John Burbank (Trades, Portfolio), leader of Passport Capital, disclosed he established four new positions when he released his first-quarter portfolio last week.
While Burbank shut down his flagship hedge fund last year after returns slumped, he is now focusing on the firm’s special opportunities fund, which invests in a concentrated number of securities to achieve long-term growth of capital. According to Bloomberg, he is also dabbling in cryptocurrencies.
The guru established positions in Tahoe Resources Inc. (TAHO, Financial), Overstock.com Inc. (OSTK, Financial), Nevsun Resources Ltd. (NSU, Financial) and the SPDR S&P Oil & Gas Exploration & Production Exchange-Traded Fund (XOP, Financial) during the quarter.
Tahoe Resources
Having previously exited a position in Tahoe Resources in the fourth quarter of 2017, the guru established a new 5.2 million-share stake for an average price of $4.56 per share, giving it 32.41% portfolio space.
The Reno, Nevada-based miner has a market cap of $1.57 billion; its shares were trading around $5.30 on Wednesday with a price-earnings ratio of 678.98, a price-book ratio of 0.62 and a price-sales ratio of 2.66.
The Peter Lynch chart below shows the stock is trading slightly above its fair value, suggesting it is overpriced.
GuruFocus rated Tahoe Resources’ financial strength 8 out of 10. While its interest coverage meets Benjamin Graham’s threshold of 5, the company’s Altman Z-Score of 2.36 indicates it is under minor financial pressure. The company’s profitability and growth scored a 6 out of 10 rating as its operating margin outperforms 80% of its peers. It has a moderate Piotroski F-Score of 4.
Of the gurus invested in Tahoe, First Eagle Investment (Trades, Portfolio) has the largest holding with 2.29% of outstanding shares. Chuck Royce (Trades, Portfolio), Pioneer Investments (Trades, Portfolio), Ray Dalio (Trades, Portfolio) and Mario Gabelli (Trades, Portfolio) are also shareholders.
Overstock
Burbank invested in 520,498 shares of Overstock for an average price of $62.39 per share, allocating 25.12% of the portfolio to the position.
The online retailer, which is headquartered in Midvale, Utah, has a market cap of $1.05 billion; its shares were trading around $36.43 on Wednesday with a price-book ratio of 5.85 and a price-sales ratio of 0.53.
According to the Peter Lynch chart below, the stock is overpriced as it is trading higher than its fair value.
Overstock’s financial strength and profitability and growth were both rated 6 out of 10 by GuruFocus. Despite the fact the company has issued approximately $44.5 million in new long-term debt over the past several years, its Altman Z-Score of 4.07 implies it is financially healthy. In contrast, its operating margin is negative and underperforms 82% of competitors. Overstock also has a moderate Piotroski F-Score of 4 and a business predictability rating of one star out of five.
With his purchase of 1.8% of Overstock’s outstanding shares, Burbank became the company’s largest guru shareholder. Leucadia National (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio) also established positions in the first quarter. Francis Chou (Trades, Portfolio) also holds the stock.
Nevsun Resources
The investor picked up 1.8 million shares of Nevsun for an average price of $2.29 per share, expanding the portfolio 5.97%. He previously closed a position in the stock in the second quarter of 2013.
The Canadian mid-tier miner has a market cap of $1.04 billion; its shares were trading around $3.48 on Wednesday with a price-book ratio of 1.29 and a price-sales ratio of 3.21.
Based on the Peter Lynch chart below, the stock appears to be overpriced as it is trading above its fair value.
Since Nevsun has no debt, GuruFocus rated its financial strength 8 out of 10. Its Altman Z-Score of 2.49, however, indicates the company has some minor financial stress. Its profitability and growth did not fare as well, scoring 5 out of 10 as its operating margin underperforms 75% of peers. The company also has a moderate Piotroski F-Score of 5 and a one-star business predictability rating.
The company’s largest shareholder among the gurus is Francisco GarcĂ Âa ParamĂ©s (Trades, Portfolio) with 0.95% of outstanding shares. Jim Simons (Trades, Portfolio) also owns the stock.
SPDR S&P Oil & Gas
After selling out of the SPDR S&P Oil & Gas Exploration & Production ETF in the fourth quarter of 2017, Burbank initiated a new position of 165,000 units for an average price of $35.82 per unit. The trade had an impact of 7.74% on the portfolio.
The ETF, which tracks the performance of an equal-weighted index of U.S. oil and gas companies involved in exploration and production, has a market cap of $3.3 billion; it was trading around $42.84 on Wednesday with a price-earnings ratio of 11.53 and a price-book ratio of 1.65.
The 14-day relative strength index is 67.07, meaning it is not overbought or oversold.
Other gurus currently invested in the ETF include Paul Singer (Trades, Portfolio)’s Elliott Associates, Chase Coleman (Trades, Portfolio), Prem Watsa (Trades, Portfolio), Carl Icahn (Trades, Portfolio) and PRIMECAP Management (Trades, Portfolio).
Other trades
During the quarter, Burbank also exited a number of positions: United HealthGroup Inc. (UNH, Financial), Parsley Energy Inc. (PE, Financial), Liberty SiriusXM Group (LSXMK, Financial), Ulta Beauty Inc. (ULTA, Financial), JD.com Inc. (JD, Financial), Anadarko Petroleum Corp. (APC, Financial) and Affiliated Managers Group Inc. (AMG, Financial).
The $75 million portfolio, which is composed of six stocks, is largely invested in the consumer cyclical and basic materials sectors.
Disclosure: No positions.
