Steve Cohen's SAC Capital Adds to Shaw Group (SHAW) Position

Steve Cohen's hedge fund firm SAC Capital recently filed a 13G with the SEC regarding its position in Shaw Group (SHAW).  Per the filing, the hedge fund now owns 5% of the company with 3,317,912 shares.

This marks almost a 260% increase in their position size since the end of the first quarter.  At the end of March, SAC Capital owned 922,431 common shares of SHAW but also owned 100,000 via call options as disclosed in their 13F filed with the SEC.


Other Hedge Funds Involved

Some readers may recall that we've featured Shaw Group on the site before as Jay Petschek and Steven Major's hedge fund Corsair Capital have been long.  Additionally, in February we highlighted when Dmitry Balyasny's hedge fund firm Balyasny Asset Management took a big stake in the company too.


Investment Thesis on Shaw

In the past, we've featured Corsair's investment thesis on Shaw if you want to know the rationale behind owning the name.

And then more recently, we've posted the firm's update on their stake excerpted from Corsair's Q1 letter where they wrote:


"two of its main customers received the final requisite Nuclear Regulatory Commission licensing to construct two new nuclear power plants and the EPA's increased environmental standards drove power plant maintenance contract wins.  The company also reported a strong fiscal Q2 and the upcoming divestiture of the Energy and Chemicals division in the next few months should create additional shareholder value.  We estimate that SHAW could earn $3.00/share in FY 2013, which would increase its net cash position to over $17.00/share."

Per Google Finance, Shaw Group is "a provider of technology, engineering, procurement, construction, maintenance, fabrication, manufacturing, consulting, remediation and facilities management services to a diverse client base that includes multinational and national oil companies and industrial corporations, regulated utilities, independent and merchant power producers, and government agencies. The Company has developed and acquired intellectual property, including downstream petrochemical technologies, induction pipe bending technology and environmental decontamination technologies."


For more on Steve Cohen's firm, we've posted SAC Capital's recent activity here.

Corsair Capital Provides Updates on Their Positions: Q1 Letter

Jay Petschek and Steven Major's hedge fund Corsair Capital is out with their Q1 letter and in it they detail updates on their investments in: LyondellBasell (LYB), Shaw Group (SHAW), Republic Airways (RJET), Neo Material Technologies (NEM) and TNS (TNS).

Given that LYB has been owned by numerous hedge funds, we wanted to highlight their commentary:

LyondellBasell (LYB) - "Though the company reported a weak Q4 as expected, the market anticipates record-low gas prices will continue to suppress ethane prices, one of LYB's main input costs, thereby supporting high ethylene margins.  If current ethane prices are sustainable, the industry could enter a 'super-cycle' where LYB would show earnings previously not thought possible.  The company also took advantage of the current strong credit markets and refinanced $3 billion of debt, benefitting by both extending maturities and lowering interest payments."


Also, the fund addressed their position in Shaw Group (SHAW): "two of its main customers received the final requisite Nuclear Regulatory Commission licensing to construct two new nuclear power plants and the EPA's increased environmental standards drove power plant maintenance contract wins.  The company also reported a strong fiscal Q2 and the upcoming divestiture of the Energy and Chemicals division in the next few months should create additional shareholder value.  We estimate that SHAW could earn $3.00/share in FY 2013, which would increase its net cash position to over $17.00/share."

We've previously posted up Corsair's investment thesis on Shaw Industries for further color.



Embedded below is Corsair Capital's Q1 letter:



Later this morning we also posted up Corsair's investment thesis on SunCoke Energy.

Balyasny Asset Management Starts Shaw Group (SHAW) Position

Dmitry Balyasny's hedge fund firm Balyasny Asset Management just filed a 13G with the SEC regarding shares of Shaw Group (SHAW). Per the filing, they now own 5.5% of SHAW with 3,583,894 shares.

This is a brand new position for the hedge fund firm as they did not own shares as of the close of the third quarter. Their 13G filing was made due to trading activity that breached the regulatory threshold on January 19th, 2012.

Per Google Finance, Shaw Group is " is a provider of technology, engineering, procurement, construction, maintenance, fabrication, manufacturing, consulting, remediation and facilities management services to a diverse client base that includes multinational and national oil companies and industrial corporations, regulated utilities, independent and merchant power producers, and government agencies."

