Hedge Fund Trading – Mario Gabelli Buys Tredegar, Steve Mandel Buys Pandora
Mario Gabelli’s Tredegar Corp (TG)
Mario Gabelli’s GAMCO held 3,690,517 shares of Tredegar on Aug. 30 this year, giving him an 11.44% portion of the company. His Oct. 3 purchase increased his holding by 3% to 3,802,477 shares and boosted his ownership to 11.79% of the company.
Tredegar Corp shares have risen 30% year to date, trading for $26.59 each on Friday.
Gabelli’s stake in the company dates back to before 2008:
Tredegar Corp. is a plastic films and aluminum extrusions manufacturer headquartered in Virginia with locations in North America, Europe, Asia and Latin America. The company is 23% owned by the Gottwald family as the largest shareholder.
The company is being urged to pursue unspecified “strategic alternatives,” according to a document members of the Gottwald family who sit on the board of directors filed with the SEC on Sept. 5.
After adverse market conditions for two year, in the first two quarters of the 2013 Tredegar reported increased year-over-year revenue and net income. Second quarter sales increased 12.8% and net income grew 29.7% from the same quarter last year.
Over the past 10 years the company grew revenue at a rate of 1.4% and EBITDA at a rate of 6.7% annually.
According to GuruFocus analysis, asset growth has increased faster than revenue growth, a negative sign. The dividend payout ratio at 1.7% also appears high and is possibly unsustainable. Positive signs include consistent and predictable per-share revenue growth and operating expansion.
The company’s cash balance stands at $44.43 million, with long-term debt of $139 million. It generated free cash flow in all but one year, 2005, over the last decade.
Tradegar trades with a P/E of 36.8, P/B of 2.2 and P/S of 0.91.
Pandora Media Inc. (P)
Steve Mandel bought 10,085,216 shares of Pandora Media on Sept. 23, making Lone Pine Capital the company’s fourth largest institutional shareholder. Shares of Pandora have soared 105% since debuting on the NYSE on Jun 17, 2011. This year alone they are up almost 200%, hitting $27.91, a new 52-week high, on Friday.
Pandora is a popular internet radio service, personalizing stations for listeners according to their taste, with over one million tracks in its library and tens of millions of users.
Mandel likely purchased the shares as part of the company’s public offering of 18.2 million common shares priced at $25 per share which closed on Sept. 24. Thirteen million of the shares were offered by Pandora, and 5.2 million by a stockholder.
Pandora said in a release Sept. 18 that it plans to use the money raised in its portion of the offering for “general corporate purposes,” such as potential acquisitions. Pandora Chairman and CEO Joe Kennedy said in the company’s second fiscal quarter statement that he planned on “accelerating investment in new technologies, channels and capabilities.”
Pandora has been enjoying a growing listener base, which continued in September, with users listening for 18% more hours than the same month last year. Its share of total U.S. radio listening also increased to 7.77% from 6.53% in September last year, and the number of active listeners rose 25% year over year to 72.7 million.
For its second fiscal quarter ended July 31, the company recorded record GAAP revenue of $157.4 million, an increase of 55% year over year, including a 44% increase in advertising revenue. GAAP EPS was $0.04.
The company ended the quarter with $68.9 million in cash on hand, a decrease from $75.4 million in the prior quarter end. It also has about $13.56 million in long-term liabilities and debt on its balance sheet.
Pandora’s quarterly revenue and earnings history since 2010:
A GuruFocus analysis shows the company’s price is near a three-year high, its P/B ratio at 51.35 is close to a three-year high and its P/S ratio at 8.33 is close to a one-year high of 8.82.
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