Whitney Tilson (Trades, Portfolio), currently well-known for his short of embattled Lumber Liquidators (LL, Financial), sold off one of his holdings and didn’t initiate any new positions during the first three months of 2015, according to GuruFocus Real Time Picks.
Tilson is the founder and managing partner of Kase Capital Management, which manages three hedge funds. He also co-founded an investment newsletter called Value Investor Insight, as well as a bi-annual investing conference called Value Investing Congress.
During the first quarter, the fund gained 0.5%, outperforming the S&P 500’s loss of 1.6%. Year-to-date, the fund returned 2.5% compared to the S&P 500’s 1%.
Sold out
American International Group (AIG, Financial)
Tilson’s only divestiture of the quarter was 61,900 shares in AIG sold for an average price of $53.62 per share. As AIG’s stock price gradually increased, Tilson trimmed his position. The graph below maps his holding history.
AIG provides property casualty insurance, life insurance, retirement products, and other financial services to clients in more than 130 countries.
In 2014, AIG’s net income was reported at $7,529 million, down from $9,085 million the previous year.
The current dividend yield is 0.9%, while the payout ratio is 10%. Mario Gabelli (Trades, Portfolio) and Ken Fisher (Trades, Portfolio) currently hold positions in AIG as of the end of the first quarter.
Add
Tilson increased his position in 10 stocks during the quarter, with the two largest being Platform Specialty Products and Air Products & Chemicals
Platform Specialty Products (PAH, Financial)
Tilson upped his stake in Platform Specialty Products by 79,075 shares, purchased for an average price of $24.06 per share. The total position now has 271,140 shares.
The company manufactures a variety of specialty chemicals for the electronics, metal and plastic plating, and oil and drilling industries. The stock price has increased 39% over the past year; the current price is $27.04 with a forward P/E ratio of 12.29 and P/S ratio of 4.33.
In 2014, net income posted a loss of $29.9 million, compared to income of $46 million the year before. The operating margin also drastically declined from 15.74% in 2013 to 1.13% in 2014.
Air Products & Chemicals (APD, Financial)
Tilson also added 4,046 shares to his holding in Air Products & Chemicals for a total of 29,728 shares. The new shares were bought for an average price of $149.55 per share.
The company serves the technology, energy, industrial, and healthcare sectors with products that include atmospheric gases, performance materials, and specialty gases.
The stock increased 22% over the past year and currently trades at $146.21. The stock is overvalued when comparing the price to the Peter Lynch earnings line.
GuruFocus rates Air Products’ business predictability as 3.5 out of 5 stars. The DCF calculator also estimates the stock is overvalued, calculating a fair price of $52.25. The margin is safety is -180%.
Over the past five years, EBIT per share has declined 1.77%, recording at $6.17 in FY 2014.
The current dividend yield is 2.1%, which is close to the five-year low, while the payout ratio is 65%.
Reduce
The investor trimmed his position in 5 stocks; the two largest were Avis Budget Group and Delta Air Lines.
Avis Budget Group (CAR, Financial)
Tilson sold 1,422 shares of his holding in rental car company Avis for an average price of $61.02 per share. The holding now consists of 71,971 shares.
Avis currently trades at $53.56, with a P/E ratio of 25 and P/S ratio of 0.68. The stock price has fluctuated much over the past year, declining by just 1%.
The company reported EBIT per share of $8.84 in 2014, which has increased steadily since 2007.
Avis has a healthy balance sheet with a current ratio over one; however, long-term debt has been increasing over the years and recorded at $11,508 million in 2014.
Delta Air Lines (DAL, Financial)
Tilson trimmed his stake in Delta Air Lines by 1,614 shares, selling them for an average $46.38 per share. The position now has 81,950 shares.
Delta’s stock has risen 19% over the past year and currently trades at $45.62 with a P/E ratio of 31.6 and P/S ratio of 0.9.
Net income declined dramatically in 2014 to $659 million, down from $10,540 million the year before. The graph below shows the net income trend over time.
Looking at the balance sheet, Delta’s current liabilities outweigh current assets, meaning the company cannot cover its short-term obligations. The dividend yield is 0.8%, while the payout ratio 23%.
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