Commodity costs have hurt a number of the major meat producers, thanks to warmer-than-expected weather and drought conditions. This pressure could well continue over the interim. Since the spin-off, Hillshire Brands Co (NYSE:HSH) is looking to undertake various cost reductions. Back in May, the company invested upwards of $100 million for cost cutting, and expects to save $80 million annually between fiscal year 2013 and 2016.
However, from a valuation standpoint, Hillshire Brands Co (NYSE:HSH) appears to be a bit expensive. Hillshire trades at 55 times earnings, while peers Bridgford Foods Corporation (NASDAQ:BRID) and Tyson Foods, Inc. (NYSE:TSN) are at 17 times. With this high P/E ratio and only a mediocre expected EPS growth rate, Hillshire has a high PEG ratio at 2.2.
At the end of the first quarter, there were a total of 32 hedge funds long the stock. Richard Perry’s Perry Capital has the largest position in Hillshire Brands Co (NYSE:HSH), worth $203 million and comprising 6.5% of its 13F portfolio. Sitting in the second spot is billionaire Ken Griffin of Citadel Investment Group with a $120 million position (check out Griffin’s newest picks).
Over 80% of the company’s stores have commercial delivery programs in place. What’s more is that the company’s acquisition of BWP Distributors will help it to further tap the commercial segment. The acquisition is expected to add roughly $170 million to $180 million in revenue in 2013. The other long-term revenue driver for Advance should be industry tailwinds, where two-thirds of the vehicles on the road are more than seven years old.
At the end of the first quarter, there were a total of 38 hedge funds long the stock. Ricky Sandler’s Eminerce Capital had the most valuable position, worth close to $214.9 million and making up comprising 5.6% of its total 13F portfolio (check out Eminence’s portfolio).
The big news of late for Iron Mountain Incorporated (NYSE:IRM) is its plan to convert to a REIT at the beginning of 2014. The stock currently pays a 2.9% dividend yield. The REIT structure makes sense given that Iron Mountain Incorporated (NYSE:IRM) has an impressive business thanks to its recurring revenue base. The company derives the majority of its revenue from fixed periodic storage-rental fees, where storage rentals accounted for 55% of revenue over the last three years, having grown at a compounded annual growth rate of 5.0% over the same period.
Marshall Hargrave has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Marshall is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article Billionaire Israel Englander Catapults New Stocks originally appeared on Fool.com is written by Marshall Hargrave.
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