Louis Moore Bacon (Trades, Portfolio) is an American hedge fund manager and trader who uses a global macro strategy to invest in the markets. Bacon has been in the top 20 of Top 100 money earners since the 1990s, and he is considered one of the top 100 traders of the 20th century.
He is the manager of a leading New York City-based hedge fund, Moore Capital Management, which had $3.17 billion under management at Dec. 31, 2014. The investor reported increasing his stake in Levy Acquisition Corp. (LEVY, Financial), a $252.5 million market cap, according to GuruFocus Real Time Picks. So in this article, we are going to try to find an explanation for this long position.
Latest move
On March 18, the guru purchased 750,000 shares of the company for an average price of $11.18. As of today, the firm's share price is $13.47, and Louis Moore Bacon (Trades, Portfolio) amasses 1.25 million shares, the value of the stake amounting to $16.84 million.
Levy Acquisition was founded in 2013 and is based in Chicago. The company does not have significant operations. It intends to complete a business combination with an operating company in the restaurant and hospitality sectors. The company’s shares gained 35.15% on a year-to-date basis and 1.35% of its market value in the last year.
In the past month, Levy agreed to acquire Del Taco Inc. Del Taco is the second largest Mexican QSR with 550 restaurants located in 16 states. On March 11, it announced the execution of the merger agreement previously valued at $500 million.
Relative Valuation
As of today, Levy Acquisition Corp's share price is $13.32. Levy Acquisition Corp's Book Value per Share for the fiscal year that ended in December 2014 was $0.27. Hence, Levy Acquisition Corp's P/B Ratio of today is 49.33. This ratio indicates a premium versus the industry average of 3.60x, and it also indicates that the stock is relatively overvalued.
Final comment
In the article we focus on the latest pick of the founder of Moore Capital Management, LP. As of 31/3/2015, Mr. Bacon has amassed a fortune of $1.75 billion, according to Forbes. Moore Capital Management's Global Investment Fund returned 1.65%, and its Macro Management Fund returned 5.7%. Both returns are net of fees.
Disclosure: As of this writing, Omar Venerio did not hold a position in any of the aforementioned securities.
