Chanos, Simons Among the Billionaires Betting on This Infrastructure Giant

RENAISSANCE TECHNOLOGIESIn July, Chicago Bridge and Iron Company N.V. (NYSE:CBI) announced plans to acquire Shaw Group Inc. (NYSE:SHAW) at $46 per share. Chicago saw an over 15% drop in its shares on the Shaw acquisition news. On the other hand, shares of Shaw were up over 50%. The acquisition price for Shaw is $46, while the company is currently trading at less than $44 a share.

At the end of 2Q, both companies had serious billionaire fund managers as shareholders—including the likes of D.E. Shaw, Steven Cohen, Jim Chanos and Jim Simons. We believe these managers were bullish on what these companies could do separately, but are aggressively bullish on what they can accomplish together. The Shaw acquisition will give Chicago more of a presence in the energy sector, while favorable petrochemical prospects will continue to drive its core business.

Shaw has plans to ramp up its nuclear projects in 2013. The company has seen margins contract on cost overruns on nuclear and coal projects. As well, the company is finalizing the sale of its energy and chemicals unit, while also completing the sale of its 20% stake in Westinghouse—back to Toshiba—which will eliminate all of its $1.7 billion debt.

Prior to the acquisition offer, Shaw was down year to date 15%, having had a couple huge earnings misses. August 2011 earnings miss came in at 176%, posting actual EPS of negative $0.44 versus estimates of $0.58. Then in May 2012, the company missed EPS again, posting negative $0.09 EPS versus estimates of $0.58.

Chicago is expected to see a revenue increase of 23% in 2012, and continued strengthening into 2013. Chicago also boasts a backlog of $28 billion—which is expected to put next year EPS up 18%. Some of the biggest competitors for the potential Shaw-Chicago conglomerate will be KBR, Inc. (NYSE:KBR), Jacobs Engineering Group Inc (NYSE:JEC) and Fluor Corporation (NYSE:FLR).

KBR reported 2Q net income of $104 million or $0.70 per share compared to net income of $100 million or $0.65 per share in the second quarter of 2011. Earnings next year are expected to come in 18% higher. KBR has announced a couple key contracts with the likes of DuPont and Dominion Resources, and is up 7% year to date. The company also upped its earnings guidance for the year 2012, calling for EPS of $2.60 to $2.80, previous estimates were $2.45 to $2.80.

Jacobs, seeing strength in its upstream oil and gas, and chemicals sectors, expects EPS to come in up at an estimated 13% higher next year. Backlogs have rose 11% to $15.6 billion from a year ago. Fluor is the powerhouse of the industry, with a market cap of around $9 billion. Fluor is expected to see a 20% increase in 2012 revenues, with its oil and gas segment being the driving force. The company is also expected to see a positive an increase in revenue mix, with a solid backlog in the chemical segment.

Fluor saw Carlson Capital increase its position by 62% in 2Q, while Jacobs and KBR saw common interest from notable firms Royce & Associates and Platinum Asset Management. Platinum was the top fund owner by shares in Jacobs, while also upping its stake in KBR by 23% over the quarter. The second largest owner of Jacobs by shares was Royce & Associates, who also owned 1.7 million shares of KBR. Worth noting for KBR is the recent insider sale by the company’s CEO.

The top five fund owners were all upping their stakes in Shaw during 2Q, most notably D.E. Shaw and Steven Cohen, by 41% and 318% respectively. For Chicago, Jim Chanos and Jim Simons were modest owners, while Columbus Circle Investors was the top fund owner, with 3.1 million shares invested. Click here to see all funds owning Shaw and all funds owning Chicago. Each of these engineering and construction firms have top fund managers owning a piece of the action, but we believe that a Chicago-Shaw combo could be the most impressive powerhouse of the bunch.

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. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Burger Kings: The 10 Most Expensive Burgers in the World

The 10 Most Ethnically Diverse Countries in the World

The 10 Most Exclusive Credit Cards in the World

The 10 Most Expensive Cruise Ships in the World

The 10 Fastest Supercomputers in the World

The 10 Best Countries for Doing Business 2015

6 Most Expensive Fruits In The World

10 Worst Airlines in the World

The 10 Biggest Tax Havens in the World to Stash Your Money

The 15 Most Murderous Countries in the World

10 Largest Colleges in the World: Bigger Isn’t Always Better

Comedians in Cars Getting Coffee: The 6 Comedians Seinfeld Needs to Interview

Easy Money: The 10 Most Successful Investors in the World Today

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!