Third Point released its quarterly 13F filing with the SEC on May 15th. Applying Wall Street estimates and valuation models, I highlight the firm’s most undervalued stocks below.
Third Point’s Most Undervalued Holdings
To determine which stocks are trading below their intrinsic value, aka “fair value” I used the finbox.io Fair Value estimates. I also wanted to blend in some indication of which stocks might be ready to make a move up soon because they’re popular with Wall Street analysts.
I calculated an average using the finbox.io fair value upside and analyst upside to create a blended upside which I then used to rank the most undervalued holdings.
Here are the top 7 stocks based on my calculations:
|Ticker||Name||Upside (finbox.io)||Upside (Analyst Target)||Blend Upside|
|PAM||PAMPA ENERGIA S A||89.9%||84.3%||87.1%|
|SUPV||GRUPO SUPERVIELLE S A||26.0%||104.6%||65.3%|
|GGAL||GRUPO FINANCIERO GALICIA S A||64.1%||62.9%||63.5%|
|GRBK||GREEN BRICK PARTNERS INC||28.8%||42.9%||35.8%|
|MPC||MARATHON PETE CORP||25.1%||27.2%||26.2%|
|MHK||MOHAWK INDS INC||9.8%||32.2%||21.0%|
Pampa Energia S.A. (NYSE: PAM) appears to be the most undervalued stock in the fund. The company has a blended upside of 87.1% relative to its current trading price. Value investors may want to take a deeper dive into the valuation of the company.
Grupo Supervielle S.A. (NYSE: SUPV) appears to be the second most undervalued stock in the portfolio. The company’s blended upside of 65.3% is very intriguing. With 63.5% margin of safety, Grupo Financiero Galicia S.A. (NASDAQ: GGAL) is the third most attractively priced security.
Other notable holdings with nice upside potential includes Green Brick Partners, Inc.(NASDAQ: GRBK), Marathon Petroleum Corporation (NYSE: MPC), Mohawk Industries, Inc.(NYSE: MHK) and Anthem, Inc. (NYSE: ANTM).
Daniel Loeb has made a name for himself generating impressive, and consistent, returns over the last two decades. In the process he has amassed a fortune of $3.2 billion, putting him at number 240 on the Forbes 400 list.
Loeb founded Third Point in 1995 that now runs two hedge funds. He started the company with $3.3 million from family and friends, in office space borrowed from David Tepper’s Appaloosa Capital. The Third Point Offshore Limited fund has generated annual returns of 15.8% since inception (1996) while the Ultra Limited fund has generated returns of 23.7% since its inception in 1997. This compares favorably to the S&P500 which has averaged less than 8% per year since 1997.
His investment style involves shareholder activism meaning he invites controversy. Loeb, therefore, finds himself in the media often and is not afraid to get into public arguments with those he disagrees with. Warren Buffett, George Clooney, the CEOs of Sony and Yahoo, and fellow activist investor Bill Ackman have all found themselves on the receiving end of his verbal attacks.
Managers with more than $100 million in qualifying assets under management are required to disclose their holdings to the SEC each quarter via 13F filings. Qualifying assets include long positions in U.S. equities and ADRs, call/put options, and convertible debt securities. Shorts, cash positions, foreign investments and other assets are not included. It is important to note that these filings are due 45 days after the quarter end date. Therefore, Third Point’s holdings above represent positions held as of March 31st and not necessarily reflective of the fund’s current stock holdings.
However, most can agree that with thousands of stocks traded on U.S. exchanges, doing thorough research on each one is nearly impossible for smaller investors. Leveraging the resources of the largest hedge funds on Wall Street can be a powerful way to narrow down the list.
The ideas section of finbox.io tracks top investors and trending investment themes. You can get the latest data on the holdings discussed above at the Third Point page.
As of this writing, I did not hold a position in any of the aforementioned securities and this is not a buy or sell recommendation on any security mentioned.