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Since the news about Yahoo CEO Scott Thompson's fake college degree surfaced, I've become interested in Dan Loeb. (I agree with him, by the way, on the Yahoo issue, and think that whoever vetted Thompson should be fired, for doing approximately as good a job as was done for Sarah Palin for the John McCain campaign in 2008.) Loeb and Third Point LLC had been very much under my radar up to this point, but here's my attempt to remedy that.

According to gurufocus.com, Dan Loeb made a lot of stock purchases during 1Q 2012, but the one I found interesting was Delphi Automotive (DLPH). Third Point purchased 13,339,711 shares, at an average estimated cost of $29, which puts Third Point in the top ten institutional holders of the stock, and makes it the second largest holding in Third Point's portfolio, after Yahoo, with a 10.3% share.

Delphi went into Chapter 11 bankruptcy in October of 2005, was purchased in 2009 by Paulson & Company, and taken public again in November, 2011, at a share price of $22.00. Paulson & Company retained 15% of the post-IPO company, or approximately 50 million shares.

Since January, Paulson & Co. has been selling some of its shares in Delphi, approximately 15 million, but remains the number one shareholder in the company.

Delphi is currently selling for approximately $28 per share, slightly off the 52-week high of $32.98 reached in March of this year, and about a 3% discount to Loeb's average purchase price. The current PE is 7.55, and the price is up 27% since its IPO last fall.

Analyst opinion is bullish, with a mean recommendation of 1.7 (1.0 being Strong Buy, 5.0 being Sell). There are 5 Strong Buys, 6 Buys, and 2 Hold recommendations.

The consensus analyst earnings estimate for CY2012 are $3.81 per share, up 40% from actual CY2011 earnings of $2.72, and the estimate for CY2013 is $4.26, an additional 12% increase.

The annual growth estimate for the next 5 years is 28.29%, compared to an industry estimate of 19.84%, a sector estimate of 17.45%, and the S&P 500 estimate of 10.29%. The PE for Delphi is 7.55, compared to the industry PE of 10.9, the sector PE of 12.5 and the S&P 500 PE of 13.4.

Given the recovery underway in the automotive sector and across the U.S. economy in general, I'm pretty bullish on Delphi too. I've allowing it a slight PE increase to 9.0, still less than the industry and sector PEs in spite of its higher growth prospects. This leads to a potential year-end 2013 stock price of $38, a 35% increase from today.

Dan Loeb, I agree. Delphi is a Buy.

Source: Delphi Automotive: Dan Loeb's Second Favorite Stock Right Now