Controversy Stricken Steven Cohen Adds One and Increases One
Despite the fact some of his largest investors have taken their money and left, Steven Cohen made some notable purchases on June 5. Cohen increased his holdings in the advertising company Lamar and bought into educational company ITT Educational. As of the most recent quarter Cohen owned 1,498 stocks valued at over $20 billion.
Lamar Advertising Company (LAMR)
Steven Cohen upped his stake in Lamar Advertising Company by 128.24%. Cohen added a total of 2,355,793 shares to his holding at an average price of $43.47 per share; this transaction represents a 0.59% impact to his portfolio. Since his buy, the price per share has increased approximately 5%.
Cohen’s historical holding history of Lamar:
The guru now owns a total of 4,192,758 shares of Lamar, representing about 4.6% of the company’s shares outstanding.
About Lamar Advertising:
Lamar Advertising Company is a leading outdoor advertising company currently operating over 150 outdoor advertising companies in 44 states, Canada and Puerto Rico, logo businesses in 22 states and the province of Ontario, Canada and over 60 transit advertising franchises in the United States, Canada and Puerto Rico.
Recent Happenings at Lamar:
Steven Cohen increased his holdings in Lamar Advertising as the company was being oversold. On June 5, Lamar Advertising hit the Relative Strength Index, or RSI, of 27.3 meaning that the company was being oversold. A stock is considered to be oversold if the RSI reading falls below 30. Steven Cohen took advantage of the overselling of Lamar to buy an additional 2 million shares of the company.
Financials of Lamar:
In the company’s most recent quarterly release it reported:
· A 6.5% increase in net revenue, first quarter revenue 2013 was $283.5 million versus $266.2 million from the first quarter of 2012.
· The first quarter net loss was $6.1 million compared to the net loss of $22.8 million in the same quarter 2012.
· The FCF increased 13% to $49.9 million, up from $44.2 million in the same period 2012.
Lamar Advertising’s guidance reported that they expect the net revenue to be approximately $322 million to $325 million, representing a pro forma increase of 2% to 3%.
The analysis on Lamar shows that the company’s operating margin has been consistently expanding and that the P/S ratio is close to a five-year high of 3.8.
Lamar Advertising’s historical P/S and P/B ratios:
The company’s price in comparison to its revenue and net income:
Lamar Advertising has a market cap of $3.98 billion; its shares were traded at around $44.26 with a P/E ratio of 159.40 and a P/S ratio of 3.40. Lamar Advertising had an annual average earnings growth of 4.4% over the past 10 years.
Lamar Advertising is popular among the gurus. There are currently 14 gurus that hold a stake in Lamar. To see the shares these gurus hold as well as their holding history, click here.
ITT Educational Services (ESI)
Also on June 5, Steven Cohen bought into ITT Educational Services. Cohen made this buy as the price of ITT Educational stock began to rebound from its 10-year low of $12.27 which it hit in April. Cohen bought 1,230,621 shares at an average price of $25.06, representing a 0.17% impact to SAC Capital’s portfolio. Since his buy, the price per share has dropped about 2% to approximately $24.66 per share.
Cohen previously owned shares of ITT Educational. He sold out of his shares in the fourth quarter 2011. Cohen’s holding history of ITT Educational is as follows:
About ITT Educational:
ITT Educational Services is the holding company for ITT Technical Institutes and Daniel Webster College. ITT Technical Institutes are a private college system focused primarily on technology-oriented programs of study. There are currently over 140 ITT schools in 39 states. ITT offers seven programs which provide career-focused, degree programs to over 70,000 students.
Recent Happenings at ITT Educational:
There has been a lot of news recently on the for-profit education industry. The oftentimes highly un-favored sector of the market seems to be making a turnaround. The industry’s troubles began in 2010, when Congress began to question whether or not these companies were necessary. These companies’ students had poor graduation rates, after they graduated they couldn’t find jobs and without jobs many of the students were unable to repay government-backed loans. Currently the default rate on student loans at these institutions now exceeds 9%, which is significantly higher than any other higher education system.
Within the past month, the for-profit educations saw some of the sharpest gains in the market. The rally in for-profit schools began in the middle of the earnings season as many of the schools in the sector did not do as poorly as expected.
The following chart shows ITT Educational’s one-month gains as well as the gains made by its competitors:
ITT Educational Services’ Financials:
In ITT Educational’s First Quarter Results, the company reported:
· Revenue of $287.7 million, a 15.8% decrease from the same quarter 2012.
· The operating income decreased 47.6% from 2012 to $52.7 million
· New student enrollment in the first quarter of 2013 decreased 3.6% to 17,412 compared to 18,067 in the same period in 2012. Total student enrollment decreased 14.2% to 61,039 as of March 31, 2013 compared to 71,123 as of March 31, 2012.
ITT Educational Services has been actively buying back its own stock. Over the past four years, the number of shares outstanding has declined 35%.
The analysis of ITT Educational reports that the operating margin has been in decline for the past five years. The annual rate of decline per year is 5.5%.
The Peter Lynch Valuation Chart shows that the company appears to be undervalued:
The 10-year financials on ITT Educational also shows that the company’s revenue and earnings growth had been stably growing up until the past year.
ITT Educational has a market cap of $616.5 million; its shares were traded at around $25.97 with a P/E ratio of 5.40 and a P/S ratio of 0.50. The company had an annual average earnings growth of 25.8% over the past 10 years. GuruFocus rated ITT Educational the business predictability rank of 4.5-star.
There are currently eight gurus that maintain holdings in ITT Educational. To see these gurus, the shares they hold and their holding history, click here.
You can view Steven Cohen’s current portfolio here. Also check out his Undervalued Stocks, Top Growth Companies and High Yielding Companies.