Causeway Capital Management was founded in 2001 by Ketterer and Harry Hartford. The Los Angeles-based company selects stocks from large and medium-sized companies in industrialized countries around the world. Your screens use quantitative, value-based metrics and a “risk score” to find potential investment opportunities. After screening, the investment team selects the stocks that have the cheapest risk-adjusted returns, price-earnings ratios, and dividend yields.
Based on the above criteria, the company’s key new purchases for the quarter were ViacomCBS Inc. (NASDAQ: VIAC), General Electric Co. (NYSE: GE), FedEx Corp. (NYSE: FDX) and Ashland Global Holdings Inc. (NYSE: ASH).
<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "ViacomCBS“data-reactid =” 20 “>ViacomCBS
Causeway acquired 4,540,401 shares in ViacomCBS in the quarter following the merger of CBS and Viacom (prior to the merger, the company held 5,601,770 shares in Viacom). Trading had a 2.04% impact on the equity portfolio. The shares were trading for $ 38.79 each in the quarter.
Viacom was originally a spin-off from CBS in 2006, so the merger is not expected to have a major impact on operations. The New York City-based multinational mass media conglomerate mainly owns film and TV assets, including live sports, news, classic shows like Star Trek, and television stations like Nickelodeon.
On February 14, ViacomCBS shares were trading at $ 34.78 with a market capitalization of $ 21.5 billion, a price-earnings ratio of 4.49 and a dividend yield of 2.21%. According to the Peter Lynch chart, stocks are clearly undervalued.
GuruFocus has given ViacomCBS a financial strength rating of 4 out of 10 and a profitability rating of 8 out of 10. The interest coverage of 6.09% and the Altman Z value of 0.97 are at the lower end of the spectrum, although the current ratio of 1.52 means that the company can meet its short-term debt obligations. The three-year sales growth rate of 13.7% exceeds 80.38% of the competitors.
The merger of CBS and Viacom offers two factors that can support the company’s growth: a double market share of television viewers and a content list that will appeal to a wide audience. The combined company will reach 4.3 billion subscribers worldwide, with brands covering many content categories and demographics in 183 countries and 45 languages.
<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "General Electric“data-reactid =” 66 “>General Electric
Following the sale of a previous stake in General Electric in the third quarter of 2019, the company invested in 16,965,702 shares in the company, which affected the equity portfolio by 2.03%. During the quarter, stocks were trading at an average price of $ 10.42 each.
General Electric, headquartered in Boston, Massachusetts, is a large multinational conglomerate known for its kitchens and other household appliances. It also owns companies in a variety of sectors, including aerospace, healthcare, financial services, and energy.
On February 14, General Electric shares were traded around $ 12.82 for a market cap of $ 111.7 billion and a dividend yield of 0.31% each. According to the Peter Lynch chart, the stock may be overvalued.
General Electric has a GuruFocus financial strength rating of 4 out of 10 and a profitability rating of 7 out of 10. The interest coverage of 1.93 and the Altman Z-Score of 1.58 are below 87.87% of the competition. The three-year 6.8% revenue growth rate is average across the industry, but the negative return on investment is a big disadvantage.
In mid-2018, Larry Culp took over the management of the company after years of losses, which a whistleblower had allegedly largely covered up with accounting fraud. The massive conglomerate has generated an increasing portion of its profits from the energy business. It may therefore be worthwhile to keep an eye on changes in the energy sector to see if the company can recover.
<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "FedEx“data-reactid =” 129 “>FedEx
Causeway sold its former FedEx stake in the first quarter of 2019, but built a new position in the company that quarter with 993,057 shares. Trading had a 1.61% impact on the equity portfolio. The shares traded at an average price of $ 154.38 each in the quarter.
FedEx is a multinational delivery service based in Memphis, Tennessee. It is the number one address in the United States when it comes to fast shipping for individuals and small online businesses. The stores also offer printing services where customers can print posters, flyers and presentations in high quality.
On February 14, FedEx shares traded at around $ 158.57 with a market capitalization of $ 41.33 billion, a price-earnings ratio of $ 755.66 and a dividend yield of 1.63%. According to the Peter Lynch chart, sales can be overvalued.
FedEx has a GuruFocus financial strength rating of 4 out of 10 and a profitability rating of 7 out of 10. The interest coverage of 6.71% and the Altman Z score of 2.06 are low, but are still in a safe range. The three-year sales growth rate of 13.4% is tempered by a decline in net income for 2019.
Chairman and CEO Frederick W. Smith commented on FedEx’s earnings report for the second quarter of fiscal 2020 as follows:
“Fiscal year 2020 is a year of ongoing significant challenges and changes for FedEx, particularly in the quarter that has just ended due to the compressed shipping season. We have enhanced our e-commerce capabilities through strategic initiatives, including FedEx’s year-round delivery Ground over seven days, significantly improved These changes have been well received by the market, which is reflected in our record volumes this high season, and although we saw some higher expenses than expected this quarter, we forecast FedEx. Ground operating margins will be in our fourth Business quarter to recover on teenagers as the wave of costs for these changes is absorbed. “
<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "Ashland Global Holdings“data-reactid =” 191 “>Ashland Global Holdings
The company also founded a new 1,448,021 shares in Ashland Global Holdings, which will affect the equity portfolio by 1.19%. The shares were trading around $ 75.86 during the period.
Ashland is a leading provider of specialty chemicals and chemical technologies. The company has reorganized itself in recent years, sold unprofitable companies and made further acquisitions in the specialty chemicals sector.
On February 14, Ashland shares traded at around $ 80.87 with a market capitalization of $ 4.11 billion, a price-earnings ratio of 8.52 and a dividend yield of 1.33%. According to the Peter Lynch chart, stocks may currently be overvalued.
GuruFocus gave Ashland a financial strength rating of 4 out of 10 and a profitability rating of 5 out of 10. The interest coverage of 1.74% and the Altman Z-Score of 1.34 are low, although the current rate of 1.95 indicates that the company can meet its short-term debt obligations. Sales have decreased by an average of 6.2% per year in the past three years.
The chart above shows that the company has been shrinking with positive profitability results since the 1990s. While total sales decreased with each round of sales, net income was at the same median.
<p class = "canvas-atom canvas-text Mb (1,0em) Mb (0) – sm Mt (0,8em) – sm" type = "text" content = "Portfolio Overview“data-reactid =” 237 “>Portfolio Overview
At the end of the quarter, the equity portfolio included positions in 87 stocks and was valued at $ 9.32 billion. The fluctuation rate was 15%.
The company’s top positions were Linde PLC (LIN) with 10.8% of the equity portfolio, Baidu Inc. (BIDU) with 8.95%, Ovintiv Inc. (OVV) with 6.86%, Ryanair Holdings PLC (RYAAY) with 6.06% and Alibaba Group Holding Ltd (BABA) with 4.84%. In terms of portfolio weight, the company has invested the most in technology, communications services and basic materials.
Read more here:
- Seth Klarman’s top trades in the fourth quarter
- Daniel Loeb’s top trades for the fourth quarter
- Ken Fischer’s top purchases in the fourth quarter
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