Corsair Capital's Investment Thesis on Shaw Group (SHAW)

Jay Petschek and Steven Major's $749 million hedge fund Corsair Capital recently sent their third quarter letter to investors and attached a write-up of their new position in Shaw Group (SHAW). Below you'll find their investment thesis.

The hedge fund bought SHAW as shares have tumbled due to the nuclear disaster in Japan. SHAW currently trades just under $22 per share and Corsair writes,

"We believe SHAW is worth $37-$43 per share and will trade near that level over the next year. Several catalysts will drive the stock higher including reporting a simplified and cash-rich balance sheet, executing a buyback worth 30% of the current market cap (the 2nd such program in calendar year 2011), and earnings growth in FY 2012."

They also believe that if those various catalysts do not result in the stock trading higher, Shaw Group could potentially be a compelling takeover target for competitors who could use stock to finance the acquisition.

Embedded below is the letter. Email readers please click to come read Corsair's thesis on Shaw Group:



For more on Corsair, we covered their past letter where they anticipated increased market volatility as well as their investment thesis on Innophos.

Hedge Fund Activity / 13F

(Just FYI: This post marks the first of a series I will be doing this week that details what the "smart money" has been up to lately.)

Four times a year, hedge funds & asset managers with > $100 million AUM (assets under management) are required to report to the SEC their holdings from the previous quarter. I check these 13F filings quarterly just to get a sense as to where these funds are putting their money sector wise. If you just sit down and do some simple number crunching between last quarter's 13F and this quarter's 13F, you can see exactly where these funds have been moving their money.

Now, these 13F's should be treated as a lagging indicator simply because the 13F's that were just released May 15th 2008 show the funds' holdings as of March 31st 2008. So, in the past month and a half, they could have completely changed their portfolio. But, at the same time, its easy to see which sectors they are flocking to.

I like to specifically follow value based hedge funds in the hope that they won't experience ridiculously high turnover and thus allowing me to track their sector rotations. Specifically, I follow the Tiger Cubs (otherwise known as the proteges of former Tiger Management legend Julian Robertson). Many of these former proteges/right hand men have started their own funds and here are the ones I've been following:

- Blue Ridge Capital (John Griffin)
- Lone Pine Capital (Steve Mandel)
- Maverick Capital (Lee Ainslie)
- Viking Global (Andreas Halvorsen)

Additionally, I also like to follow the Commodities Corporation "offspring" which typically employ a global macro strategy.

- Tudor Investment Corp (Paul Tudor Jones)
- Moore Capital (Louis Bacon)
- Caxton Associates (Bruce Kovner)

So, I follow a core of value funds in depth and then I also follow a core of global macro funds in depth. Over the next week, I will be going into detail as to what those specific funds were up to this past quarter. Additionally, I like to follow other "whales" and funds that are not necessarily value based, but are still top performers on Wall Street. I won't be going into detail on some of these names, but I will provide some very useful links that give a broad overview of what some of these whales have been buying/selling. Because, after all, you've got to at least keep tabs on what these guys are doing:

- Warren Buffett (obviously)
- Carl Icahn (rabblerousing at its best)
- RBS Partners (Eddie Lampert)

Then, of course, there are some just straight up beastly funds which you have to keep an eye on due to their awesome returns over the years:

- Atticus Capital (Timothy Barakett)
- BP Capital (Boone Pickens)
- Greenlight Capital (David Einhorn)
- Paulson & Co (John Paulson)
- D.E. Shaw & Co (David E. Shaw)
- Jana Partners (Barry Rosenstein)

And, lastly, a few deep value & activist funds.

- Third Point (Daniel Loeb)
- Pershing Square (Bill Ackman)
- Okumus Capital (Ahmet Okumus)
- T2 Partners (Whitney Tilson)
- Tontine Partners (Jeffrey Gendell)

So, over the coming week I'll touch on some important position moves some of these funds/whales have made (new positions, removed positions, etc). And, specifically, I'll be looking in depth at some of my favorite funds on a quarter by quarter comparison. Here are the links to my in-depth analyses of said funds.

- Blue Ridge Capital
- Lone Pine Capital
- Maverick Capital
- BP Capital
- Atticus Capital