The pain caused by falling oil prices isn’t just for energy companies, as industrial companies with exposure to the industry also have started to sink under the strain: Dover (DOV +2.2%) shares have slipped 4.3% during the past month, while Kennametal (KMT -0.3%) has shed 8% and MRC Global (MRC -6.1%) has tumbled 12%.
Seeing "potentially disastrous implications for U.S. energy and production companies and their suppliers," Global Hunter downgraded the three companies today; the firm says MRC has 46% exposure to U.S. upstream capex after previously estimated the company’s North American market share at ~24%, "exposing it broadly to the ups and downs of the broader market.”
Earlier: Dover moves higher despite Goldman downgrade to Sell
Kennametal (NYSE:KMT) has appointed Don Nolan as the company's president, CEO and member of the board of directors, while electing William Newlin, lead director, to serve as chairman of the board, effective today.
Nolan has most recently served as president of Avery Dennison's $4.5B Materials Group.
Current Kennametal chairman, president and CEO Carlos Cardoso will retire Dec. 31.
Joel Greenblatt made investors fortunes at his hedge fund 30 years ago by holding a highly concentrated basket - six to eight names - of deep-value stocks, but his approach today is somewhat different: Buy more than 300 high-quality stocks trading at cheap prices and short more than 300 expensive, lower-quality names. Stocks are weighted in the portfolio depending on where they rank along that spectrum.
Greenblatt: "[My partner] and I would wake up some days and lose 15% or 20% of our net worth ... now it's more like 15 or 20 basis points."
The strategy is also available in a trio of mutual funds Greenblatt's Gotham Asset Management offers, and they now account for more than half of Gotham's $7B in AUM.
A top position last year remaining a large holding after a big run higher is Apple, thanks to "huge returns on capital" and 11% earnings yield. As for Apple's future, Greenblatt will leave that for others to debate: "I don't own just Apple. I own a bucket of companies like Apple, and over time, I know my bucket is going to work."
Kennametal (KMT -7.4%) remains sharply lower after FQ2 results revealed higher sales but lower profits compared to the previous year.
Revenues rose 9% to $690M, but just 2% was an organic increase and 7% came from the acquisition of Allegheny Technologies' tungsten materials business.
KMT also issued downside guidance for FY 2014, lowering EPS to $2.60-$2.75 from a prior forecast of $2.90-$3.05 and $2.97 analyst consensus; expects total sales growth of 12%-13% vs. prior 5%-7%, and organic sales growth of 2%-4% vs. prior 4%-6%.
Related to the acquisition, KMT plans restructuring actions and expects to incur $40M-$50M in pretax charges within the next three years.
$SKFB.BB, $KMT, $TKR, $ATI, $CRS - Integrated Company Dashboard (ICD) on SKF AB is being released to clients. Key points to follow...
Apr 15, 3:57 PM
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Kennametal Inc is engaged in developing and manufacturing metalworking tools and wear-resistant engineered components and coatings. It supplies its products for transportation, general engineering, aerospace, defence, energy and earthworks sectors.