel Systems Solutions (FSYS): Fuel Systems Solutions is an alternative fuel component manufacturer. Think about the natural gas powered internal combustion engines. Their stock has been hurt recently because of a new share issuance, and they’re near a 52 week low. George Soros sold out of his position completely at a price 19% higher than today, although it was not a large position. Ron Muhlenkamp is also an owner.

General Mills (GIS): General Mills is a producer of consumer foods. Shares have been hurt in the last two weeks because of rising commodity prices. There were a slew of guru sales in the third quarter last year. Arnold Van Den Berg, George Soros, and Ken Fisher sold out of their positions completely. Ruane Cunniff reduced theirs by 29.51%. Shares have only been down 2% since then.

Seahawk Drilling (HAWK): Seahawk Drilling has been off and on the 52 week low list the last few weeks. They’re a small $84 million oil and gas driller and there are concerns that the regulatory environment has become very difficult for them and other small drillers. Robert Rodriguez and George Soros sold out of HAWK in the third quarter last year, probably in response to the government’s response to the BP oil spill in the gulf. Shares are now 19% lower since those sales.

Tellabs (TLAB): Tellabs dropped to within a penny of its 52 week low yesterday. They’re still sliding after reporting disappointing figures on January 25. They design, develop and support telecommunications networking products for communications service providers. Two gurus sold shares in the last two quarters. George Soros reduced his position by nearly 77% in the third quarter last year and the stock is 27% lower than when he sold. Third Avenue Management, which is Marty Whitman’s shop, reduced their position by nearly 30% in the second quarter. The stock is 34% lower now compared to when they sold. Third Avenue still owns 4.58% of the outstanding shares. Insiders had been selling like crazy before their big drop as well.

Disclosure: No positions

About the author:

Steven Kiel
Steven Kiel is the president and chief investment officer for Arquitos Capital Management, a Virginia-based investment management firm. He is a graduate of George Mason School of Law and a captain in the Army Reserves. He manages two spoke funds, The Freedom Fund, a value-oriented portfolio, and The Hayek Fund, a portfolio dedicated to free market principles. He can be contacted at steven.kiel@arquitos.com or through the firm's website at www.arquitos.com.

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Rating: 3.8/5 (5 votes)

Comments

hschacht
Hschacht - 3 years ago
The more I've looked at TLAB, the more I like it.

$1.2 billion in net cash. An underlying operating business that is valued at only $800 million, yet it earned $200 million in the last 12 months.

If the company wasn't buried under a mountain cash , it would be more obvious to those who haven't adjusted the PE for the excess cash. Don't get me wrong, this is a first class problem. And it proves how little most investors look at a firm's balance sheet.

They are preoccupied with a penny miss in earnings. With Tellabs, that earnings number is pretty meaningless when viewed in the context of that balance sheet.

Oh, and how many people know that TLAB owns $200 million worth of CSCO shares?

This stock is ridiculously valued and I'm amazed that the "miss" from last quarter has preoccupied so many.

Let's hope management wakes up and does a special dividend, recap, or monster buyback. Their laissez-faire approach hasn't been very effective.

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