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Tepper Walks His Talk – Triple Digit Increases in Engineering Companies

September 14, 2013 | About:
Sally Jones

Sally Jones

49 followers
When Guru David Tepper says his hedge fund bets on the country’s revival, nothing demonstrates it better than his investment in ‘bricks and mortar’ engineering and construction companies and their projects. Tepper’s updated portfolio lists 72 stocks, 12 of them new, with a total value of $6.9 billion, and a quarter over quarter turnover of 37%. The hedge fund portfolio is currently weighted with top three sectors: ETF, options, preferred at 27.9%, financial services at 17% and industrials at 15.6%.

David Tepper, founder of Appaloosa Management, personally earned $2.2 billion in 2012, and is the highest-earning among the top 40 hedge fund managers. His average 12-month return is 26.01%, so every stock in his portfolio is being studied in detail. His top five holdings are well known, but there is so much more to learn about this true alpha. For example, here’s a grouping of four of Tepper’s lesser-known engineering and construction company holdings, three of them characterized by triple-digit increases.



Chicago Bridge & Iron Company (CBI)

Up 53% over 12 months, Chicago Bridge & Iron Company has a market cap of $6.8 billion; its shares were traded at around $63.46 with a P/E ratio of 20.90.

Founded in 1889, Chicago Bridge & Iron Company provides conceptual design, technology, engineering, procurement, fabrication, construction and commissioning services to customers in the energy, petrochemical and natural resource industries.

The company reported net income for the second quarter of 2013 as $106.0 million, or $0.98 per diluted share, including the after tax impact of acquisition-related costs of $6.3 million, or $0.06 per diluted share, compared to $72.3 million in the same period a year ago. Revenue for the second quarter of 2013 was $2.9 billion with new awards of $2.5 billion, resulting in a backlog of $24.5 billion, compared to revenue of $1.29 billion in the same period a year ago, according to a company press release.

Guru Action: As of June 30, 2013, David Tepper made a new buy of 1,501,044 shares at an average price of $58.09, for a gain of 10.8%.

His shares represent 1.40% of shares outstanding, valued at around $89.5 million.

Track historical pricing, revenue and net income:

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Fluor Corporation (FLR)

Up 12% over 12 months, Fluor Corporation has a market cap of $10.97 billion; its shares were traded at around $67.12 with a P/E ratio of 23.90.

Incorporated in 2000, Fluor Corporation provides professional services in the fields of engineering, procurement, construction and maintenance as well as project management services on a global basis. It serves a diverse set of industries worldwide including oil and gas, chemicals and petrochemicals, transportation, mining and metals, power, life sciences and manufacturing. It is also a main service provider to the U.S. federal government.

The company reported financial results for its second quarter ended June 30, 2013. Net earnings attributable to Fluor for the second quarter were $161 million, or $0.98 per diluted share, compared with $161 million, or $0.95 per diluted share, in the second quarter of 2012. Consolidated segment profit for the quarter was $288 million and revenue was $7.2 billion, comparable with results in the second quarter of 2012. The company’s new awards for the second quarter were substantial at $7.2 billion, including $3.6 billion in industrial and infrastructure and $3.3 billion in oil and gas. Fluor’s consolidated backlog at the end of the quarter was $37.0 billion, which compares with $37.5 billion at the end of last quarter, according to a company statement.

Guru Action: As of June 30, 2013, David Tepper increased his position by 636.61%, buying 1,287,402 shares at an average price of $60.76, for a gain of 10.7%. Tepper bought new in the previous quarter, buying 202,227 shares at an average price of $65.53 for a gain of 5.9%

Current shares stand at 1,489,629 or 0.91% of shares outstanding, valued at around $88.3 million.

Foster Wheeler AG (FWLT)

Down 1% since January, Foster Wheeler AG has a market cap of $2.42 billion; its shares were traded at around $24.61 with a P/E ratio of 24.30.

Foster Wheeler AG is a provider of construction and engineering services. The company and its subsidiaries serve the oil and gas, oil refining, chemical and petrochemical, environmental, power generation, and power plant operation and maintenance industries worldwide.

Foster Wheeler AG reported income from continuing operations for the second quarter of 2013 of $68.3 million, or $0.68 per diluted share, compared with $30.4 million, or $0.29 per diluted share, in the second quarter of 2012. Adjusted income from continuing operations in the second quarter of 2013 was $54.6 million, or $0.54 per diluted share, compared with $33.7 million, or $0.32 per diluted share, in the year-ago quarter, according to a company press release.

Guru Action: As of June 30, 2013, David Tepper increased his position by 203.96%, buying 1,027,969 shares at an average price of $22.18, for a gain of 11%. He has held for two quarters, first buying 504,001 shares at an average price of $24.14 and making a 1.9% gain in the first quarter of 2013.

His current shares of 1,531,970 represent 1.56% of shares outstanding, valued at around $85.5 million.

Track historical pricing, revenue and net income:

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KBR Inc. (KBR)

Down 1% over 12 months, KBR Inc. has a market cap of $4.67 billion; its shares were traded at around $31.71 with a P/E ratio of 37.30.

Incorporated in 2006, KBR Inc. is an indirect wholly-owned subsidiary of Halliburton Company. The company and its subsidiaries comprise a global engineering, construction and services company supporting the energy, hydrocarbon, government services, minerals, civil infrastructure, power and industrial sectors.

The company reported its second quarter 2013 financial results with net income attributable to KBR as $90 million, or $0.61 per diluted share, compared to net income attributable to KBR of $104 million, or $0.70 per diluted share, in the second quarter of 2012. Consolidated revenue in the second quarter of 2013 was $2.0 billion compared to $2.1 billion in the second quarter of 2012. Operating income in the second quarter of 2013 was $123 million compared to $129 million in the prior year second quarter according to a company press release.

Guru Action: As of June 30, 2013, David Tepper increased his position by 291.68%, buying 1,317,886 shares at an average price of $31.87, for a loss of 0.6%. Tepper bought new in the previous quarter, buying 451,825 shares at an average price of $30.97 for a gain of 2.3%

Current shares stand at 1,769,711 or 1.20% of shares outstanding, valued at around $57.5 million.

David Tepper’s hedge fund, Appaloosa Management, had net returns of almost 30% last year, with an average annual return of 23.3% over 5 years, and 29.2% since its inception in 1993.



Philanthropist Tepper donated a record $55 million to his alma mater Carnegie Mellon University in 2004.

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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: 2.8/5 (6 votes)

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