Dinakar Singh: Long Yutong Bus Company at Sohn London Conference

We're posting up notes from the Sohn London Investment Conference 2015.  Next up is TPG-Axon Capital's Dinakar Singh.  He pitched a long of Yutong Bus Company (SHA:600066).


Dinakar Singh's Sohn London 2015 Presentation

Long Yutong Bus Company (SHA: 600066)

Yutong Bus Company’s main products are school coaches, enterprise shuttle buses, caravans, motor homes. Margins are improving. Expect revenues to grow 10-15% in coming years.

Dinakar Singh said that he would much rather invest in Chinese capital goods companies than in their European counterparts that have very high valuations.


Be sure to check out the rest of the Sohn London Conference presentations.

Dinakar Singh's Sohn Canada Presentation: Long Hitachi & India Private Banks

We're posting up notes from the Sohn Canada Investment Conference 2015 (Capitalize For Kids.)  Next up is Dinakar Singh from TPG Axon.  He pitched two long ideas: Hitachi and India private banks (Yes Bank and Axis Bank).

Dinakar Singh's Sohn Canada Presentation

-    Currently seeing problem markets rather than problem world
-    Services are doing well and manufacturing is doing poorly
-    Zero capex growth in 1990’s, may see this happen again
-    See opportunities in Japan (through restructurings) and India (earnings growth)
-    Long Hitachi: see operating margins improving from 6.5% to 10%, 8x PE, see going to 14x in line with industry
-    Long India private banks (Yes Bank and Axis Bank): bank sector restructuring, consumer growth, cyclical recovery, dramatic growth for private banks


Be sure to check out the rest of the presentations from the Capitalize For Kids Conference.

TPG-Axon Capital Files 13D & 13G on SandRidge Energy Stake

Dinakar Singh's hedge fund firm TPG-Axon Capital has filed a 13D and then 13G with the SEC regarding their stake in SandRidge Energy (SD).

Per the 13G filing, the firm owns about 32 million shares, or 6.5% of the company: 4.1% via common stock and 2.4% economic on basket swap.  The firm executed a swap to realize certain gains/losses for tax planning.

This is a reduction in their position size, as they previously disclosed ownership of over 39 million shares at the end of the third quarter (via their last 13F filing with the SEC).

Per Google Finance, SandRidge Energy is "an independent oil and natural gas company. The Company is engaged in development and production activities in the Mid-Continent, Gulf of Mexico and Permian Basin in west Texas. Its primary area of focus is the Mississippian formation, a shallow hydrocarbon system in the Mid-Continent area of northern Oklahoma and Kansas. The Company also operates businesses that are complementary to its primary development and production activities, including gas gathering and processing facilities, an oil and natural gas marketing business and an oil field services business, including its wholly owned drilling rig business, Lariat Services, Inc. (Lariat)."

TPG-Axon Increases GNC Holdings Stake

Dinakar Singh's hedge fund firm TPG Axon has filed a 13G with the SEC regarding shares of GNC Holdings (GNC).  Per the filing, TPG has revealed a 5.8% ownership stake in GNC with over 5.28 million shares.

This marks an increase of 1,258,000 shares in their position size since the end of the first quarter.  The filing was made due to activity on June 16th.

You can view some previous investment picks from Dinakar Singh here.

Per Google Finance, GNC Acquisition is "a global specialty retailer of health and wellness products. The Company has three segments: Retail, Franchise and Manufacturing/Wholesale. Corporate retail store operations are located in the United States, Canada, and Puerto Rico, and in addition the Company offers products domestically through GNC.com, LuckyVitamin.com and www.drugstore.com. Franchise stores are located in the United States and 54 international countries, including distribution centers where retail sales are made. The Company operates its primary manufacturing facilities in South Carolina and distribution centers in Arizona, Pennsylvania and South Carolina. The Company manufactures the majority of its branded products, but also merchandises various third-party products. It sells products through a worldwide network of more than 8,100 locations operating under the GNC brand name."

Dinakar Singh's Thesis on Hitachi & Daqin Railway: Invest For Kids Chicago

Next up in our notes from Invest For Kids Chicago 2013 is Dinakar Singh of TPG-Axon Capital.  He presented two long ideas: Hitachi and Daqin Railway.


