HOTCHKIS & WILEY

HOTCHKIS & WILEY

Last Update: 08-12-2016

Number of Stocks: 179
Number of New Stocks: 14

Total Value: $23,367 Mil
Q/Q Turnover: 5%

Countries: USA CAN
Details: Top Buys | Top Sales | Top Holdings  Embed:

HOTCHKIS & WILEY Watch

  • Hotchkis & Wiley Sells JPMorgan, Boosts Wells Fargo

    HOTCHKIS & WILEY was formed in Los Angeles in 1980 and has focused exclusively on finding and owning undervalued companies that have a significant potential for appreciation. During the second quarter the company traded the following stocks.


    The company reduced its stake in Great Plains Energy Inc. (GXP) by 76.09% with an impact of -0.77% on the portfolio.

      


  • Hotchkis & Wiley Large Cap Diversified Value

    The S&P 500 Index returned +2.5% during the second quarter of 2016. There was wide performance dispersion across sectors, with the best-performing sector (energy) outperforming the worst-performing sector (technology) by more than 14 percentage points. Despite the partial rebound in energy this quarter, over the last 12 months we have observed a massive flight away from cyclical market segments in favor of non-cyclicals. Pundits have described this trend as “risk off”, “flight to safety”, “low volatility”, “bond proxy” etc., but the reality is that non-cyclical businesses now appear to trade at an unusually high premium to cyclical businesses. Macroeconomic shocks like Brexit have only exacerbated the divergence. True to Benjamin Graham, we view stocks trading at discounts to intrinsic value as having a margin of safety. Ironically, it has become difficult to identify a margin of safety in businesses currently perceived as “safe” because their valuations have become stretched. Accordingly, our modest overweight allocation to cyclicals reflects the risk-adjusted valuation opportunities available and not a macroeconomic outlook. The most attractive individual opportunities reside within financials and energy, though we remain slightly underweight both sectors relative to the Russell 1000 Value as only select segments within the sectors offer compelling risk adjusted valuations—albeit highly compelling. Relative to the Russell 1000 Value Index the portfolio is overweight consumer discretionary and technology, underweight consumer staples, and relatively equal-weight other sectors. We do not know when value dislocations will revert, nor are we certain that these dislocations will not widen further before reverting. We have learned from past experience, however, that these cycles inevitably do normalize and we believe that our portfolio is well-positioned to benefit.


    Interest rates declined during the quarter, largely influenced by investors’ flight to US Treasuries in the aftermath of Brexit. The low rate environment has been a stubbornly persistent macroeconomic headwind for most financials, with banks disproportionately affected because their net interest margins are pressured. From a bottom-up fundamental perspective, however, the strengthening posture of US banks has been quite encouraging. Profitability has been solid and capital ratios are at/near all-time highs. All companies subjected to the Fed’s stress test have passed, which improves the potential for increased returns of capital to shareholders. Buying back shares at/below book value can be highly accretive and this group’s payout yield (dividends + share repurchases) currently stands at 8%1. Financials represent the portfolio’s largest sector, though the weight is about equal to that of the Russell 1000 Value—we are overweight banks and underweight REITs.

      


  • Hotchkis & Wiley's Best Investments Year to Date

    HOTCHKIS & WILEY are value investors focusing on important investment parameters such as a company's tangible assets, sustainable cash flow and potential for improving business performance. It manages a portfolio composed of 173 stocks with total value of $23.763 billion.


    Marathon Oil Corp. (MRO)

      


  • Bed Bath & Beyond Among Companies With Growing EPS

    Companies with growing EPS are often good investments as they can return a good profit to investors. Here is a selection of the most undervalued companies, according to the DCF calculator, that have a five-year growing EPS.


    Earnings per share of Bed Bath & Beyond Inc. (BBBY) grew by 10% over the last five years and according to the DCF calculator, the stock at the price of about $45 is undervalued and trading with a margin of safety of 50%.

      


  • Hotchkis & Wiley Boosts Stake in Discovery Communications

    Hotchkis & Wiley, an independent investment firm, increased its position in Discovery Communications Inc. Class A (NASDAQ:DISCA) by 50.02% as the company increased revenues and operating income during the first half of 2016.


    The firm initially purchased 3,888,600 shares of Discovery Communications at an average price of $31.39 during the first quarter of 2015. Throughout 2015, Hotchkis and Wiley raised their position to 9,875,281 shares, finishing the first quarter of 2016 with 10,347,018 shares. As of June 30, the independent firm owned 15,522,485 shares of Discovery Communications after purchasing 5,175,467 shares at an average price of $25.23.

      


  • Hotchkis & Wiley Buys Morgan Stanley, Citigroup, AIG in 1st Quarter

    HOTCHKIS & WILEY was founded in 1980 by John Hotchkis and George Wiley, value investors focusing on important investment parameters such as a company's tangible assets, sustainable cash flow and potential for improving business performance. During the first quarter the firm bought shares in the following stocks:


    The firm increased its stake in Marathon Oil Corp. (MRO) by 44.55% with an impact of 0.8% on the portfolio.

