Seeking Alpha
Newsletter provider, fund holdings, insider ownership
Profile| Send Message| ()  

Chieftain Capital Management is an investment advisor that was formed in January 2010 when the original Chieftain Capital was split into two separate firms. John Shapiro and Glenn Greenberg originally founded the firm in 1984. In late 2009, the firm split in two, due to personality conflicts, dividing into Chieftain Capital Management and Brave Warrior Advisors. Mr. Shapiro and partners Tom Stern and Joshua Slocum formed the new Chieftain Capital Management, leaving Greenberg who now heads up Brave Warrior Advisors. Chieftain Capital focuses on value investing for institutions and individuals.

Below we complied a list of John Shapiro’s stock picks as of June 30th this year. Five of these stocks underperformed (SPY)’s 5.6% loss and this may be a great time to imitate those positions.

Tempur Pedic International Inc. (TPX) manufactures, markets, and distributes bedding products in North America and internationally. It has lost 1.73% since the end of June this year. The Company reported net income of $61.9 million in the third quarter of 2011 as compared to $44.2 million in the third quarter of 2010. In addition, the Company increased its cash balance by $16.3 million to $103.0 million in the third quarter. The company is expected to earn $3.16 in 2011 and $3.77 in 2012. The stock recently traded at $69.23. Its forward PE ratio is 21.08. Shapiro had a $313 million position in TPX at the end of June. We don’t think this stock is cheap.

Time Warner Cable Inc. (TWC), together with its subsidiaries, operates as a cable operator in the United States. It lost 18.81% since the end of June this year. Revenues for the third quarter of 2011 increased 3.7% from the third quarter of 2010 to $4.9 billion. Operating Income for the third quarter of 2011 increased 8.1% from the third quarter of 2010 to $1.0 billion driven by higher adjusted OIBDA and lower amortization expense. The company is expected to earn $4.47 in 2011 and $5.39 in 2012. The stock recently traded at $62.88. Its forward PE ratio is 14.07. Shapiro had a $243 million position in TWC at the end of June. George Soros had $58 million invested in TWC.

Crown Holdings, Inc. (CCK) engages in the design, manufacture, and sale of packaging products for consumer goods. It has lost 15.02% since the end of June this year. Third quarter gross profit improved 5.0% to $396 million over the $377 million in the 2010 third quarter and included $14 million from foreign currency translation. Net income attributable to Crown Holdings in the third quarter increased to $129 million over the $126 million in the third quarter last year. The company is expected to earn $2.8 in 2011 and $3.23 in 2012. The stock recently traded at $33.22. Shapiro had a $242 million position in CCK at the end of June. Analysts expect CCK to grow its earnings by 11.5% annually over the next five years. This may be a great investment if their estimates are accurate.

Lockheed Martin Corporation (LMT) engages in the research, design, development, manufacture, integration, operation, and sustainment of advanced technology systems and products in the areas of defense, space, intelligence, homeland security, and government information technology in the United States and internationally. It has lost 7.02% since the end of June this year. The company reported third quarter 2011 net sales of $12.1 billion, compared to $11.3 billion in 2010. Earnings from continuing operations during the third quarter of 2011 were $665 million, compared to $557 million in 2010. Cash from operations during the third quarter of 2011 was $511 million, compared to $513 million during 2010. The company is expected to earn $7.61 in 2011 and $7.9 in 2012. The stock recently traded at $75.72. Its forward PE ratio is 9.8. Shapiro had a $215 million position in LMT at the end of June. Jim Simons had $36 million invested at the end of June.

Aon Corporation (AON) provides risk management, insurance and reinsurance brokerage, and human resource consulting and outsourcing services in the United States and internationally. It lost 8.02% since the end of June this year. Aon reported third-quarter revenue jumped 51% to $2.72 billion. Its net income was $198 million for the three months ended Sept. 30, which was up from $144 million in the same quarter last year. The company is expected to earn $3.32 in 2011 and $3.71 in 2012. The stock recently traded at $47.14. Its forward PE ratio is 14.13. Shapiro had a $154 million position in AON at the end of June. Boykin Curry is extremely bullish on AON. He presented his case at the Value Investing Congress. He likes the fact that the stock has a free cash flow yield of 10%.

U.S. Bancorp (USB), a financial services holding company, provides various banking and financial services in the United States. It has lost 0.28% since the end of June this year. The company reported net income of $1.27 billion for the third quarter of 2011. The total net revenue was $4.8 billion for the third quarter, which was 4.5% higher than the same quarter of 2010 and 2.2% higher than the second quarter of 2011. Revenue was driven by growth in both net interest income and fee income. The company is expected to earn $2.37 in 2011 and $2.62 in 2012. The stock recently traded at $25.4. Its current PE ratio is 10.92. Shapiro had a $139 million position in USB at the end of June. Warren Buffett had more than $1.7 billion invested in USB at the end of June (see Warren Buffett’s top picks).

Abbott Laboratories (ABT) engages in the discovery, development, manufacture, and sale of health care products worldwide. It has returned 2.34% since the end of June this year. Net income for Abbott Laboratories fell to $303 million, compared to $890.7 million a year earlier. This is a decline of 66% from the year earlier quarter. Revenue rose 13.2% to $9.82 billion from the year earlier quarter. The company is expected to earn $4.65 in 2011 and $5.05 in 2012. The stock recently traded at $53.65. Its forward PE ratio is 11.36. Shapiro had a $130 million position in ABT at the end of June. Ken Fisher had $493 million invested in ABT.

Laboratory Corporation of America Holdings (LH) operates as an independent clinical laboratory company in the United States. It lost 15.51% since the end of June this year. Revenues for the third quarter were $1,404.5 million, an increase of 10.0% over the third quarter of 2010. Net earnings were $134.3 million and earnings per diluted share (EPS) were $1.31 in the third quarter of 2011. The company is expected to earn $6.27 in 2011 and $6.98 in 2012. The stock recently traded at $82.39. Its current PE ratio is 16.33. Shapiro had a $124 million position in LH at the end of June. Ray Dalio had more than $3 million invested in LH at the end of June.

Ryanair Holdings plc (RYAAY), together with its subsidiaries, provides passenger airline services in Ireland, the United Kingdom, continental Europe, and Morocco. It lost 2.79% since the end of June this year. The company is expected to earn $2.15 in 2011 and $2.54 in 2012. The stock recently traded at $29.49. Its current PE ratio is 14.07. Shapiro had a $72 million position in RYAAY at the end of June. Jim Simons had $59 million invested in RYAAY.

Source: Chieftain Capital's Promising Stock Picks