Carl Icahn isn’t letting his recent investment in Netflix consume all his attention: he’s been adding back shares of Take-Two Interactive Software, Inc. (NASDAQ:TTWO) that he had sold last year. The PC and video game industry has been suffering as more consumers move towards mobile-based entertainment, but Take Two has been seeing better numbers at least temporarily. Its top and bottom lines were up in its most recent quarter compared to the same period in the previous year. Wall Street analysts are very optimistic and the stock trades at only 6 times their consensus estimates for the next fiscal year; however, we had not thought that the company was a good value. Read our discussion of Icahn and Take Two.
Lone Pine Capital was busy in the past week: the fund, managed by billionaire and Tiger Cub Stephen Mandel, issued two 13G filings. Lone Pine now owns 5.6 million shares of cloud computing related company Informatica Corporation (NASDAQ:INFA) and 2.2 million shares of pipeline and energy storage company SemGroup Corp (NYSE:SEMG). We looked at Lone Pine’s 13F filing for the second quarter of 2012 and it hadn’t owned either of these stocks at that time. Informatica trades at 30 times trailing earnings as the market demonstrates its excitement over the growth opportunities in cloud computing. The sell-side agrees that it will probably see strong earnings growth next year, with the stock trailing at a forward P/E of 20, but we had thought that was still a bit high and Informatica’s earnings per share are actually down so far this fiscal year. Learn more about Informatica. SemGroup is another industry play, as oil and gas activity in the U.S. is heating up and driving demand for more midstream infrastructure. As a result it’s also expected to see strong growth: in the first half of 2012, the company only earned 9 cents per share yet forward earnings estimates imply a P/E of 26. As with Informatica, we think that we’d avoid the stock based on pricing.
Billionaire Ken Griffin’s Citadel Investment Group reported a position of 2 million shares in Meritage Homes Corporation (NYSE:MTH), up from 1.2 million shares at the beginning of July. Like many stocks connected to housing, Meritage is up year to date (recording a 55% rise) as the market expects a rebound in the industry and a particularly strong recovery in the Sunbelt (where the company’s operations are concentrated). Its forward P/E is 24, and similarly to many of these other stocks that is based on quite a bit of analyst optimism. Investors should look at other homebuilding stocks instead if they want to play that thesis. Find out more about Citadel’s investment in Meritage.
Royce & Associates, a fund managed by Chuck Royce that tends to focus on mid-cap and small-cap stocks, increased its stake in Scholastic Corp (NASDAQ:SCHL) to a total of 3.1 million shares. The publishing business is more like the gaming industry than what the rest of these companies are in: beset with challenges based on how content is consumed. Scholatic’s most recent quarter was a less crucial part of its seasonal business, but with its losses higher than in the same period in 2011 and short sellers circling we don’t have enough confidence to buy it even at its current valuation of 11 times trailing earnings.
