Key Takeaways
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Marathon Asset Management opened stakes in West Fraser Timber, Buenaventura and GFL Environmental in the third quarter, its latest 13F shows.
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West Fraser lost money again and is shutting two mills indefinitely.
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GFL is weighing offers to take it private, with final bids due November 9.
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Buenaventura grew quarterly profit 50%, yet its stock is down 16% since September 30, which makes it my pick of the three.
A fund's brand-new positions show where its freshest money went, and Marathon Asset Management's third-quarter buys landed in three very different places.
Its 13F for the quarter ended September 30, filed October 26, shows $2.2 billion of US-listed stocks. It opened or added to four positions, and the three biggest are all new: West Fraser Timber ( WFG ), Compañía de Minas Buenaventura ( BVN:NYSE )and GFL Environmental ( GFL ).
A month later, one is losing money, one is in play, and one is cheaper than at quarter-end despite a 50% jump in quarterly profit.
West Fraser Is Still Losing Money
The fund held 606,680 West Fraser shares worth $42 million on September 30, 1.9% of its 13F stocks and its 19th-biggest position. The stock is down 4% since.
West Fraser's third quarter , reported October 28, extended a losing streak that now runs at least six quarters. The net loss was $80 million on $1.36 billion of sales, narrower than the $204 million loss a year earlier. Adjusted EBITDA was just $38 million, about 3% of sales.
The bigger news was the cuts. West Fraser is indefinitely curtailing its Huguley OSB mill in Alabama and its Leola lumber mill in Arkansas, and it expects a $200 million to $220 million impairment charge in the fourth quarter. It has $1.2 billion of liquidity to wait for a better market.
The mean target has slipped from $88.33 to $83.83 over the past year, and the range has narrowed. The highest target fell from $110 to $90, while the lowest rose from $70 to $79, still well above Friday's $67.15 close. The mean sits 25% above the price.
TIKR Tracks 7 Analysts on West Fraser Timber. How Many Say "Buy"?
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Buenaventura's Stock Fell as Its Profit Jumped
The fund's 1.22 million Buenaventura shares were worth $38 million on September 30, 1.7% of its 13F stocks and its No. 22 position. The stock has dropped 16% since and is now 41% below its 52-week high.
The quarter doesn't explain the drop. Buenaventura's third-quarter revenue, reported October 29, rose 27% to $545.3 million, and net income rose 50% to $268.4 million. It ended the quarter with about $1 billion of cash and more cash than debt. The soft spots were operational: direct silver output fell 21% on lower planned grades, and its San Gabriel mine ran at reduced processing for most of the quarter.
Analysts didn't follow the stock down. The mean target climbed from $21.73 a year ago to $38.53, close to its May peak of $40.53, and sits 46% above Friday's $26.42 close. Even the lowest target, $27.40, is above that price. At about 6x forward earnings, investors aren't paying much for what Buenaventura is expected to earn.
GFL Is Now a Takeover Bet
The fund's 771,499 GFL shares were worth $32 million on September 30, 1.5% of its 13F stocks and its No. 25 position. The stock is up 8% since and 3% below its 52-week high, a long way from its $33.54 close in late May.
The reason is a possible buyout. In its October 28 results , GFL said a special committee of independent directors is reviewing unsolicited proposals to take the company private, with a final deadline of November 9 for updated bids. The business is giving bidders reasons to pay up: revenue grew 27% in the quarter, and GFL raised its full-year guidance for the third time this year.
The mean analyst target of $51.95 sits 15% above Friday's $45.21 close, and the stock trades at about 48x forward earnings. Neither matters much now. If a bid lands, its price sets the stock; if none does, the takeover premium already in the price is at risk.
Buenaventura Has the Numbers on Its Side
If I could buy one of the three right now, it would be Buenaventura. It just grew profit 50%, holds net cash, and trades at about 6x forward earnings, while analysts raised their targets as the stock fell.
The risk is metal prices. A miner's estimates can drop fast when gold and silver fall, and 6x is only cheap if those estimates hold.
West Fraser needs a better lumber market before it earns money again. GFL is a coin flip on a deal, and November 9 decides it. The fund's next 13F, due by mid-February, will show whether it held on to all three.
So What Are These Three Stocks Actually Worth?
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