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Alan Fournier - Steely on Steel with USAP

March 07, 2013 | About:
Sally Jones

Sally Jones

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On March 6, 2013, Alan Fournier, fund manager of Pennant Capital Management, made his seventh add of Universal Stainless & Alloy Products (USAP) stock in a string of adds this year. With this latest increase of 0.76%, Fournier owns 1,103,668 USAP shares at the average price of $36.15. USAP's stock price continues to fluctuate slightly since its drop on Jan. 28, 2013 to $32.78.



[u][/u]Alan Fournier is a value investor who pays attention to the both the micro and macro picture. Pennant Capital Management’s portfolio lists 42 stocks with a total value of $4.7 billion, and a quarter-over-quarter turnover of 10%. The Pennant Capital portfolio heavyweight sectors are currently technology 28.7%, consumer cyclical 17.7% and healthcare 13.7%.



In a competitive global industry, USAP shows sales of $250.9 billion, and a profit of $14.6 billion, with products selling to the original equipment manufacturer as well as the middle man service centers of forgers, wire drawers and rerollers. USAP’s specialty bar facilities are reputed to be among the most diverse producers in the industry for product size, range and capability. Serving industrial and military customers in the aerospace, automotive and heavy equipment industries, USAP competes with both domestic and foreign producers of specialty steel products.

Headquartered in Bridgeville, Pa., and established in 1994, Universal Stainless & Alloy Products has a market cap of $249.7 million; its shares were traded 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. Over the last 10 years, USAP has had positive earnings in eight of those years and positive operating cash flow in almost every single year in the past decade except for 2004. Any mood swing in the company’s gross and net margins reflects economic conditions and the competitive global steel industry that takes hits from unfair pricing practices from afar.

USAP Annual Growth

1362680977140.pngUSAP data by GuruFocus.com

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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: 4.7/5 (6 votes)

Comments

kfh227
Kfh227 premium member - 1 year ago


I read up on this one. I had to seeing how Alan Fournier keeps accumulating. Looking at the balance sheet alone, this is fairly valued. But USAP seems to be moving into higher margin products. They have been and state that they intend to continue to do so. So, there is the catalyst.

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