Winter 2011

Blount International is positioned to benefit from increased demand in the outdoor products market, particularly with its strong brand portfolio and innovative product offerings. The company has a solid financial foundation and is expected to see growth in revenue and profitability over the next few years.

Nielsen Media is becoming a public company again, and I have a historical connection with it, having owned it before it was called Nielsen Media. The company has a strong foundation and potential for growth.

Cigna is trading at 8x earnings, which is exceedingly cheap compared to its growth potential. The company is expected to benefit from the influx of uninsured individuals entering the market in 2014 due to healthcare reform, which should positively impact its customer base and revenue.

Aetna is trading at 9x earnings, making it a compelling investment given its strong growth outlook. The company is well-positioned to capture new customers from the healthcare reform changes, which will likely enhance its revenue streams.

WellPoint is also trading at 9x earnings, which is attractive considering the expected growth from the healthcare reforms. The company is likely to benefit from an increase in membership as more uninsured individuals gain access to healthcare.

Xerox is a top-ten position for the firm, particularly after the market reacted negatively to its acquisition of Affiliated Computer Services, causing a significant drop in stock price. This presents a buying opportunity as the company has strong fundamentals and growth potential.

McKesson is a drug distributor with a strong market position, holding over 92% market share alongside two other large players. The company is expected to benefit from growth in healthcare information technology and has a significant amount of cash that can be deployed for further growth or stock repurchases, making it a compelling investment opportunity.

Builders FirstSource is a supplier/distributor to the homebuilding industry that has been losing money consistently since 2007. However, the company has the potential to generate significant EBITDA and revenues when homebuilding stabilizes, and it is well-positioned to grow through acquisitions in a fragmented industry.

Subsea 7, formerly Acergy, specializes in deepwater installation of subsea equipment for the oil and gas industry. The company has a competitive advantage due to its technological expertise and the complexity of its operations, which creates high barriers to entry.

Acergy is well positioned to benefit from the dramatic growth of deepwater development, particularly as natural gas discoveries become economically viable. The company has successfully restructured and is now debt-free, with significant revenue potential and improving margins. With a market cap of $440 million and projected EBITDA of $180 million, the stock is undervalued at current levels.

NewMarket is a low growth, mature business with significant barriers to entry and a strong competitive position. The company has shown improved earnings potential, generating approximately $12 per share annually, and has engaged in share buybacks, which enhances shareholder value.

Subsea 7 is currently the largest position held, trading at $25 per share with earnings projected between $1.00-1.20 per share. Despite its high valuation, the company has strong management and a solid financial position, including significant net cash, which supports its growth potential.

BLT is undervalued due to misconceptions about its exposure to the U.S. housing market, with over 70% of sales coming from international markets. The company has a strong niche position with a global market share of 60-70% in saw chains and guide bars, and it trades at a significant discount to its intrinsic value, which is estimated at $27.00 per share compared to the current price of $14.87, representing a margin of safety of 45-55%.

The Williams Companies (WMB) is an integrated natural gas energy company that is undervalued due to low natural gas prices and skepticism about a potential business split. The new leadership is expected to unlock value by separating the exploration & production (E&P) business from the midstream assets, which will allow each business to attract the right investors. The current share price of $27 does not reflect the potential upside of $36 to $43 per share, representing a 35% to 60% upside.

OPAP S.A. is undervalued due to the negative sentiment surrounding Greek stocks, trading at 4.5x EV/EBIT compared to a historical average of 8x. The company has a strong financial position with no debt and consistent cash flow generation, making it well insulated from Greece's economic issues. With the legalization of online betting and new game launches, OPAP is positioned for growth, presenting a significant buying opportunity.

Iridium represents an attractive structural short investment due to its impending financial challenges and increasing competition in the satellite communications industry. The company plans to invest $3 billion in its next generation satellite constellation, which is necessary as its current satellites are nearing the end of their life. However, with projected flat to negative EBITDA growth and high leverage, Iridium is likely to face a restructuring similar to past industry players, destroying equity value for shareholders.

Research in Motion is undervalued at $47, reflecting market skepticism about its ability to sustain earnings. The company has a strong return on equity, significant cash reserves, and generates substantial free cash flow, suggesting that the market is overly pessimistic about its future earnings potential.

The company has an excellent franchise in pain medications and is expected to recover its earnings and valuation despite current pressures from generic competition. With a pipeline of potential drugs nearing approval, the investment was made at a low multiple of demonstrated earnings, suggesting significant upside potential.