MTW: Exiting Following Solid Beat

 

                             

Summary

 

Our MTW thesis based on its exposure to a recovery in construction and break-up value (see 10/28/13 “MTW: Next Activist Value Target?”) has played out well.  Given current market prices, the shares have entered our fair value range in a softer equity market and potentially less attractive macro environment.  We also would prefer to own OC (and potentially other building products names) at current levels for construction exposure, rather than MTW at ~$27.60.  We are not signaling an MTW problem/short/sell, but rather responding to our repricing thesis working out in a market offering some better construction-exposed opportunities.  If MTW shares retreat, we would look to re-enter, with our thesis put forth in our March 2013 Mining & Construction Equipment black book.

 

 

Quick Take

 

  • Solid Beat:  MTW readily exceeded expectations for the quarter, principally on 10% revenue growth in Foodservice Equipment amid solid margin gains.
  • Both Segments Grow: Excluding $120 million shift in 2012 Crane revenues between quarters, the Crane segment showed 4Q growth of 9.3% - consistent with other strong construction equipment sales readings.
  • Less Under Recognized:  MTW is better recognized today, with several of our catalysts having occured (e.g. the redemption of a high cost/problematic covenant tranche of debt has now been announced.)
  • Better Options:  We see OC as a better exposure for 2014 from current levels to a construction rebound following MTW’s ~35% total return since late October (vs. a roughly flat S&P 500).

MTW: Exiting Following Solid Beat - lkj

 


Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more

Europe's Battles Against Apple, Google, Innovation & Jobs

"“I am very concerned the E.U. maintains a battle against the American giants while doing everything possible to sustain so-called national champions," writes economist Daniel Lacalle. "Attacking innovation doesn’t create jobs.”

read more

An Open Letter to Pandora Management...

"Please stop leaking information to the press," writes Hedgeye Internet & Media analyst Hesham Shaaban. "You are getting in your own way, and blowing up your shareholders in the process."

read more

A 'Toxic Cocktail' Brewing for A Best Idea Short

The first quarter earnings pre-announcement today is not the end of the story for Mednax (MD). Rising labor costs and slowing volume is a toxic cocktail...

read more

Energy Stocks: Time to Buy? Here's What You Need to Know

If you're heavily-invested in Energy stocks it's been a heck of a year. Energy is the worst-performing sector in the S&P 500 year-to-date and value investors are now hunting for bargains in the oil patch. Before you buy, here's what you need to know.

read more

McCullough: ‘My 1-Minute Summary of My Institutional Meetings in NYC Yesterday’

What are even some of the smartest investors in the world missing right now?

read more

Cartoon of the Day: Political Portfolio Positioning

Leave your politics out of your portfolio.

read more

Jim Rickards Answers the Hedgeye 21

Bestselling author Jim Rickards says if he could be any animal he’d be a T-Rex. He also loves bonds and hates equities. Check out all of his answers to the Hedgeye 21.

read more

Amazon's New 'Big Idea': Ignore It At Your Own Peril

"We all see another ‘big idea’ out of Amazon (or the press making one up) just about every day," writes Retail Sector Head Brian McGough. "But whatever you do, DON’T ignore this one!"

read more