Rehan Jaffer’s H Partners Management disclosed today that its stake in Remy International Inc (NASDAQ:REMY) now has an activist nature. According to the Schedule 13D form filed with the SEC, the fund owns more than 2.8 million shares of Common Stock, which account for 8.75% of the company’s shares outstanding as of September 9, 2014.
H Partners Management is an independent investment firm founded by Rehan Jaffer in 2005 and based in New York City; it manages more than $1 billion in assets. Jaffer is an activist value investor that acquired his taste –and eye- for activist investing while working at Dan Loeb’s Third Point. In fact, Mr. Loeb himself once said: Jaffer “is super-hungry. He’s got a good nose. He’s very intelligent. So he’s got a great combination of having a high IQ, really strong financial analytics, a great nose for value, and great trader sense” (Hedge Hunters).
Remy International Inc (NASDAQ:REMY) is $602.15 million market cap global vehicular parts designer, manufacturer, remanufacturer, marketer and distributor of aftermarket and original equipment electrical components for automobiles, light trucks, heavy-duty trucks and other vehicles. After losing 19.5% year-to-date, its stock trades at barely 12.8 times the company’s earnings, at a 20% discount to its peers’ average valuation. In addition, it boasts a 2.12% dividend yield.
Despite a 6% reduction in its exposure to Remy International Inc (NASDAQ:REMY) over the second quarter of 2014, H Partners Management still seems quite bullish on the company, remaining as the largest institutional shareholder, amongst those we track, by a wide margin. Second in line is Jeffrey Bronchick’s Cove Street Capital, with more than half a million shares, worth over $12 million by the end of the second quarter. Jeffrey Moskowitz’s Harvey Partners also seems pretty confident about this auto-parts company’s future. The fund started a position with 232,500 shares over the second quarter of the year.
But you might wonder, why follow Mr. Jaffer’s pick? I should highlight that H Partners Management’s equity portfolio, worth more than $1.2 billion, only comprises five stocks. This means that the team has went though a lot of work and research to select them. Although all of the stocks in its portfolio are down year-to-date, you should not discard a turnaround –which is what the fund is betting on. In fact, analysts expect Remy International Inc (NASDAQ:REMY) to deliver average annual EPS growth rates around 14% over the next five years, outperforming both its industry peers and the broader market.
Disclosure: Javier Hasse holds no positions in any stocks or funds mentioned
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