Analysis Of Institutional 5% Ownership Filings Last Week In Basic Materials And Energy Sectors

by: GuruFundPicks

Many leading funds filed forms 13-D and 13-G (and form 4) with the SEC last week, including Blackrock, Carl Icahn and JPMorgan Chase & Co., indicating that they had amended their ownership in U.S. traded public companies in the basic materials and energy sectors. The forms are required to be filed within ten days, so the institutions traded these shares sometime during and after the last couple of trading days of December.

Also, we have included, when applicable, SEC Form 4 filings by Institutions that are considered corporate insiders by virtue of their holding more than 10% ownership, and in many cases having representation on the Board of Directors. The following are the most notable filings in the basic materials and energy sectors last week (for more info on Forms 13-D and 13-G, and how to interpret that, please refer to the end of this article):

Molycorp Inc. (MCP): MCP is engaged in the mining and processing of rare earth ores at the mountain pass facility near the CA/NV border. The rare earths are critical inputs in existing and emerging applications, including: clean energy technologies, such as hybrid and electric vehicles and wind power turbines; multiple high-tech uses, including fiber optics, lasers and hard disk drives; numerous defense applications, such as guidance and control systems and global positioning systems; and advanced water treatment technology for use in industrial, military and outdoor recreation applications.

On Wednesday, BAMCO Inc. of Baron Mutual Funds with $16.4 billion in U.S. equity assets under management filed SEC Form SC 13G/A indicating that it held 0.3 million or 0.3% of outstanding shares of MCP, a decrease from the 2.9 million shares it held at the end of Q3. BAMCO opened its position in MCP in Q3 of 2010, and built it up to 5.3 million shares at the end of Q1 of 2011, and then dropping it to 2.7 million shares at the end of Q2. MCP shares have been weak recently, down by over 60% from the almost-$80 high in April last year. This despite impressive quarter results as both revenues and earnings are rising strongly, and are expected to almost double from $1.55 in 2011 to $2.89 in 2012 while the stock trades at a very attractive 10 forward P/E.

Metabolix Inc. (NASDAQ:MBLX): MBLX is a bioscience company well-known as the provider of the Mirel brand of PHA natural plastics that are environmentally sustainable and totally biodegradable, and a green alternative to petroleum-based plastics. It is engaged in the development of a proprietary platform technology for co-producing plastics, chemicals and energy from crops such as switchgrass, oilseeds and sugarcane. On Tuesday, Fred Alger Management filed SEC Form SC 13G/A indicating that it held 2.5 million or 7.2% of outstanding shares, an increase from the 1.8 million shares it reported holding at the end of Q3. MBLX shares gapped to the downside on Friday, cut by more than half, after the company announced after-the-close on Thursday that Agribusiness giant Archer Daniel Midlands (NYSE:ADM) gave notice of termination of its Telles, LLC joint venture for PHA bioplastics with MBLX, effective February 8th.

James River Coal Co. (JRCC): JRCC is engaged in the exploration and production of steam, bituminous and industrial-grade coal in KY and IN. On Tuesday, the world's largest and most prominent asset manager, Blackrock Inc. (NYSE:BLK), with more than $3.3 trillion in assets under management, filed SEC Form SC 13G/A indicating that it owned 4.2 million shares or 11.7% of outstanding shares. This is an increase from the 2.9 million shares that five Blackrock entities held in JRCC stock at the end of Q3, including Blackrock Advisors LLC, Blackrock Fund Advisors, Blackrock Inc., Blackrock Investment Management LLC, and Blackrock Japan.

Hyperdynamics Corp. (NYSE:HDY): HDY is engaged in the exploration of oil and gas in the offshore coast of the Republic of Guinea in West Africa. On Tuesday, Blackrock Inc. filed SEC Form SC 13G/A indicating that it held 25.2 million or 16.1% of outstanding shares. This is an increase from the 3.7 million shares that three Blackrock entities held at the end of Q3, including Blackrock Advisors LLC, Blackrock Fund Advisors, and Blackrock Investment Management LLC.

EXCO Resources Inc. (NYSE:XCO): XCO is an independent oil and natural gas company, engaged in the exploration, exploitation, development and production of onshore North American oil and natural gas properties with a focus on shale resource plays. On Tuesday, Atlanta-based hedge fund INVESCO Private Capital, with over $1 billion in assets under management and headed by Wilbur Ross, filed SEC Form 4 indicating that it purchased 212,837 shares for $2.1 million. This is on top of the 0.4 million shares for $4.1 million purchase that we reported INVESCO in the last week of December, and the 0.4 million shares for $3.5 million purchase that we reported in the third week of December, so that overall it has added 1.0 million shares to its 27.6 million shares of XCO that it reported holding at the end of Q3. XCO trades at the lows of the year, down more than 50% in the past year, and it trades at a discount 12-13 forward P/E and 1.2 P/B compared to the averages of 20.6 and 5.2 for the U.S. oil & gas exploration & production group.

CVR Energy Inc. (NYSEMKT:CVR): CVR is engaged in the refining and marketing of petroleum products in KS, OK, MO, NE, and CO. On Friday, billionaire and famed Wall Street investor Carl Icahn filed SEC Form SC 13D indicating that he held 12.6 million or 14.5% of outstanding shares, a new position for the firm since it filed its 13-F Q3 filing. Also, on Thursday, JPMorgan Chase & Co. filed SEC Form SC 13G/A indicating that it held 1.62 million or 1.8% of outstanding shares, a decrease from the 1.65 million shares it held at the end of Q3. Carl Icahn is an activist hedge fund manager, well known to take large stakes in distressed public corporations, and then uses his influence resulting from the ownership to affect change at these companies, eventually in many cases selling them for a 'tidy' profit. His filing of a 13D (as opposed to a 13G which implies a passive stake) is indicative that he intends to use his activist approach to increase the value of his holdings in CVR.

Credit: Fundamental data in this article were based on SEC filings, I-Metrix® by Edgar Online®, Zacks Investment Research, Thomson Reuters and The information and data is believed to be accurate, but no guarantees or representations are made.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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