Dinakar Singh's Presentation at Invest For Kids Chicago

•    Global fund – but pick best few dozen ideas
•    Average multiple of 14 is misrepresentative as some sectors are trading above historical number
•    Asia is discount of world
•    Many cyclical stocks in Asia trade at low multiples
•    Japan is seeing company change in some companies
•    At US with high prices with high margins
•    % of index trading at single digit multiple chart (very low in US and 32% in Europe and 30% in Thailand, and 27% in Hong Kong)
•    Likes to use auto sales for a proxy on where an economy is
•    Big recovery is over
•    Companies have restocked
•    Margin trend in Russell 3000
•    American listed companies has  come from interest and taxes – EBITDA margins are lower
•    Climb becomes harder when rates begin going up
•    Own 30 stocks and 5 happen to be US


•    Idea #1: Hitachi (Japanese) 
•    New CEO in 2008 was a change agent (even though insider)
•    Sold entire consumer business
•    Investing in healthcare equipment like Emerson and Phillips
•    Valuation is different than Emerson and Phillips
•    Hitachi has made tremendous process with margins at 5% yet could they double
•    Far more ways to win in terms of earnings
•    CEO boosted buybacks dividends


•    Idea #2: Daquin Railway (601006 CH) 
•    P/E multiple is half on union pacific at 8.2 versus 16.3x for Union Pacific
•    Good balance sheet
•    Good management and 6% dividend yield
•    Every year they should grow profits
•    Dividend should be growing
•    Could get tariff growth form coal
•    Rail rates could be up significant


Check out the rest of the hedge fund presentations from Invest For Kids Chicago here.

TPG-Axon Discloses Outerwall Stake

Per a 13G just filed with the SEC, Dinakar Singh's TPG-Axon has revealed a 5.1% passive stake in Outerwall (OUTR) with shares 1,434,429.  This is a brand new position for them and the filing was required due to activity on October 4th.

We just posted about how JANA Partners has gone activist on Outerwall and now TPG-Axon has disclosed a stake in the company formerly known as Coinstar as well.

The NYPost just highlighted that the company has "rebuffed fresh approaches from buyout firms."  Piper Jaffray has also said they see a sum of the parts value of $70 for OUTR.

Conversely, Bloomberg points out that around 30% of OUTR shares were sold short as of the beginning of October.

Per Google Finance, Outerwall is "a provider of automated retail solutions, which offers convenient products and services. The Company's offerings in automated retail include its Redbox business, where consumers can rent or purchase movies and video games from self-service kiosks (Redbox segment), and its Coin business, where consumers can convert their coin to cash or stored value products at self-service coin counting kiosks (Coin segment). Its New Ventures business (New Ventures segment) is focused on identifying, evaluating, building, and developing self-service concepts in the marketplace."

TPG-Axon's Dinakar Singh Likes Sirius XM & Time Warner Cable: Interview

Dinakar Singh, CEO of $4 billion TPG-Axon Capital recently sat down with Bloomberg TV so we wanted to post up some of the highlights of his rare appearance.

It seems as though he is betting against telecom stocks and is also bearish on some financials (in particular US regional banks).  He's bullish on names like Sirius XM (SIRI), Time Warner Cable (TWC), and W.R. Grace (GRA).  He sees growth in the chemical, aerospace, and healthcare industries.

A graphic on screen showed TPG-Axon's key long exposures in tech & media: SIRI, TWC, Viacom (VIA.B), Kabel Deutschland, Equinix (EQIX), Expedia (EXPE), Priceline.com (PCLN), and Yandex (YNDX).


On the current environment:   “For us, we pick stocks. That is how we make money. More and more, everyone has become more emotional in markets. We get scared by headlines and we all start acting the same way whether you are a CEO or a consumer. Jobs do matter. I think when you look at the U.S. in the last number of months, our view coming in this year is that people got too excited. There was a bounce back from last year and some good weather but it was going to be a slow gradual sloppy messy restructuring without a big recovery. Things have reversed. I think people are getting too pessimistic…I think ultimately consumers and CEOs are reading the same headlines and scared. I think you are seeing a cyclical or temporary step down. We do not think there one should expect a big bounce, but there won’t be much of a plunge either. It feels like the numbers are crummy but they will probably stay this way for a while. The fiscal cliff is a real issue. I think you're seeing an impact right now.”  


On how to play this market:   “People have gotten scared and they’re paying a lot for safety. On the safety side, people like dividends in safe industries. So Verizon is trading 18 times earnings because people want safety and a good dividend. There are companies like Time Warner Cable that we think are just as defensive but they did not happen to pay a dividend, they have even better cash flow, but they traded as a result much less well last year. For us, big opportunity. So media and cable that’s very cash flow rich and where we think management is going to turn that spigot on and turn it into a dividend or buy back machine that makes sense. Sirius, Time Warner Cable, companies like that. On the cyclical side, not everything is terrible. There are some sectors where we think there is good structural growth and balance sheets will be put to work. Some chemical companies are very good restructuring candidates. Aerospace suppliers.  Aerospace is in the middle innings of a very long term upgrade cycle.”


On telecom services:   “In a hedge fund, this is called a funding short. It is not that you think it is terrible and going straight to 0, but it is priced fully and not going up much so not a very good risk reward. Within telecom services there are two categories. There are the Verizons, we get it, they trade here for a reason, but they are pretty fully priced. On the other side, there are other companies that are legacy telecom companies where the dividend is a very high, but business really is eroding. It is priced well today because of a high dividend, but it is not sustainable. When you look around the world, a lot of high dividend stocks in Europe are not trading well because people are looking at them and saying I get it. I have a dividend today but it might not be there tomorrow.”


