Guru Bruce Berkowitz (Trades, Portfolio) significantly reduced his position in MRC Global (MRC, Financial), selling 3,784,300 shares on March 14.
MRC Global is the largest distributor of pipe, valve and fitting products and services to the energy and industrial markets. The company was originally founded in the Netherlands in 1921 as United Brass Engineers Ltd. and later the company name was changed to MRC Global when the company became part of Transmark. MRC Global currently serves more than 12,000 customers in 45 countries worldwide.
MRC Global has a market cap of $1.4 billion, an enterprise value of $1.85 billion, a P/B ratio of 1.47, a P/S ratio of 0.31 and a quick ratio of 1.40.
Berkowitz is a Massachusetts native who grew up in the city of Chelsea. The city is located directly across the Mystic River from Boston. Berkowitz attended Chelsea High School and Huntington Prep before graduating from Beaver Country Day School. After graduation Berkowitz attended the University of Massachusetts Amherst where he graduated cum laude with a bachelor’s degree in economics.
After Berkowitz graduated from college he landed a job at the Strategic Planning Institute in Cambridge, a management consulting firm. In 1983 he joined Merrill Lynch in London. Berkowitz worked at several financial institutions where he was able to gain wisdom, experience and confidence.
After more than 17 years of investment experience, Berkowitz decided to venture off on his own. He founded Fairholme Capital Management in 1997 which he still operates nearly two decades later. Fairholme Capital Management currently owns 19 stocks with a total value of $2.424 billion.
Below is a Peter Lynch Chart for MRC Global Inc.
The company listed its primary risk factors as follows:
- Decreased capital and other expenditures in the energy industry, which can result from decreased oil and natural gas prices, among other things, and can adversely impact customers’ demand for products and revenue.
- Volatile oil and gas prices affect demand for products.
- As evidenced by the decline of oil prices from late 2014 to 2015, prices for oil and natural gas are subject to large fluctuations in response to relatively minor changes in the supply of and demand for oil and natural gas, market uncertainty and a variety of other factors that are beyond our control. Any sustained decrease in capital expenditures in the oil and natural gas industry could have a material adverse effect.
- We may be unable to compete successfully with other companies in the industry.
- We sell products and services in very competitive markets. In some cases, we compete with large companies with substantial resources. In other cases, we compete with smaller regional players that may increasingly be willing to provide similar products and services at lower prices. Competitive actions, such as price reductions, consolidation in the industry, improved delivery and other actions, could adversely affect our revenue and earnings. We could experience a material adverse effect to the extent that our competitors are successful in reducing our customers’ purchases of products and services from us. Competition could also cause us to lower our prices, which could reduce our margins and profitability. Furthermore, consolidation in our industry could heighten the impacts of the competition on our business and results of operations discussed above, particularly if consolidation results in competitors with stronger financial and strategic resources and could also result in increases to the prices we are required to pay for acquisitions we may make in the future.
It is likely that Berkowitz reduced his position in MRC Global because there has been so much variance and volatility surrounding the oil industry. The company’s revenues and profits are greatly affected by oil prices.
Cheers to your investment success.
