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Lone Pine’s Mandel Acquires Third and Fourth Large Stakes in Three Months - SemGroup, Informatica

November 07, 2012 | About:
Holly LaFon

Holly LaFon

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Investor Steve Mandel has reported acquiring 5.2% each of two companies mid-quarter for his $16.5 billion funds at Lone Pine Capital: SemGroup Corp. (SEMG) and Informatica Corporation (INFA), GuruFocus Real Time Picks reports.

The two purchases show Lone Pine continuing its recent interest in acquiring substantial ownership of large companies, such as its 7% purchase of Dunkin Donuts (DNKN) in September and quadrupling of its Kinder Morgan (KMI) stake to 9.1% of the company in October.

The former Julian Robertson protégée took out a 5.2% stake in his largest new holding SemGroup Corp. (SEMG) on Oct. 24, buying more than 2.1 million shares for a total cost of $82.6 million at $38 per share on average.

SemGroup, an energy pipeline company based in Tulsa, Okla., that services clients in crude oil, natural gas and other industries, went public in November 2010 and its stock has since gained 55%.

In its second quarter ended June 30, the company reported increasing demand for its midstream storage, transportation and processing services due to growing North American production. To meet demand, it is expanding its ownership of Glass Mountain Pipeline LLC by acquiring a 25% share from Chesapeak Energy (CHK), bringing its total ownership to 50%. The pipeline will have an initial capacity of approximately 140,000 barrels per day and immediate storage 440,000 barrels.

In addition, in May, it announced that it would construct a new crude oil gathering system in Colorado called the Wattenberg Oil Trunkline, a project with 200,000 barrels of operation storage extending to the White Cliffs Pipeline, to be complete in the third quarter of 2013.

SemGroup’s revenue in the second quarter came to $334.2 million, increased from $317.7 million the prior-year quarter. Earnings before interest, taxes, depreciation and amortization (EBITDA) were $30 million, up from $28.9 million in the prior-year quarter.

The improvements in results were primarily due to higher volumes in its White Cliffs Pipeline, a storage expansion and major plant turnaround, offset by natural gas prices and decreased use of one of its facilities.

SemGroup has a P/E ratio of 87.1, P/B ratio of 1.6 and P/S ratio of 1.1.

Mandel on Oct. 26 took a 5.2% stake in Informatica Corporation (INFA). At a closing price near $27.50 that day, his more than 5.6 million shares cost approximately $155 million in total. The stock was a former holding of Mandel’s at a smaller size and higher price:



Informatica is the world’s leading independent provider of data integration software, which includes cloud and social media. Its stock experienced a 42% decline over the past year, including a plunge of almost $13 in July when it issued guidance below analysts’ estimates.

Mandel’s recent purchase came the day after the company issued third quarter results on Oct. 25. Informatica had total revenues of $190.3 million for the quarter, 1% below $195.9 million for the year-ago quarter. GAAP net income was $15.5 million, down from $27 million for the year-ago quarter, and GAAP net income per diluted share was $0.14, lower than $0.24 for the year-ago quarter.

The results reflected increased demand for the company’s products in the U.S. and Asia Pacific, while performance lagged in Europe. Overall international revenues slipped 3% over the prior-year quarter and comprised 33% of Informatica’s total revenues.

Along with its $26.82 current stock price being close to a two-year low, Informatica’s P/E at 25.7, P/B at 2.74 and P/S at 3.8 are each near their three-year lows.

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INFA data by GuruFocus.com

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