Kyle Bass adds OXY, OCN and KS to Portfolio

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Feb 18, 2015
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Kyle Bass (Trades, Portfolio) grew up lower-middle class in Miami, FL. in which his parents lived from paycheck to paycheck, so he never learned firsthand what it meant to invest and save money. However, he took an interest in it when he was in college at Texas Christian University, where he took the class as an elective to his math and science courses. He originally wanted to get into medicine, but changed his major after the world of finance and investing began to intrigue him the more he learned.

Bass is now the founder and principal of Hayman Capital Management, which has always been his ultimate goal.

His portfolio now consists of 8 stocks, valued at $325 million with a quarter over quarter turnover rate of 21%.

It's no surprise that 60% of his portfolio consists of stocks in the financial services sector, since he expressed his interest in finance when he was a teenager in college.

Here's a look at his newest buys:

Ocwen Financial Corp (OCN, Financial)

Bass purchased 3,263,374 shares of OCN at an average price of $21.65/share. OCN consists of 15.2% of his overall portfolio.

Ocwen Financial Corp was organized in 1988 in Florida as a financial services holding company that is engaged in the servicing and origination of mortgage loans.

The stock is currently trading at $9.10 and the intrinsic value calculator gives the stock a fair value of $17.41, with a 48% margin of safety, which indicates this stock may be undervalued. We give the company a Business Predictability rating of 2 stars out of 5. Businesses with a 2 star rating typically have an overall gain of 6% per year.

Over the past 12 months, the average Revenue per Share Growth Rate was 30.70% per year and over the past five years, Growth Rate was 31.90% per year, which shows the company has predictable revenue and earnings growth. The current P/S ratio is 0.57.

KapStone Paper and Packaging Corp (KS, Financial)

Bass purchased 564,377 shares of KS at an average price of $29.12/share, which now consists of 5.1% of his overall portfolio.

KapStone Paper, formerly known as Stone Arcade Acquisiton Corporation, was created in Delaware in 2005 as a company that produces and sells different unbleached kraft, linerboard, saturating kraft and unbleached folding carton board.

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The stock is currently trading at $32.65/share, although the Peter Lynch earnings line values the stock at $31.30, indicating the stock may be overvalued.

As of today, the current earnings per share is $1.51 and KapStone's P/E ratio is 21.62.

Over the past 12 months, Revenue per Share has been $18.99 and the Growth Rate was 47.60% for the year; however, over the past five years, the Growth rate was -2.60%, which is due to the fact that revenue has been declining for the past five years.

Occidental Petroleum Corp (OXY, Financial)

25,000 shares of OXY were purchased during 4Q2014 at an average price of $83.10/share. OXY consists of 0.62% of the overall portfolio.

Occidental Petroleum conducts business through three different segments: oil and gas, chemical and midstream, marketing and other segment, which gathers, processes, stores, purchases and markets oil, condensate, natural gas, NGLs. CO2 and power.

According to the intrinsic vaue calculator, OXY's fair value is $77.71, with a margin of safety of -6%, which indicates the stock may be undervalued since it is currently trading at $81.89/share.

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The company's dividend yield is 3.50%, which is close to its 10-year high and the payout ratio is 39%, which indicates the dividend may be sustainable. Shareholders will receive their next payout on April 15 of $0.72 a share. The five-year growth rate is 18.80%, ranking the company higher than 93% of the other companies in the Oil & Gas E&P industry.

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