Steve Mandel (Trades, Portfolio) is the founder of Lone Pine Capital, a long/short equity money manager that he started in 1997. Prior to founding LPC, Mandel was senior managing director and consumer analyst at Tiger Management Corporation (1990-1997), mass-market retailing analyst at Goldman, Sachs (1984-1990) and senior consultant at Mars and Company (1982-1984).
Lone Pine Capital invests in public equity markets across the globe and utilizes long-short strategy. The firm uses fundamental analysis and bottom-up stock picking to build the portfolio. Mandel uses both value and growth methodologies and does not hold many stocks for very long.
Last quarter Steve Mandel (Trades, Portfolio) initiated a long position in CSX Corp. (CSX, Financial), buying 2,088,300 shares of the company. CSX is one of the nation's leading transportation companies. The company provides rail-based transportation services including traditional rail service and the transport of intermodal containers and trailers. CSX’s principal operating subsidiary, CSX Transportation, Inc., provides an important link to the transportation supply chain through its approximately 21,000 route mile rail network, which serves major population centers in 23 states east of the Mississippi River, the District of Columbia and the Canadian provinces of Ontario and Quebec. It has access to over 70 ocean, river and lake port terminals along the Atlantic and Gulf coasts, the Mississippi River, the Great Lakes and the St. Lawrence Seaway. The company’s intermodal business links customers to railroads via trucks and terminals.
CSX Corporation has seen good growth in its revenues and profitability over the last five years. In the last five years, the company’s revenues have risen by ~ 20% while its EPS has grown by more than 42% to $1.92 in FY2014. The company has also done a good job in terms of returning cash to the shareholders through dividends and buybacks. The company has increased its annual dividend to $0.63 in FY2014 versus $0.33 in FY2010. The company has also reduced its share count by over ~150 million since FY2010.
Going forward, analysts are expecting the company’s EPS to further increase to $2.02 in the current year and $2.21 next year. Its revenues are expected to decline 4.30% in the current year and grow 3.70% next year.
CSX Corporation is trading at a forward PE of 12.85 and has a dividend yield of 2.53%. According to GuruFocus’ DCF Calculator, the company has a business predictability rating of 4.5 stars and a margin of safety of 40%.
Out of 28 analysts covering the company, 12 have buy or strong buy ratings while 16 Ă‚ have hold ratings. The stock is a good buy at current levels given attractive valuations, good growth prospects and history of returning cash to the shareholders through dividends and buybacks.
