Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Chesapeake Energy Corporation (CHK), Canadian Natural Resource Ltd (USA) (CNQ) & 3 Stocks Fairholme’s Bruce Berkowitz Was Buying Last Quarter

Page 1 of 2

Each quarter, large investors, such as Bruce Berkowitz’s Fairholme fund, file 13Fs with the SEC, disclosing many of the positions held in their equity portfolios during the latest three-month period. Fairholme, in particular, is a very large managed fund, with over $19 billion in assets under management. According to most estimates, it has averaged a monthly return of just over 1% since September 2000.

The original 13F is here, and it’s worth noting that retail investors have beaten the market by piggybacking hedge fund sentiment (see the secrets here). Let’s take a look at Berkowitz’s five largest newest positions initiated during the first quarter of 2013.

FAIRHOLME (FAIRX) Bruce Berkowitz

Chesapeake Energy Corporation (NYSE:CHK)

The fund’s largest new position was in Chesapeake Energy Corporation (NYSE:CHK), with a $273 million position reported at the end of the quarter. In spite of its high debt and ongoing asset sales, the company has a strong presence in the Utica shale field and others, and Berkowitz’s move seems to be a bet on the longer-term prospects of the company.

Doug Lawler’s presence as Chesapeake Energy Corporation (NYSE:CHK)’s new CEO is expected to stabilize shareholders’ uncertainty moving forward, which may be an added boon to the company’s stock price. Wall Street’s average price target on Chesapeake Energy Corporation (NYSE:CHK) indicates a 5-6% upside is expected from current levels, and Susquehanna recently upgraded shares to a Positive rating from Neutral due to Lawler’s hire, with a price target to $26. Shares currently trade in the mid-$21 range.

Canadian Natural Resource Ltd (USA) (NYSE:CNQ)

The fund also bought 1,101,800 shares in Canadian Natural Resource Ltd (USA) (NYSE:CNQ), creating a position worth over $35.4 million in the oil and gas E&P. Despite a recent downgrade by Zacks, some pundits consider Canadian Natural Resource Ltd (USA) (NYSE:CNQ) to be a possible takeover target, and it also stands to benefit if the Keystone XL pipeline is approved. The company’s chief land ownership in the Western half of Canada gives Berkowitz solid exposure to this region, while shares trade at a lowly 11.2 times year-ahead earnings. A PEG near 1.3 indicates that despite the fact that analysts expect 30% EPS growth next year, this energy company is still moderately cheap.

Genworth Financial Inc (NYSE:GNW)

The third and last new buy for Berkowitz during this quarter was 898,800 shares in Genworth Financial Inc (NYSE:GNW), creating a position worth about $9 million as of March 31. Berkowitz’s move may have been in anticipation of impressive earnings performance in the latest quarter, as Q1 net income doubled (year-over-year) to $103 million.

Up more than 37% year to date, investors’ optimism has been primarily due to Genworth’s potential three-way breakup. The financial security company is expected to IPO its Australian mortgage insurance unit for $800 million in the next year or two, and most analysts expect Genworth to sell its wealth management and alternative businesses for a sum of $400 million.

While Genworth has said that it is waiting for “more evidence of a good IPO market,” the Australian IPO is expected to be the company’s first priority. Generally speaking, Genworth’s core U.S. mortgage and long-term care businesses would benefit from a breakup, as the company could heighten its focus on these two areas.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

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 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!