Kingstown Capital Files 13D on Aerojet Rocketdyne

Michael Blitzer's hedge fund firm Kingstown Capital has filed a 13D with the SEC regarding shares of Aerojet Rocketdyne (AJRD).  Per the filing, Kingstown now owns 5.5% of the company with 3.5 million shares.

This is up slightly from the 3.4 million shares they owned at the end of the second quarter.  The 13D filing contains the standard boilerplate that they purchased shares because they thought it was undervalued and they may talk to management from time to time.

We've posted previous portfolio activity from Kingstown here.

Per Google Finance, Aerojet Rocketdyne Holdings, Inc., formerly GenCorp, Inc., "is a manufacturer of aerospace and defense products and systems. The Company develops and manufactures propulsion systems for defense and space applications, and armaments for precision tactical and long-range weapon systems applications. It has two operating segments: Aerospace and Defense, and Real Estate. Its Aerospace and Defense segment includes the operations of its subsidiary Aerojet Rocketdyne, Inc., which is engaged in designing, developing and manufacturing aerospace and defense products and systems for the United States Government, including the United States Department of Defense (DoD), the National Aeronautics and Space Administration (NASA), aerospace and defense prime contractors, as well as portions of the commercial sector. Its real estate segment includes activities of its subsidiary Easton Development Company, LLC related to the re-zoning, entitlement, sale, and leasing of its excess real estate assets."

Tiger Veda Starts EADS, Osram Licht Stakes: Q3 Letter

Manish Chopra's hedge fund Tiger Veda initiated a few new positions in the third quarter according to their Q3 letter.  Tiger Veda bought Osram Licht, EADS, and KAR Auctions Services.

Readers might already be familiar with Osram Licht because David Einhorn's hedge fund purchased it as well and mentioned it in Greenlight Capital's Q3 letter which we previously posted.  This lighting manufacturer was spun-off from Siemens and is a restructuring play.

Of their new EADS stake, Tiger Veda writes,

"EADS in France, the manufacturer of Airbus aircraft and various defense businesses, that we expect will grow earnings materially over the next 5 years, due to losses from old products going away, well executed high incremental margin product introductions hitting the tarmac, and a restructuring of the defense businesses post ridding the company (Board) of government supervisors (Directors), as they sold down their equity stakes to undergo an attempt at a transformation towards the profit margins of Boeing."

Chopra also purchased shares of KAR Auctions Services (KAR), a used car auctioneer.  

During the third quarter, Tiger Veda had average gross exposure of 114% and average net exposure of 68%.  Their top five holdings at the end of Q3 were Tribune, Macquarie Infrastructure, Royal Caribbean, Gencorp, and Air Lease.


For more Q3 hedge fund letters, head to:

- Dan Loeb & Third Point's Q3 letter

- David Einhorn & Greenlight Capital's Q3 letter

- Bill Ackman's  (Pershing Square) Q3 letter

- Cobalt Capital thesis on EOG Resources

- Hoplite Capital's Q3 letter

- Corsair Capital's thesis on News Corp

- Ruffer's Q3 letter

Stock Pick Performance From Value Investing Congress Speakers Presenting at September's Event

The Value Investing Congress is only a few weeks away and will take place on September 16th & 17th in New York.  MarketFolly readers can receive discounted admission by clicking here and using code: N13MF7  This code expires tonight so be sure to take advantage.


Performance of Last Year's Picks From Speakers

We thought we'd check in on the performance of the stock picks from last year's Value Investing Congress.  These picks are from speakers who presented last year that will also be presenting again this year.

Here's the performance breakdown from October 3rd, 2012 until August 29th, 2013:

- 17 out of 21 picks outperformed the S&P 500

- Average performance of picks: +49%

- Performance of S&P 500 over same time frame: +13.3%


Jeff Ubben's Picks
Long Valeant Pharmaceuticals (VRX) +77.1%
Long Moody's (MCO): +44.2%
Long CBRE (CBG): +14.3%
Long Motorola Solutions (MSI): +11.7%

He also mentioned these names: Halliburton (HAL): +42.5%, Adobe (ADBE) +41%, & C.R. Bard (BCR): +9.8%


Mick McGuire's Picks
Long Gencorp (GY): +50.5% 
Long Brookfield Residential Properties (BRP): +39.6%

Long Alexander & Baldwin (ALEX): +28.7%


Alex Roepers' Picks
Long Rockwood Holdings (ROC): +34.9%
Long Energizer (ENR): +34%
Long Clariant (CLN VX): +33.9%
Long FLSmidth (FLS DC): -5.7%
Long Joy Global (JOY): -45.1%


