Valueact Surges Stake in Dresser-Rand Group Inc. (DRC)

Jeffrey Ubben is bullish on Dresser-Rand Group Inc. (NYSE:DRC). In a recent filing with the Securities and Exchange Commission, his fund, Valueact Capital, has reported a massive increase in their stake: to around 5 million shares from 658,200 shares. The new position accounts for 6.6% of the company’s shares outstanding.

VALUEACT CAPITAL

David Cohen and Harold Levy, the managers of Iridian Asset Management, are also betting on Dresser-Rand Group Inc. (NYSE:DRC), having recently upped their stake from 4.6 million to 5.6 million shares. Phill Gross and Robert Atchinson are also very bullish on this stock and upped the stake by over 200% during the last quarter of 2013. Adage Capital Management now holds 1.5 million shares reportedly worth $90.5 million. Jason Capello‘s Merchants’ Gate Capital has also increased its investment in Dresser-Rand to 925,000 shares valued at $55.1 million.

Dresser-Rand Group Inc. (NYSE:DRC) is a producer of engineered rotating equipment for a variety of industries worldwide. The company has a market cap of $4.1 billion and does not pay a dividend. Following the 2008 credit crunch, the stock had been in an uptrend until the middle of 2013 when it reached an all-time high of $67.38. The price has been falling ever since and is currently approximately $54.50 per share. The stock is traded at a trailing Price to Earnings (P/E) ratio of 19.3, which is inline with the industry average of 18.8.

The company is set to announce 2013 fourth quarter financial results on March 12. Analysts expect revenues of $1.1 billion and earnings per share (EPS) of $1.31. Dresser-Rand Group Inc. (NYSE:DRC) was recently downgraded by Morgan Stanley to “equal-weight” and with a price target of $57. Raymond James has also downgraded this stock, citing lower than expected 2014 guidance.

Disclosure: none.

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