Alexander Roepers of Atlantic Investment Management has made a lot of money for clients over the last two decades.
In the last 21 years, Roepers has earned his clients an astonishing compounded annual return of 19.2%. Roepers’ basic investing principles include Warren Buffett’s “buy what you know” rule, waiting for the right opportunity, and sticking to a predetermined valuation level. Roepers also has tremendous focus in his investments, investing only in his favorite six or seven ideas.
Atlantic Investment works with management of it’s the companies it invests in behind the scenes to help enhance and accelerate shareholder value while retaining liquidity.
Today, at the Value Investing Congress, he’s here to share five new stock picks.
- Baker Hughes (BHI): Third-largest energy service company in the world. Current stock price: $50. Target price: $73. Pressure pumping business has zero margins – that should improve. Talking to management to help improve margins, pay down debt, execute a sizeable share repurchase in 2014.
- Faurecia (EO FP): $24 billion automotive parts company based in France. Guilt by association – 57%-owned by Peugeot, one of the most heavily shorted stocks in Europe. Fifth-largest parts seller in the U.S. Has a large backlog with strong earnings growth. Stock has a 41% upside. Price target of 31 euros (currently at 22 euros).
- ITOCHU Techno-Solutions (4739 JP): A Japanese technology company with 65% upside. It’s the third largest IT service provider in Japan. Japanese companies starting to spend more on IT, which should help growth.
- Lanxess (LXS GY): A German manufacturing company that produces performance chemicals and performance polymers for car tires. Roepers thinks the stock has 45% upside. Catalysts include a new $400 million plant in Singapore, which should fuel growth in Asia. Improving demand for replacement tires should also benefit Lanxess.
- Harman International (HAR): A U.S. company that creates parts for car speakers. Roepers believes the stock, currently trading around $66, has 26% upside ($84 target). Provides “infotainment” for the nine largest car companies in the world. It currently has a 22% market share. Margins are going up, giving the company a chance to double earnings in the next few years. Atlantic is pushing the company to initiate $700 million in share repurchases over the next two to three years.
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