Chemtura Corp (CHMT), Manitowoc Company, Inc. (MTW): Billionaire James Dinan’s Small Cap Picks Include Visteon

According to the 13F, York initiated a position of 2.8 million shares in natural gas storage and pipeline transportation company Spectra Energy Partners, LP (NYSE:SEP). Spectra Energy Partners, LP (NYSE:SEP) has at least slightly increased its dividend payment each quarter since it began paying dividends in late 2007; at current prices and dividend levels, the yield is over 5%. The payout ratio is fairly high, however, with the stock valued at over 20 times consensus earnings for 2014. Further increases would place an awful lot of strain on cash flow, and we’re concerned that Spectra might even have to cut its dividend in the future.

The fund reduced its holdings of Visteon Corp (NYSE:VC) to 1.4 million shares between January and March. Visteon Corp (NYSE:VC) provides auto parts with a focus on climate and electronics components. As with many auto parts companies, Wall Street analysts expect earnings to improve considerably over the next several years: as a result, the five-year PEG ratio is 0.7. However, revenue growth was fairly light last quarter- up 8% compared to the first quarter of 2012. SAC Capital Advisors, managed by billionaire Steve Cohen, owned 2.6 million shares of Visteon at the end of the first quarter (find Cohen’s favorite stocks).

Dinan and his team added shares of $2.3 billion market cap satellite imagery provider DigitalGlobe Inc (NYSE:DGI) with 2.7 million shares according to the 13F. The company is unprofitable on a trailing basis, and is expected to lose money this year as well; analysts to expect it to break into the black in 2014 but the forward P/E is still quite high at 49. The stock price has more than doubled in the last year on very strong revenue growth- sales were up 47% in Q1 2013 versus a year earlier. Brian Jackelow’s SAB Capital Management disclosed ownership of 4.7 million shares (research more stocks SAB owns).

Disclosure: I own no shares of any stocks mentioned in this article.