Jim Chanos , founder and president of hedge fund
Kynikos Associates, has a better eye for when a company is verging
on failure than poised for growth. Thus, he dedicates most of his
fund to short positions. Famous examples include his prescient
calls on Enron and Baldwin-United, which he shorted.
Chanos also has $292.3 million in long positions, the two newest
of which, according to his updated third quarter portfolio, are
Starbucks ( SBUX )
and Occidental Petroleum Corp ( OXY ). He identifies
both optimal long and short positions through fundamental
analysis.
Starbucks ( SBUX )
Chanos bought 142,000 shares of Starbucks in the third quarter for
$50 per share on average, a 2.5% weight in his portfolio.
Starbucks' stock increased 5% year to date.
Starbucks is the premium coffee, tea, food, and beverage-related
accessories company that operates primarily through company-owned
retail stores.
In the fourth quarter, reported Nov. 1, the company had an 11%
year-over-year revenue increase to a record $3.4 billion, with
global comparable store sales increasing 6% and Americas comparable
store sales increasing 7%. Earnings per share were $0.46, compared
to $0.47 the previous year, which included a $0.10 non-routine
gain.
The company's operating margin expanded 60 basis points to 15.4%
from 14.8% the previous year, which included a 100 basis point
non-routine gain. Starbucks in the fourth quarter increased its
dividend 24% to $0.21 per share.
In November, the company announced a radical move into tea with
the purchase of Teavana Holdings Inc. ( TEA ) for approximately
$620 million in a deal expected to close by year end.
Starbucks has a P/E of 28.5, close to a two-year low. It also has
a P/B of 7.6 and P/S of 2.9.
SBUX data by GuruFocus.com
Occidental Petroleum Corp ( OXY )
Chanos paid $87 per share on average for his second new buy,
Occidental Petroleum Corporation. Its stock price has declined 21%
year to date.
An international oil and gas exploration and production company,
Occidental Petroleum Corp also owns OxyChem, a North American
chemical subsidiary.
In the third quarter announced Oct. 25, the company reported $5.97
billion in net sales, down from $6.01 billion a year previously.
Net income fell to $1.38 billion from $1.77 billion a year
previously. Diluted earnings per common share also declined to
$1.69 from $2.17.
Earnings fell in Occidental's oil and gas segment due to lower
product prices and higher costs, partially offset by higher oil
volumes. Earnings at its chemical segment also declined due to
lower prices across most product lines. On its midstream segment
earnings increased, reflecting higher margins in its marketing and
trading businesses, partially offset by lower gas processing and
pipeline businesses income.
Occidental is trading at relatively low valuations: a P/E close to
a 10-year low at 10.5, P/B ratio close to a three-year low at 1.6
and P/S ratio at 2.6 close to a three-year low.
OXY data byGuruFocus.com
In the third quarter, Chanos also added to, reduced and sold out
of other positions. See his portfolio here. And check out his
undervalued stocks, top growth companies and high yield
stocks.About GuruFocus: GuruFocus.com tracks the stocks picks and
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