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Alan Fournier - Full Sail with USAP

February 19, 2013 | About:
Sally Jones

Sally Jones

49 followers
On Feb. 15, 2013, Alan Fournier, fund manager of Pennant Capital Management, made his third purchase of USAP stock in 2013 so far, acquiring 20,500 shares of Universal Stainless & Alloy Products (USAP) at the average price of $36.09, as reported in the latest Real Time Picks.

With this add of 0.23%, Fournier now owns 1,068,768 shares of USAP. The stock price has not changed since his last purchase on Feb. 6, 2013. USAP closed at $36.22 a share on Feb. 15, up 0.36%. Pennant Capital primarily invests in technology, healthcare, services, industrial goods, consumer goods, financial, basic materials and industrials. As of the end of 2012, Pennant listed 42 stocks at a total value of $4.79 billion.

In the highly competitive steel industry that sells to industrial and military customers in need of OEM parts for aerospace, automotive, heavy equipment, energy, power generation, oil and gas, [u][/u] and other related markets, USAP competes with both domestic and foreign producers of specialty steel products. Pricing practices by foreign producers have resulted in a high import penetration into U.S. markets. For example, in 2010, the import penetration for stainless bar and stainless rod in USA was 50 percent and 37 percent, respectively.

Established in 1994, Universal Stainless & Alloy Products has a market cap of $249.7 million; its shares were traded at around $36.22 with a P/E ratio of 15.1 and P/S ratio of 1. Universal Stainless & Alloy Products had an annual average earnings growth of 11.9% over the past 10 years. Revenue of Universal Stainless & Alloy Products was $251.0 million compared with $252.6 million in 2011, and is ranked higher than 62% of the 29 companies in the industry; the earnings yield (Joel Greenblatt) of Universal Stainless & Alloy Products is ranked higher than 59% of the 29 companies in the industry. With positive earnings in eight of the last ten years and positive operating cash flow in almost every single year in the past decade except for 2004, USAP has a clearly established track record. The swing in USAP's gross and net margins is reflective of economic conditions and the specialty steel industry. See detailed information about USAP stock at: http://www.gurufocus.com/stock/USAP

Known as a value investor who pays attention to the both the micro and macro picture, Fournier leads Pennant with an investment philosophy of focusing on continuous, in-depth research, constant monitoring of ever-changing probabilities, and the formula of a long-short portfolio that intends to capture a 1.5 return on most investments, given the wide spectrum of risk-return.

Pennant Capital takes its inspiration from Mr. Fournier’s days of sailboat racing and the pennant flags that help racers watch the changing winds. The movement of the market is not unlike the wind that propels the sailboat ahead, demanding full attention and skill of its captain and team to respond to continuous change. Quick to cut losses and let long winners run, Pennant Capital revalues a stock at every point of price escalation. For Fournier’s holdings, read here: http://www.gurufocus.com/holdings.php?GuruName=Alan+Fournier

About the author:

Sally Jones
Sally Jones writes about Real Time Picks. She says, "I truly enjoy watching the Gurus in realtime and telling their story."

Rating: 2.8/5 (4 votes)

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