Caxton Associates (Trades, Portfolio) LP was founded in 1983 by legendary hedge fund manager Bruce Kovner. Kovner retired from running the firm in 2012. Since then, Andrew E. Law has taken over as the chairman and CEO of the investment firm. During the second quarter, the firm purchased a 1,269,000 share stake in Teck Resources (TCK, Financial)Â at an average price of $10.29 per share. Since the purchase, Teck Resources' market price has gained an estimated 79%.
Teck Resources is headquartered in Vancouver, British Columbia. It is a diversified resource company that focuses on copper, zinc, steel making, coal, gold and energy. The company’s operations began in 1913, when Teck-Hughes Gold Mines Ltd. was formed to develop a gold discovery in Teck Township, on the shores of Kirkland Lake, Ontario. Teck Resources has since expanded its operations, becoming Canada’s largest diversified resource company with operations and projects in Canada, the United States, Chile and Peru.
Teck Resources has a market cap of $10.58 billion, an enterprise value of $15.85 billion, a P/B ratio of 0.85, a current ratio of 2.64 and a quick ratio of 1.61.
According to GuruFocus, Teck Resources has a financial strength rating of 4 of 10 with a cash to debt ratio of 0.14, an equity to asset ratio of 0.48 and a Piotroski F-Score of 3, which usually indicates a poor business situation. The company also has an Altman Z-Score of 0.44, indicating that the company is in the distress zone and is in potential danger of filing for bankruptcy within the next two years. The company also has a 4 of 10 profitability and growth rating with an operating margin of -40.76%, a net-margin of -32.53%, an ROE of -14.72%, an ROA of -7.16% and an ROC (Joel Greenblatt (Trades, Portfolio)) of -11.13%.
According to GuruFocus, Teck Resources has three severe warning signs that investors should pay attention to.
- The company’s Piotroski F-Score is 3, which implies a poor business situation.
- The company’s gross margin has been in 5-year decline of -19% per year.
- The company’s revenue growth per share has been in decline of -3.70% per year over the previous 5 years.
Below is a Peter Lynch chart that shows Teck Resources is trading above its intrinsic value.
Law may have decided to purchase a stake in Teck Resources because the company is established with nearly 100 years of operating experience. In addition, the company has been able to expand its operations to become Canada’s largest diversified resource company.
It is noteworthy that Caxton Associates (Trades, Portfolio) was the only investment firm amongst the gurus to purchase a stake in Teck Resources during the second quarter. Ray Dalio (Trades, Portfolio) and Joel Greenblatt (Trades, Portfolio) both reduced their stake, while Dodge & Cox sold out its remaining shares.
Disclosure: Author does not own any shares of this company.
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