On China:   “If you look at China specifically, multiples had really collapsed…You have two general types of companies. Big, state-owned companies that people don’t trust and private companies that people really don’t trust. There isn’t a lot that trades at big multiples anymore. I think if you can find cases where there is real growth and they can pay cash back to you, you’ll make money.”


Embedded below is the first part of the interview of Dinakar Singh's interview with Bloomberg TV:



And here's the second part:

Eddie Lampert: Risk Coming Back to Markets (Interview)

This morning on CNBC, Eddie Lampert was interviewed on a myriad of topics. The chairman of Sears Holdings (SHLD) and hedge fund manager of ESL Investments/RBS Partners says that risk is 'coming back' to markets.


On Risk & the Markets

With the low interest rate environment, Lampert tosses out a quote we've heard a lot over the past few years: "They (investors) want a return on their money rather than just a return of their money."

David Bonderman, founding partner of Texas Pacific Group (TPG) also joined the conversation and argued that "the economy is better than you think it is ... the US is not in trouble in the short-term, maybe the long-term is another story."


On Bricks & Mortar Retail

Lampert notes that the "world is very different" and certain great iconic American brands like Disney (DIS) have had success, while there's others that need reinvention (JC Penney, Sears, etc).

The Sears chairman mentions that both retail and media are in re-invention mode, saying some companies will have "profitless prosperity."

He also argues that another one of the businesses he owns in size, Autozone (AZO), is a great retail business because it's less affected by internet competition. If something's wrong with your car and you need a new part, you need it now rather than waiting a few days for it to arrive via shipping.

Embedded below are the videos of Eddie Lampert's interview (email readers click to come view):

Video 1:


And Video 2:



There were a bunch of rare appearances on CNBC this morning, so don't miss:

- John Phelan of MSD Capital on the economy & markets

TPG-Axon Capital Reduces International Paper (IP) Stake

Dinakar Singh's TPG-Axon Capital Management recently filed an amended 13G with the SEC regarding shares of International Paper (IP). Due to portfolio activity on December 31st, TPG-Axon disclosed a 1.4% ownership stake in IP with 6,300,000 shares.

This marks a decrease in their position as Singh's firm owned 14,270,005 shares back in the third quarter. Over the course of three months, they've decreased their position size by almost 56%.

The hedge fund firm also filed a separate 13G on shares of Zhongpin (HOGS). Based on the filing, it appears as though their position remains unchanged with 3,000,000 shares. This total represents an 8.5% ownership stake in HOGS. We covered when TPG-Axon was buying HOGS back in September. Per Google Finance, Zhongpin is "principally engaged in the meat and food processing and distribution business in the People’s Republic of China (the PRC)."

Singh founded TPG-Axon in 2004 in collaboration with private equity firm Texas Pacific Group. Prior to launching his hedge fund, Singh was co-head of Goldman Sachs' principal strategies group.

International Paper is "a global paper and packaging company. It is complemented by the North American merchant distribution system, with primary markets and manufacturing operations in North America, Europe, Latin America, Russia, Asia and North Africa. The Company operates in six business segments: Industrial Packaging, Printing Papers, Consumer Packaging, Distribution, Forest Products, and Specialty Businesses and Other."

For all other SEC filings, head to our ongoing hedge fund tracking series.

Dinakar Singh's TPG-Axon Capital Buys More Zhongpin (HOGS)

Dinakar Singh's hedge fund firm TPG-Axon Capital Management recently filed a 13G with the SEC regarding shares of Zhongpin (HOGS). Per the filing, TPG-Axon has disclosed a 5.18% ownership stake in HOGS with 1,800,000 shares. Due to portfolio activity on September 21st, this marks a 484% increase in their position size as Singh's firm only owned 307,845 shares back on June 30th.

A former partner at Goldman Sachs, Dinakar Singh founded TPG-Axon in 2004 in partnership with the private equity firm Texas Pacific Group, launching with $5 billion. The firm has offices in New York, Hong Kong, Tokyo and managed $13 billion as of 2008. Prior to founding his firm, Singh was co-head of the Principal Strategies group at Goldman Sachs.

Taken from Google Finance, Zhongpin is "is principally engaged in the meat and food processing and distribution business in the People’s Republic of China (the PRC). At December 31, 2009, the Company’s product line included 358 meat products, including chilled pork, frozen pork and prepared meats, and 34 vegetable and fruit products, that are sold on a wholesale basis and on a retail basis through an exclusive network of showcase stores, network stores and supermarket counters."

For more on the latest hedge fund movements, head to our constant coverage of SEC filings.