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Steven Cohen is the founder of SAC Capital Advisers, which has over $12 billion under management. SAC is known as one of the most consistent performing hedge funds and has posted average annual returns of approximately 30% during two decades of trading. He is currently quite bullish on energy and retail stocks. Cohen has also recently stated that he's more worried about 2012, as the government stimulus wears off and the effect this may have on the economy. In this article I will review five recent stock purchases by Cohen to determine whether they are solid investment opportunities that will accrue in value and deliver strong investment returns.

Bill Barrett Corporation (NYSE:BBG)

Bill Barrett has a market cap of $1.78 billion, and is currently trading at around $38, with a price to earnings ratio of 29. Its 52 week trading range has been between $37.60 and $52.13. It reported third quarter 2011 earnings of $181.86 million, an increase from second quarter earnings of $177.57 million. The income statement showed net income in the third quarter of $20.64 million, a significant decrease from second quarter net income of $32.64 million. It has quarterly revenue growth of 11.8% and a return on equity of 5.08%.

One of Bill Barrett’s competitors is Occidental Petroleum Corporation (NYSE:OXY), which has a market cap of $71.25 billion and is trading at around $88, with a price to earnings ratio of 11.25. It has quarterly revenue growth of 26.1%, a return on equity of 18.16% and pays a dividend with a yield of 2%. This data indicates that both companies are performing on par.

Cohen holds 1,461,316 shares of Bill Barrett, buying 1,461,316 shares in the third quarter 2011, adding to the existing holding of 3,072 shares. The average purchase price per share is $45.55. Based upon the last trading price of $35.77, he has made a return of -21.48%.

Bill Barrett’s cash position has substantially improved in the last quarter. Its balance sheet showed $105.22 million in cash for the third quarter, a substantial increase from $39.86 million cash in the second quarter. Bill Barrett’s quarterly revenue growth of 11.8%, versus an industry average of 38.7%, and a return on equity of 5.08%, versus an industry average of 11.2%, indicates that it is under-performing many of its competitors.

The earnings outlook for the oil and gas drilling and exploration industry is quite positive, primarily due to the ongoing boom in demand for resources driven by the growth of the Chinese economy. This indicates further opportunities for strong revenue growth, which when combined with a weak dollar, that should make U.S. exports more competitive, bodes well for oil and natural gas demand and producers like Bill Barrett.

On the basis of this positive industry outlook, combined with the company’s increase in earnings, net income and balance sheet cash I understand the rationale of Cohen’s investment. On this basis, I rate Bill Barrett as a buy.

The Mosaic Company (NYSE:MOS)

Mosaic has a market cap of $23.48 billion, and is currently trading at around $52.50, with a price to earnings ratio of 8.59. Its 52 week trading range is between $44.86 and $89.24. It reported third quarter 2011 earnings of $3.03 billion a substantial increase from second quarter earnings of $2.86 billion. Third quarter net income was reported at $526 million a decrease from second quarter net income of $649.20 million. It has quarterly revenue growth of 40.9%, a return on equity of 25.74% and pays a dividend with a yield of 0.4%.

One of Mosaic’s competitors is Monsanto Company (NYSE:MON), which market cap of $36.39 billion and is trading at around $68, with a price to earnings ratio of 22.93. It has quarterly revenue growth of 18.4%, a return on equity of 15.18% and pays a dividend with a yield of 1.70%. Based on these indicators Mosaic is outperforming Monsanto, but I should be noted that both companies have solid performance indicators.

Cohen holds 106,411 shares of Mosaic, buying 106,060 shares in the third quarter 2011, adding to an existing holding of 106,411. The average purchase price per share was $66.96. Based upon the last trading price of $50.01, he has made a return of -25.31%.

Mosaic’s cash position has improved, with $4.04 billion in cash for the third quarter 2011 an increase from $3.91 billion cash in the second quarter. Net tangible assets have increased to $10.32 billion in the third quarter from $9.81 billion in the second quarter. Mosaic’s quarterly revenue growth of 40.9%, versus an industry average of 7.8%, and a return on equity of 25.74%, versus an industry average of 29.7%, indicates that it is outperforming many of its competitors.

The current outlook for the specialty chemical industry is quite positive especially for phosphate producers such as Mosaic. Over the last year the phosphate price has increased by over 50%. In addition the ongoing demand for both commodities and agricultural products by the Chinese economy, coupled with a weak US dollar, that should make U.S. exports more competitive, bodes well for earnings growth for producers like Mosaic.

The positive industry outlook combined with increased earning, a strong cash position and solid performance indicators show that Mosaic is well positioned for growth and is able to capitalize on this ongoing demand. I agree with Paulson’s decision to purchase the stock and I also believe that s the stock is trading at well below its 52 week high that there is currently a buying opportunity. I rate Mosaic as a buy.

FleetCor Technologies (NYSE:FLT)

FleetCor has a market cap of $2.27 billion, and is currently trading at around $28, with a price to earnings ratio of 18.25. Its 52 week trading range has been between $24.28 and $38. Third quarter 2011 earnings of $134.21 million were reported, the same as second quarter earnings of $134.21 million. Third quarter net income was $40.51 million, an increase from second quarter net income of $36.72 million. It has quarterly revenue growth of 20.2% and a return on equity of 19.16%.

