General Motors Company (GM), MGM Resorts International (MGM), Citigroup Inc (C): Covalent Capital Partners’ Top Picks Heading Into 2015

PulteGroup, Inc. (NYSE:PHM) has moved from fifth to third in Covalent’s portfolio in terms of value, and now represents a much larger share of the portfolio despite a negligible increase of less than 1% during the quarter to 1.68 million shares. The thanks for that is due to a strong fourth quarter performance from the stock, is it increased 21.5% over the final 3 months of 2014, and has continued that trend into 2015, up a beastly 6.66% year-to-date.

The most recent charge, at the end of January, came after PulteGroup, Inc. (NYSE:PHM) released strong fourth quarter results, with earnings of $217.1 million, or $0.58 per share, on revenue of $1.82 billion, which was up 10.1% from a year ago. Analysts had expected revenue of earnings of just $0.40 per share on revenue of $1.76 billion.

PulteGroup, Inc. (NYSE:PHM) is one of the largest homebuilders in the U.S, and operates a number of different brands, including Pulte Homes, Centex (which it bought in 2009), and Del Webb, as well as its own home financing arm, Pulte Mortgage.

Citigroup Inc (NYSE:C) slides from the top of Covalent’s portfolio down to fourth, as the fund shed 118,345 shares during the quarter, 15% of its position to leave it with 625,497 shares. It is not the only fund fleeing from Citi, as David Tepper’s Appaloosa Management sold its entire 8.32 million share position in the investment bank last quarter.

Citigroup Inc (NYSE:C) recently settled the litigation case brought against both it and investment banks Goldman Sachs Group Inc. (NYSE:GS) and UBS AG (NYSE:UBS) by a group of investors, by agreeing to pay $235 million. It was alleged the banks made efforts to conceal the risks of mortgage securities sold by the now-defunct Residential Capital LLC. Citigroup is further embroiled in another lawsuit alleging price fixing on the foreign currency exchange market between it and other banks, including Goldman Sachs and Bank of America Corp (NYSE:BAC). JPMorgan Chase & Co. (NYSE:JPM) has already settled in that case, for $100 million.

Citigroup Inc (NYSE:C) faces a crucial moment in the coming weeks, as the Federal Reserve prepares to release its annual bank stress test, one that Citi failed to pass last year (the only bank with that dubious distinction). Failing again would mean a continued inability to pay shareholder dividends and buyback shares, among other things, which has kept its stock depressed for the past year.