Whitney Tilson's Picks
Long Netflix (NFLX): +409.8%
Long Howard Hughes (HHC): +46%
Long Berkshire Hathaway (BRK.A): +26.1%


Guy Gottfried's Picks
Long Canam Group (TSE:CAM): +81.2%
Long ClubLink Enterprises (TSE:CLK): +19.1%


Bob Robotti's Picks
Long Calfrac Well Services (TSE:CFW): +34.8%


As you can see, these managers' picks performed quite well on average.  And don't forget: each one of them will be presenting their new picks at this year's event in a few weeks along with plenty of other new speakers (full list of speakers here).


Hear Ubben, McGuire, Roepers & More Pitch Their Latest Ideas

Find out what stock picks these hedge fund managers will pitch at this year's Value Investing Congress in September.  Market Folly readers can save $800 off admission by registering here and using code: N13MF7  Remember, the code expires tonight!

Mick McGuire's 3 Ideas With Hidden Value: VIC Presentation

Continuing coverage, we're posting up notes from the Value Investing Congress.  Below are notes from the presentation of Mick McGuire of Marcato Capital Management.  His talk was entitled 'Perspectives on Book Value.'

McGuire was named a rising star in 2012 by Institutional Investor and he was previously an analyst at Bill Ackman's Pershing Square before launching his own fund and now manages around $750 million.

He sees a theme of companies owning significant assets which exceed the carrying value on the balance sheet. "Land,"  especially very old land.  Accounting rules, under GAAP, record land at cost, and it is valued at the lower of cost or fair value. It is only adjusted to mark it down, if value drops.  So it is almost never marked up on balance sheets.  So businesses with old holdings have land worth a lot more than they carry them for.

Here are his pitches that are all real-estate themed to some degree:


3 Ideas With Hidden Value

Alexander & Baldwin (ALEX):  One of Hawaii's oldest companies.  Owns commercial real estate in HI and CA.  $30/share, Market Cap $1.3B, EV $1.5B.  Revenue isn't the way to value it. Owns 7.9M sq ft of commercial real estate, and a pipeline of resorts/residential, 75,000 acres of land on Maui and Kauai.  Shows total assets of $1.43 on balance sheet, but only $832M in real estate value.

How to value their properties: Look at comps, or rental cash flow, commercial real estate worth about $442M.  mainland, similarly, get about $500M. So about $900M for real estate, about $22/share, but reduce for corp expense, so net $13.50/share, about 50% of current market value.

Active development projects are in Wailea, Kauai, still owns 100 acres in Wailea, worth about $1M/acre.  Kahului property, and highrise in Honolulu.  Total worth about $294M.   1000 acre master planned community on Kauai, up to 1500 units, selling for $1-4M each.  So JV interests another $400M,  means total, $30.00 of value, same as the share price.

You get the land "free."  What is it worth? They have 20% of Maui, and 15% of Kauai. It's mostly ag land, selling for $27k/acre. They have leased out some of the land, imply value of around $7k/acre. Will take many years to monetize the land, they use 100 years. Low value: $13.72/share to as high as $17.32 per share. Company strategy is to farm the land, waiting for  Total valuation: $43.70 to $47.30, up from $30.00 stock price today.

Q&A:  how about their corporate expenses?  They don't have a good handle on where it should be relative to where it is. "it's not an agenda item with me."  He says they've provided a lot of information to investors. 


Gencorp (GY):  Missile and rocket supply maker. $600M market cap. 11.5% FCF yield to the equity. Non core real estate holdings: carries it at $64.4M.   They said they are the largest shareholder.

Q&A:  What is the catalyst?  Says new CEO, attacked cost structure and capital structure complexity.  One questioner said they had about $300M in environmental claims.


Brookfield Residential Properties (BRP):Trading at $14.39, like ALEX, its value depends on how fast they monetize their land holdings.  62% of their balance sheet is raw land.  Yet they are considered a homebuilder.

"Positive carry call option on inevitable US housing recovery." Concerns about Toronto and Vancouver, which are priced at 6.5x and 8.9x median HH income, like the US was before the collapse.

When they value all the assets, they get approximately $2.2B of TBV, 58% increase in value, or stock move of around $44-55 per share, around 3x current share price!  No analysts covering the stock.

Q&A: Catalyst?  Analyst coverage would help.


Embedded below is McGuire's slideshow presentation from the Value Investing Congress:




Be sure to check out the rest of the hedge fund presentations from the Value Investing Congress.