Billionaire Michael Price’s Latest Stock Picks

Billionaire Michael Price’s MFP Investors is a value and activist hedge fund which Price founded in 1998 after earning considerable money from the sale of Heine Securities. We have gone through the fund’s 13F filing for the end of September and while there was little activity at the top of Price’s portfolio we think that we’ve been able to pick out some of his thoughts on names and market trends. Read on for our analysis of MFP Investors’ portfolio and compare its positions to previous filings.

Michael Price

Intel. Price added to his holdings of Intel Corporation (NASDAQ:INTC) with 1.6 million shares of the stock in the portfolio at the end of September (compared to 1.3 million at the beginning of July). We’ve noted that there was little change in many of the large positions from last quarter, so the fact that Price increased his stake in Intel- which had been his largest position- is somewhat significant. While many verticals in the computing industry are slumping, driving down sales at many chip manufacturers tied to PCs in particular, Intel has fought its way to a more modest decline in its business. Its earnings are expected to continue to decline, but the forward P/E is 10 and for now Intel pays a dividend yield above 4%. We looked at Intel in October and thought that the stock was a good buy relative to its peers.

Gulfmark. Another stock that Price bought during the third quarter- increasing his stake by about 10%- was Gulfmark Offshore, Inc. (NYSE:GLF), which owns a fleet of offshore supply vessels which serve oil and gas companies engaged in offshore drilling and production. Gulfmark’s revenue and earnings were down slightly in the third quarter compared to the third quarter of 2011, and the stock tends to be correlated with the price of oil (since higher oil prices make offshore drilling more economical, thus driving demand for Gulfmark’s services). Wall Street analysts expect strong earnings growth in 2013, however, and so the stock trades at only 9 times forward earnings estimates.

Finance & Insurance. Four of Price’s top six 13F holdings were finance or insurance companies, just as they had been three months earlier. They represented a broad spectrum of industries: megabank Citigroup Inc. (NYSE:C); small regional bank West Coast Bancorp (NASDAQ:WCBO), whose market capitalization is only about $410 million; and insurance companies Alleghany Corporation (NYSE:Y) and Symetra Financial. There’s still a case to be made for Citi as a value stock, since it trades at about a 40% discount to the book value of its equity and at a forward P/E of 8. Fellow billionaire David Tepper’s Appaloosa Management had increased its own stake in Citigroup during the second quarter of 2012. However, while we’d been bullish on Citi over the summer we think that the stock has risen enough that investors who want a megabank may want to look at JPMorgan Chase or even Wells Fargo instead. West Coast Bancorp is almost the opposite of Citi: a much smaller bank, it trades at a premium to its book value (the P/B ratio is 1.3) and at 18 times consensus earnings for 2013. Its business has been pretty stable recently. Though we aren’t as familiar with small regional banks, we think that there are probably better values in the industry that don’t carry multiples that high. The insurers have been reporting much higher net income numbers than a year ago, and for the most part their multiples look good- both trade at a discount to book value, with Symetra’s P/B being particularly low.  They might be good stocks to look at; we’d expect their earnings growth to slow down, but they’d be good values at their current prices even given a low growth rate.

We therefore have mixed reviews on Price’s finance and insurance picks, partly because we think that there are cheaper banks available in the market. Gulfmark seems like a good way to go long offshore drilling activity, but given the explosive growth of onshore production we’re not sure oil prices will rise enough to support the expected growth in offshore drilling. Our mindset on Intel is similar: good buy relative to its peers, but tied closely to an industry that we’d be wary of at this time.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!