By Adam Barnett
Peconic Partners, founded and still run by William Harnisch, uses a mixture of macro analysis of the economy and micro analysis of individual companies and sectors to determine its investment selection process. It is named after the wealthy Native American tribe from Long Island. See the original 13F here.
Why Do We Pay Attention?
It's important to track hedge fund sentiment because, on the whole, their best picks have been shown to outperform the market by as much as 18 percentage points a year. Best of all, retail investors can capitalize on this phenomenon, but they have to know where to look first (learn the secrets of this strategy here).
The 'Tippy Top'
In the latest 13F, the fund's largest holding is in construction and engineering company Mastec (MTZ), with approximately 2.1 million shares worth around $62 million. A similar amount was held during the prior quarter. Mastec had a strong Q1 2013, with continuing operations adjusted diluted EPS of $0.27 vs. $0.14 in the corresponding quarter last year -- a 93% increase. The stock's price action has been very bullish in the past year, as it's currently trading near its 52-week high of $30 a share. Mastec's P/E ratio is currently at 21.74, with a forward P/E ratio of 16.73.
The cinema operator Regal Entertainment Group (RGC) is next. As per the 13F, Peconic's 2.9-million share stake was worth about $49 million. The size of the holding is down slightly, but not significantly, from the prior quarter. The stock has had strong price action in 2013 so far, rising from $14 in January to around $18.64 at the time of writing, very close to the 52-week high. Diluted earnings per share was $0.14 for the 2013 first quarter compared to $0.30 for the first quarter of 2012. The stock's P/E ratio is relatively high at 24.21, with a forward P/E ratio of 18.49.
The Best of the Rest
Peconic also has a substantial stake in construction and utilities provider Quanta Services (PWR), holding about 1.7 million shares of stock worth just over $47.6 million as of the latest 13F. A similar amount was also held during the prior quarter. Price action has been volatile, with the price currently near $29.14, close to the 52-week high. The company reported Q1 2013 EPS of $0.38, $0.09 better than the analyst estimate of $0.29. Revenue for this quarter came in at $1.59 billion vs. the consensus estimate of $1.4 billion.
Telecommunications services provider Dycom (DY) is next, with Peconic holding 2.1 million shares worth $41.7 million at the time of the 13F filing. This represented an increase in value of the fund's exposure; it held approximately 1.95 million shares in the prior quarter. As of this writing, the stock is trading at $19.34, down from a quarterly high $22 in early January.
Finally, Peconic has a stake of 2,516,858 shares worth approximately $41 million in Floteck (FTK), a provider of drilling and production related services for the energy industry. This is an increase from 1,955,507 shares held in the prior quarter. Revenue for Q1 2013 was $78.2 million compared with $79.2 million for Q1 2012. This worked out to $0.15 earnings per common share (fully diluted), compared to $0.07 earnings per common share (fully diluted) for the same period in 2012, due to cost savings. As of this writing, the stock is trading at $16.71, having touched its 52-week high of $17.30 during the same session.
Generally speaking, the 13F of Peconic Partners has displayed a bullish bias for overall market direction, with the fund maintaining or increasing its holdings in each of its top five equity positions, most of which displayed strong performance during the first quarter. If you believe that a long-running bull market will continue, all five of these stocks are worth monitoring (continue preparing for 13F-filing season here).