William Harnisch founded Peconic Partners in 2000 after 22 years at Fosrtmann-Leff Associates, where he eventually became President and CEO. We track Peconic’s quarterly 13F filings alongside those of hundreds of hedge funds and other notable investors, having learned that the information in these filings can be useful in developing investment strategies (for example, we have found that the most popular small cap stocks among hedge funds outperform the S&P 500 by an average of 18 percentage points per year). Investors can also look through top stock picks from individual investors in an attempt to identify potentially cheap names for further research. Read on for our quick take on Peconic’s five largest holdings by market value as of the end of March or see the full list of Harnisch’s stock picks.
The fund reported a position of 2.1 million shares in MasTec, Inc. (NYSE:MTZ), a $2.6 billion market cap construction company specializing in energy and power infrastructure. Mastec’s stock price has more than doubled in the last year, as markets expect demand to grow; pipelines, for example, will be built to serve the burgeoning natural gas industry. Revenue and earnings were each up over 20% in the first quarter of 2013 versus a year earlier, and while markets have priced in some growth Wall Street analysts are still bullish; their forecasts imply a five-year PEG ratio of 0.7.
Movie theater operator Regal Entertainment Group (NYSE:RGC) was another of Harnisch’s top picks with the filing disclosing ownership of 2.9 million shares. Conditions have not been good for Regal Entertainment Group (NYSE:RGC), going by recent reports, and with the stock trading at 25 times trailing earnings many market players seem to believe that it is too expensive: according to the most recent data, 20% of the float is held short. The stock pays a 21 cent quarterly dividend, making for an annual yield of 4.4% at current prices, though income investors should still be concerned about its valuation.
Peconic owned 1.7 million shares of Quanta Services Inc (NYSE:PWR), another company focused on building energy and power infrastructure, at the beginning of April. Recent growth numbers have been strong here, as they have been at Mastec, but both investors and the sell-side appear to have lower expectations for its future earnings as the stock trades at “only” 18 times trailing earnings with the forward multiple being only slightly lower. Billionaire Israel Englander’s Millennium Management had 1.1 million shares of Quanta in its portfolio according to that fund’s own 13F (find Englander’s favorite stocks).