One of FleetCor’s competitors is Wright Express Corporation (WXS), which has a market cap of $1.83 billion and is trading at around $47, with a price to earnings ratio of 15.45. It has quarterly revenue growth of 51.5% and a return on equity of 20.17%. Based on this data it is outperforming FleetCor, although both companies have solid performance indicators.

Cohen holds 19,440 shares of FleetCor, buying 19,340 shares in the third quarter 2011, adding to an existing holding of 100 shares. The average purchase price per share was $28.34. Based upon the last trading price of $27.19, he has made a return of -4.06%.

FleetCor’s cash position has improved with the balance sheet showing $194.68 million in cash for the third quarter, an increase from $164.21 million in the second quarter. The net tangible assets have substantially decreased with -$115.11 million in third quarter 2011, from -$75.37 million in the second quarter. FleetCor’s quarterly revenue growth of 20.2%, versus an industry average of 16.9%, and a return on equity of 19.16%, versus an industry average of 15.9%, indicates that it is outperforming many of its competitors.

The earnings outlook for the business services industry is not particularly positive, primarily due to the poor economic outlook and decreasing demand for business support services as companies seek to cut costs due to decreased consumer demand. Therefore, many participants in the industry feel that earnings growth will be flat, despite signs of improvement in the economy.

Despite the negative industry outlook FleetCor has maintained earnings, increased net income and balance sheet cash, and has solid performance indicators. Accordingly, I agree with Cohen’s investment decision and rate FleetCor as a buy.

Medicis Pharmaceutical Corp (MRX)

Medicis has a market cap of $1.88 billion, and is currently trading at around $31, with a price to earnings ratio of 22.32. Its 52 week trading range is $24.97 to $40.51. It reported third quarter 2011 earnings of $184.67 million, a decrease from second quarter earnings of $190.83 million. Third quarter net income was $22.95 million a significant decrease from second quarter net income of $40.24 million. It has quarterly revenue growth of 4.30% and a return on equity of 11.13%.

One of Medicis’ competitors is Allergan Inc (NYSE:AGN), which has a market cap of $24.05 billion and trades at around $79, with a price to earnings ratio of 26.88. It has quarterly revenue growth of 9.9%, a return on equity of 19.17% and pays a dividend with a yield of 0.3%. Based on these indicators is outperforming Medicis.

Cohen holds 524,335 shares of Medicis, buying 520,044 shares in the third quarter 2011, to add to an existing holding of 4,291 shares. The average purchase price per share was $37.52. Based upon the last trading price of $30.25, he has made a return of -19.38%.

Medicis’ cash position has substantially improved. The balance sheet showed $184.05 million in cash for the third quarter 2011, an increase from $150.20 million in the second quarter. The net tangible assets have declined to $588.05 million in the third quarter 2011, from $612.65 million in the second quarter. Medicis’ quarterly revenue growth of 4.3%, versus an industry average of 19.8%, and a return on equity of 11.13%, versus an industry average of 8.7%, indicates that it is under-performing many of its competitors in earnings growth but is generating a superior return on equity.

The earnings outlook for companies in the drug manufacturing industry is currently subdued, primarily due to the poor economic climate and negative economic sentiment. Moody’s recently stated; “that many drug manufacturers have found 2011 to be a challenging year, although they have been able to offset declining revenue growth with price increases in the US and revenue from emerging markets.” It is believed that 2012 will be an even more challenging year for industry participants.

Despite the negative industry outlook I do agree with Cohen’s decision to invest in the company on the basis of its significantly increased net income and substantially improved cash position. These both demonstrate that it is well positioned for further earnings growth should there be an improvement in the economy. Accordingly, I rate Medicis as a buy.

Tenneco Inc (NYSE:TEN)

Tenneco has a market cap of $1.59 billion, and is currently trading at around $26, with a price to earnings ratio of 15.03. Its 52 week trading range has been between $22.47 and $46.81. It reported third quarter 2011 earnings of $1.77 billion, a decrease from second quarter earnings of $1.89 billion. Third quarter net income was $30 million, a large decrease from second quarter net income of $50 million. It has quarterly revenue growth of 15% and a return on equity of 150.56%.

One of Tenneco’s competitors is Meritor Inc (NYSE:MTOR), which has a market cap of $485.94 million and is currently trading at around $5, with a price to earnings ratio of 7.73. Based on these indicators, it I being outperformed by Tenneco.

Cohen holds 862,911 shares of Tenneco, buying 858,211 shares in the third quarter 2011, adding to a holding of 4,700 shares. The average purchase price per share was $34.95. Based on the last trading price of $25.23, he has made a return of -27.81%.

Tenneco’s cash position has improved in the last quarter. The balance sheet showed $163 million in cash for the third quarter 2011, an increase from $161 million in the second quarter. Tenneco’s quarterly revenue growth rate of 15%, versus an industry average of 7.8%, and a return on equity of 150.56%, versus an industry average of 18.1%, indicates that it is outperforming many of its competitors.

The outlook for the auto parts industry is quite positive with Moody's Investors Services recently revising the outlook from stable to positive. This improvement in the industry outlook is being driven by improving US economic indicators and the growing demand for vehicle parts.

Despite the positive industry outlook and Tenneco’s recent increased cash holdings I do not agree with Cohen’s decision to invest in the company, due to Tenneco’s decreased earnings and substantial decrease in net income for the third quarter. Accordingly, I would prefer to take a wait and see approach with this company and I rate it as hold.

Source: 5 New Buys From Billionaire Steven Cohen