Three Big Buys by Kyle Bass in the Fourth Quarter: Huntsman Corporation (HUN), Tempur-Pedic International Inc. (TPX)

Page 1 of 2

Earnings Analysis: Huntsman Corp. (NYSE: HUN)Kyle Bass is known for successfully playing the right cards in the sub-prime market crisis in 2007, which gave his fund an enormous return of 216% in that year. Since then, he has become a notable figure closely observed by many investors. His expertise is on examining debt levels; his hedge fund has in fact turned into a “debt analysis think-tank.”  His theses on Japan and several Euro-zone economies were said to be rooted from the skills he acquired through a decade-long career on Wall Street. Thus, even with a reported dip of his Japan Macro Fund last year, Kyle Bass’ positions are worth a good look as these can point to a mix of stocks that one can consider.

Mr. Bass’ Hayman Capital Management had a total of $160 million assets under management as of the end of December 2012. It had sold 3 stocks out and bought 10 new ones.  The biggest buys were Huntsman Corporation (NYSE:HUN), Nationstar Mortgage Holdings Inc. (NYSE: NSM), and Tempur-Pedic International Inc. (NYSE:TPX). Although this article does not show the actual performance of the stocks when Hayman made the purchase, because we do not know for sure when that happened, we can still get an idea by analyzing its current performance. By looking at how the stock has done so far since the quarter of purchase, it provides a strong basis for whether the fund manager had picked the right stock or not.

Sources: www.finviz.com, www.whalewisdom.com and www.nasdaq.com; Data retrieved Feb. 26, 2013

Huntsman

Hayman Capital had just put chemicals-maker Huntsman Corporation (NYSE:HUN) on top of its portfolio with a new position of over 1.380 million shares, representing 13.68% of its total portfolio. Despite the recent negative growth in its revenues, Huntsman Corporation (NYSE:HUN) has either met or exceeded consensus estimates in terms of earnings in all quarters of 2012; the company boasts an ROE of 20.55%. Indicators of its valuation can easily lure investors. Its P/E ratio is 11.07, while its forward P/E is only 7.08. On the other hand, its high debt-equity ratio, at 1.955, can become a concern if the revenue continues to plummet. On a positive note, however, the quarterly debt-equity ratio is on a declining trend.  Meanwhile, Huntsman Corporation (NYSE:HUN) maintains a good record of paying stable dividend income; it recently increased the quarterly amount from $0.10 to $0.125 per share in the first quarter of 2013. The company had just moved up in market cap rank, with $4.04 billion, passing Patterson Companies, which has a current market cap of $4.02 billion.

Nationstar Mortgage Holdings

The asset management firm initiated a position in Nationstar Mortgage worth over $21.293 million, which is equivalent to 13.26% of its portfolio. The company exhibits high profitability with its net margin (ttm) of 20.63% and ROE of 32.72%. The current margin is way above the historical rate of below 10%. In fact, the company has consistently performed a positive earnings surprise in the last 3 consecutive quarters. Furthermore, NSM has a P/E ratio of 19.76 and a forward ratio of only 9.45. Meanwhile, quarterly revenue has expanded enormously by 204.83% year-over-year. In terms of debt, the company heavily relies on borrowings, with its debt-equity ratio of 5.35. But I must say that Mr. Bass had correctly picked NSM based on the fact that the stock price has been slowly moving above the $35 mark since the year started.

Page 1 of 2
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

10 Best States To Practice Medicine

The 10 Best States to Have a Business

The 12 Most Expensive Apple (AAPL) Apps in the Market

The 10 Richest Billionaires in the World

10 Biggest Kickstarter Failures

The 10 Best Places to Work At

The Top 10 of Google Inc (GOOGL)’s Most Expensive Acquisitions

13 Best Cities to Visit in South America

10 Most Expensive Works of Art of All Time

The 10 Richest Banks in the World

The 10 Best-Paying Jobs in America (2014)

7 Most Expensive Foods in the World

The World’s Top 10 Earning Authors

Five Wicked and Very Expensive Items (and Other “Stuff”) Sold on eBay

10 Biggest Celebrity Bankruptcies

The Top 10 Highest Paid CEOs in 2014

The 10 Most Expensive Real Estate Cities in America

10 Most Expensive States To Live In America

The 10 Best Airlines in the World

The 10 Best-Selling Cars in 2014

The 10 Best Industries to Invest In

The 10 Most Expensive States to Own a Car In

Top 10 Business Schools in US: 2014 Rankings

Top 20 Female Billionaires in 2014

6 Movies That You Should Watch to Better Understand The Cold War

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top 6 Tax Scams and How to Protect Yourself

Top Businesses to Invest In

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!