Jeff Ubben (Trades, Portfolio), founder of ValueAct Holdings L.P., an $18,092 million hedge fund, during the first quarter of 2015 decided to sell out his stake in Rockwell Collins Inc (COL)as did Guru Jim Simons (Trades, Portfolio).
Ubben sold out 4,465,000 shares; that investment started in 2012 Q4 and gave him a total return of 45%. He started to sell his shares during 2014 Q4 when he sold 59.60% of his stake, then he closed his position during the past quarter, selling the remaining 40.4%. This sale had an impact of 2.4% on his portfolio.
The company designs, produces and supports communications and aviation systems for commercial and military customers. The integrated system solutions and products it provides to served markets are oriented around a set of core competencies: communications, navigation, automated flight control, displays/surveillance, simulation and training, integrated electronics and information management systems.
Rockwell Collins Inc has a market cap of $ 12.57 billion and an enterprise value of 14.76 billion. It has positive returns (ROE 34.20%, ROA 9.09% and ROC 42.60%) that are ranked higher than 91% of other companies in the global aerospace & defense industry and is now trading at $95 with a P/E(ttm) of 19.90, a forward P/E of 16.58 and a price to book ratio of 6.50. The price rose by 19% over the last year and doubled (+94%) during the last 10 years.
The company had strong results in the first half of fiscal 2015 and show that its roughly 20,000 dedicated employees every day are focusing on providing trusted, innovative solutions to their customers. These results are: 7% organic revenue growth, 13% earnings per share growth, and a 69% improvement in their operating cash flow.
Robert Kelly Ortberg, chief executive officer and president, is very focused on the employees' feedback and this is why he visited many of them around the world and discussed the direction the company is headed. He found there's a groundswell of energy and excitement across the company driven by the employees' strong positions, their opportunities for global growth and expectations .
Forbes magazine recently ranked the company among America's 500 best employers for 2015. More specifically, Rockwell Collins rated as the number one employer in the U.S. aerospace and defense industry.
During the quarter, it achieved a number of milestones which are supporting the long-term growth objectives. Rockwell Collins is expanding its cabin offerings to include a powerful portfolio of onboard applications and connectivity solutions that will help engage, entertain and empower its passengers; in March, it announced the acquisition of Pacific Avionics.
As part of their overall connectivity strategy, they recently signed a memorandum of understanding to develop and provide the SATCOM terminals for OneWeb's global aviation, high-speed broadband service. Also they will be a value-added reseller of OneWeb's service.
The company management is hopeful about the future of the partnership with OneWeb and how it strategically positions the company in this evolving broadband connectivity market.
In January, they launched their commercial flight simulation joint venture, called ACCEL, with Beijing's Bluesky Aviation Technology company. After that launch, they'll now be offering 737 and A320 simulators. This JV is targeted at the growing Chinese simulation market.
For the second quarter of 2015 their sales increased to $82 million or 7% compared to the second quarter of 2014. Income from continuing operations improved $15 million or 10% over the prior year and these are improved primarily due to the higher sales.
