Eclectic Mix of Stocks Added to WCG Management’s Portfolio

Canadian Pacific Railway Limited (USA) (NYSE:CP)

– Number of shares held by WCG Management as of March 31: 48,439

– Value of WCG’s holding as of March 31: $6.45 Million

WCG Management also purchased a new stake in Canadian Pacific Railway Limited (USA) (NYSE:CP), comprised of 48,439 shares valued at $6.45 million at the end of March. The Canada’s second-largest railway operator was the third-largest equity holding in WCG’s equity portfolio at the end of the first quarter, accounting for 7.78% of the fund’s portfolio. Canadian Pacific Railway recently revealed plans to drop its merger efforts with regard to Norfolk Southern Corp. (NYSE:NSC), citing fierce opposition from rival railroad operators, shippers and the U.S. Justice Department. Instead, the company’s Board authorized a buyback program of up to 6.91 million shares, which represents roughly 5% of the company’s outstanding common stock. Moreover, the Board also authorized an increase in the company’s quarterly dividend to $0.50 per share from a significantly lower dividend of $0.35 per share. Canadian Pacific also reputed plans to engage in mergers and acquisitions activities, saying that M&A activity is “dead” for now. The Canadian railway operator has seen its shares gain 13% year-to-date. According to a fresh 13D filing, Bill Ackman’s Pershing Square owns 9.84 million shares of Canadian Pacific Railway Limited (USA) (NYSE:CP), which account for 6.40% of the company’s shares.

ConocoPhillips (NYSE:COP)

– Number of shares held by WCG Management as of March 31: 190,000

– Value of WCG’s holding as of March 31: $7.64 Million

WCG Management also turned bullish on ConocoPhillips (NYSE:COP) in the first quarter of 2016, as the fund acquired a new stake of 190,000 shares of the company. The 190,000-share position was valued at $7.64 million on March 31 and accounted for 9.23% of the fund’s equity portfolio. The world’s largest independent exploration and production (E&P) company was recently downgraded to ‘Underperform’ from ‘Hold’ at Jefferies, which said the stock “is now trading 27% above our target price of $37”. Moreover, analysts at Jefferies asserted that ConocoPhillips has a three-turn premium to the sector’s average P/E by 2018, which simply implies that the company’s stock is three times more expensive than the shares of other peers that will be generating similar bottom-line figures in 2018. Shares of ConocoPhillips are up 30% in the past three months, but are still down nearly 1% year-to-date. In February, the company announced a reduction of its quarterly dividend payment to $0.25 per share from $0.74 per share, in an attempt to preserve balance sheet strength. Russell Lucas’ Lucas Capital Management owns 38,736 shares of ConocoPhillips (NYSE:COP) as of March 31.

Disclosure: None