Ken Griffin‘s Citadel Investment Group has made Louisiana-Pacific Corporation (NYSE:LPX) its latest bullish target. In the hedge fund’s latest filing with the SEC, it disclosed ownership of 7.27 million shares of the Nashville, Tennessee-based company, giving it a 5.1% passive stake in the building materials producer. That was an increase of more than 6.6 million shares since September 30, when Citadel had reported ownership of just over 600,000 shares in their position.
Citadel Investment Group is currently one of the largest hedge funds in the world, with an equity protfolio valued at nearly $80 billion as of September 30. In the 23 years from its start in 1990 to the end of 2013, Citadel’s assets under management grew to $16 billion from just $4.2 million. A stunningly successful run was briefly halted during the 2008/2009 financial crisis, but Citadel has recovered in the years since and is back to posting strong returns using the same combination of computer code and quantitative analysis that has driven their success.
Louisiana-Pacific Corporation (NYSE:LPX) is just the latest company Citadel Investment Group has taken a bullish stance on. As we reported a week ago, it has recently become quite bullish on a couple of other stocks, such as Ryland Group Inc (NYSE:RYL) and Astoria Financial Corp (NYSE:AF), increasing its positions in each of them to 5.1% and 5.0% respectively. In the case of Astoria, Citadel more than doubled their position, obtaining nearly 3.0 million shares to achieve its 5.0% stake. A couple weeks before that Citadel boosted its stake in Bonanza Creek Energy Inc (NYSE:BCEI).
With Louisiana-Pacific Corporation (NYSE:LPX) they are investing in a 42-year-old building materials producer, and the largest producer in the world of oriented strand boards (OSB), which have a high usage rate in housing construction for their durability and load-bearing properties. Unsurprisingly, Louisiana-Pacific Corporation’s success is tied to the success of the housing market, particularly in the United States, and that is reflected in their stock fluctuations over the years.
The stock peaked in value in the early-1990’s during the start of the U.S housing boom, and rebounded from a down stretch in the mid-2000’s during the U.S housing bubble. With new home construction slowly starting to rebound in 2012 from the depths of the housing bubble and 2008/2009 financial crisis, Louisiana-Pacific Corporation (NYSE:LPX)’s stock has also made a big turnaround, up 99.88% since the start of 2012. However it’s stalled over the last calendar year and lost 8.09%.
Part of that current drought is due to financial results that have disappointed analysts and investors. Their most recent results, for the third quarter of 2014, were unveiled on November 5, and came in well below expectations. Louisiana-Pacific Corporation (NYSE:LPX) suffered a loss of $20.4 million during the quarter, amounting to a loss of $0.12 per adjusted share. Analysts had been predicting a loss of $0.05 per adjusted share. However revenue did rise to $518.1 million during the quarter, a 2% gain from the previous year’s third quarter, and exceeding analysts estimates of $506 million.
The good news for Louisiana-Pacific Corporation (NYSE:LPX) is that millenials are expected to begin staking their claims to new homes over the next five years, increasing demand in the new homes market that has been relatively stagnant for years, with the market being largely dictated by baby boomers who had mostly settled down and purchased homes already during the bubble.
Analysts at Zacks recently upgraded their rating on Louisiana-Pacific Corporation (NYSE:LPX) from ‘Underperform’ to ‘Neutral’, while reiterating a $17.00 price target on the stock, which opened trading today at $15.97. However, both Longbow Research and DA Davidson have recently downgraded their ratings on the stock from ‘Buy’ to ‘Neutral’ as well. Longbow reiterated a $16.00 price target upon announcing their downgrade.
Other hedge funds with large positions in Louisiana-Pacific Corporation (NYSE:LPX) include Robert Bishop’s Impala Asset Management, which opened their position in the third quarter of 2014 with 5.67 million shares, Phill Gross and Robert Atchinson’s Adage Capital Management with 3.98 million shares, and Jeffrey Altman’s Owl Creek Asset Management with 2.81 million shares.
Disclosure: None
