Alan Fournier's Most Heavily Weighted Trades In Q1 2015

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May 28, 2015
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Alan Fournier (Trades, Portfolio) manages Pennant Master Fund, Pennant Windward Master Fund, Broadway Gate Master Fund, Ltd., and Pennant General Partner, LLC. Previously, Fournier was the partner responsible for global equity investments at Appaloosa Management L.P., and he began his investment career at Sanford C. Bernstein in 1988. Before entering the investment management industry, Mr. Fournier spent five years in technology system sales for Digital Equipment Corporation, where he was a national account manager.

His portfolio is composed of 40 stocks and has a total value of $5,338 million with a Q/Q turnover of 16%

This article is about the trades he did in Q1 2015 with the biggest impact on the total value of his portfolio.

With an impact of 3.8% on his portfolio, he sold out his stake of Gilead Sciences Inc (GILD) with a final gain of 25%. The company is now trading with a P/E (ttm) of 12.60 near its 52-week high (-3.74%) and has amazing returns (ROE +93%, ROA +44%).

With an impact of 3.71% on his portfolio, he reduced by 67.40% is stake of Carter’s Inc (CRI) a branded marketer in the United States of apparel for babies and young children. The company is now trading with a P/E (ttm) of 25.30 near its 52-week high (-0.91%). It has positive returns (ROE +27.70% and ROA +11.53%) but looks overpriced by 71% according to the DCF model.

With an impact of 3.3% on his portfolio, he bought Manitowoc Co Inc (MTW) a multi-industry, capital goods manufacturer operating in two principal markets: Cranes and Related Products and Foodservice Equipment. The company is trading with a P/E (ttm) of 18.90 (-40.84% from its 52-week high and +22.04% from its 52-week low). It has positive returns (ROE +17% and ROA +3.62%) but looks overpriced by 26% according to the DCF model).

With an impact of 2.5% on his portfolio, he sold out his stake of Ocwen Financial Corp (OCN) with a final loss of 72%. OCN is a financial services holding company which, through its subsidiaries, is engaged in the servicing and origination of mortgage loans. The company is trading with a forward P/E of 14.41 (-73.69% from its 52-week high and +80.39% from its 52-week low). Despite a good growth rate the company has negative returns (ROE -33%, ROA -5.97%) and even the price followed this trend: it tanked by 70% during the last 12 months.

With an impact of 2.3% on his portfolio, he bought Realogy Holdings Corp (RLGY), a provider of residential real estate services in the United States. The company is trading with a P/E (ttm) of 44.00 near its 52-week high (-6.12%) and +41.75% from its 52-week low. It has almost null returns (ROE +7.46%, ROA +2.11%) and looks overpriced by 198% according to the DCF model.

With an impact of 1.9% on his portfolio, he sold out Wesco International Inc (WCC) with a final gain of 18%. WCC is a provider of electrical, industrial, and communications maintenance, repair and operating (MRO) and original equipment manufacturers (OEM) products, construction materials, and advanced supply chain management and logistics services. The company is trading with a P/E (ttm) ratio of 14.40 at $72 (-21.70% from its 52-week high and +11.46% from its 52-week low). It has positive returns (ROE +14.51%, ROA +5.67%) and positive growth rates (3 years growth rate is 6% for revenue and 10.90% for EBITDA). At the current price it looks overpriced by 8% according to the DCF model.

With an impact of 1.7% on his portfolio, he sold out Terex Corp (TEX) with a final gain of 48%. TEX is a lifting and material handling solutions company. It is engaged in delivering reliable, customer-driven solutions for a range of commercial applications including construction, infrastructure, quarrying, mining, manufacturing, transportation, energy and utility industries. It has five business segments Aerial Work Platforms; Construction; Cranes; Material Handling & Port Solutions; and Materials Processing. The company is trading with a P/E (ttm) of 11.20 at $28.13 (-33.86% from its 52-week high and +27.81% from its 52-week low). Returns are positive (ROE +13.59%, ROA +4.55%) and are ranked higher than 59% of competitors. The price dropped by 28% during the last 12 months and now the company looks fairly valued (undervalued by just 4% according to the DCF model).

With an impact of 1.52% on his portfolio, he reduced by 29.14% his stake of Marathon Petroleum Corp (MPC), a marketer, transporter and transporter of petroleum product refiners in the United States. The company is trading with a P/E (ttm) of 8.80 at $100.96, near its 52-week high (-7% and +34.97% from its 52-week low). The company has double-figure returns (ROE +29.83%, ROA +10.66%) and are ranked higher than 88% of other companies in the Global Oil & Gas Refining & Marketing industry. MPC looks undervalued by 40% according to the DCF model.

With an impact of 1.4% on his portfolio, he increased his stake in General Motors Co (GM). The company is trading with a P/E (ttm) of 16.60 at $35.81 near its 52-week high (-6.97% and +25.88% from its 52-week low). GM has almost null returns (ROE +11.76% ROA 2.64%) and the price over the last 12 months is flat (an easy raise of 4%). The company looks overpriced by 13% according to the DCF model.

With an impact of 1.31% on his portfolio, he heavily increased by 279.85% his stake of Impax Laboratories Inc (IPXL), a technology-based, specialty pharmaceutical company applying formulation and development expertise, as well as its drug delivery technology, to the development, manufacture and marketing of bioequivalent pharmaceutical products, commonly referred to as "generics" in addition to the development and marketing of branded products. IPXL is trading with a P/E (ttm) ratio of 72.90 at $46.11 (-11.61% from its 52-week high and +108.18% from its 52-week low). It has positive returns (ROE +5.11%, ROA +3.72%) but almost null growth rate over the last 3 years (revenue +3%, EBITDA +1.60%). It also looks heavily overpriced by 395% according to the DCF model.

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