      


  • Companies Fall to 5-Year Lows

    According to GuruFocus' list of five-year lows, these guru stocks have reached their five-year lows: Guess? Inc. (NYSE:GES), Quality Systems Inc. (NASDAQ:QSII), RPX Corp. (NASDAQ:RPXC) and Ruby Tuesday Inc. (NYSE:RT).


    Guess? reaches $15.71

      


  • Valuing Best Buy for Potential Catalyst

    Best Buy (NYSE:BBY) is the largest specialty retailer of consumer electronics in the U.S. As of February, it had 1,037 stores in the U.S., whereas the number of international Best Buy stores stood around 216 with 350 stand-alone Best Buy mobile stores in the U.S. that focus on mobile phones and accessories. Currently the stock is trading at a P/E multiple of 10.30 while comparing it with peers, and it has an upside potential of 30% from the market price of $30.06.


    Company overview

      


  • Growing EPS, Margin of Safety: Herbalife, Viacom

    Companies with growing EPS are often a good investment as they can return a good profit to investors. Here is a selection of the most undervalued companies, according to the DCF calculator, that have a five-year growing EPS.


    Earnings per share of Silicom Ltd. (NASDAQ:SILC) grew by 23% over the last five years and according to the DCF calculator, the stock at Thursday's price of $28.4 is undervalued and trading with a margin of safety of 52%.

      


  • Hotchkis & Wiley Global Value Fund 1st Quarter Commentary

    MARKET COMMENTARY


    The Russell Developed Index had a flat -0.04% return during the first quarter of 2016, though it was anything but a flat trajectory. On February 11th, the index was down by more than 11% for the year before recovering over the quarter’s final seven weeks. This date also represented a turning point in the value/growth cycle. From the beginning of the year through February 11th, Russell Developed Index stocks with the lowest price-to-book ratios (lowest quintile) underperformed the index -20.5% vs. -11.7%. From February 11th through the end of the quarter, however, this lowest valued quintile outperformed the index +16.5% vs. +13.2%. While it is too early to proclaim a new value cycle is upon us, it is noteworthy that such cycles have lasted between 5 and 8 years historically once they have taken hold—this would be a welcomed tailwind for our approach.

      


  • Hotchkis & Wiley Large Cap Value Fund First Quarter Commentary

    MARKET COMMENTARY


    The S&P 500 Index returned +1.35% during the first quarter of 2016, though it was anything but a steady trajectory. On February 11th, the S&P 500 Index was down by more than 10% for the year before recovering over the quarter’s final seven weeks. This date also represented a turning point in the value/growth cycle. From the beginning of the year through February 11th, S&P 500 Index stocks with the lowest price-to-book (P/B) ratios (lowest quintile) underperformed the index -16.1% vs. -10.3%. From February 11th through the end of the quarter, however, this lowest valued quintile outperformed the index +16.2% vs. +13.0%. While it is too early to proclaim a new value cycle is upon us, it is noteworthy that such cycles have lasted between 5 and 8 years historically once they have taken hold—this would be a welcomed tailwind for our approach.

      


  • Bed Bath & Beyond Is a Serious Buy Right Now

    The 20% off standard has served the company well over the years, helping it grow from $3 billion in sales in 2002 to over $12 billion today. Just looking through Bed Bath & Beyond’s (NASDAQ:BBBY) 15-year financial record is impressive, but the past does not equal the future.


      


  • Hotchkis & Wiley Diversified Value Fund First Quarter Commentary

    The S&P 500 Index returned +1.35% during the first quarter of 2016, though it was anything but a steady trajectory. On February 11th, the S&P 500 Index was down by more than 10% for the year before recovering over the quarter’s final seven weeks. This date also represented a turning point in the value/growth cycle. From the beginning of the year through February 11th, S&P 500 Index stocks with the lowest price-to-book ratios (lowest quintile) underperformed the index -16.1% vs. -10.3%. From February 11th through the end of the quarter, however, this lowest valued quintile outperformed the index +16.2% vs. +13.0%. While it is too early to proclaim a new value cycle is upon us, it is noteworthy that such cycles have lasted between 5 and 8 years historically once they have taken hold—this would be a welcomed tailwind for our approach.


    In most market environments, some sectors/industries are coveted while others are shunned depending on the market’s disposition at the time. This behavior often results in a market that exhibits a bifurcation in stock valuations. Currently, this dichotomy is quite pronounced. Investors are fearful that the economic woes in China and other emerging economies will spill over into the US and other developed markets. This fear has caused investors to pay 20x earnings or more for the perceived safety of non-cyclicals like consumer staples or real estate and sell cyclicals like energy or industrials at a fraction of the valuation. We believe when “safe” stocks trade at excessive valuations they become risky, not safe, which is the market’s current paradox. Taking the long-term view, we see compelling risk-adjusted valuation opportunities in select market segments that have been shunned. Our bottom-up search for value in today’s market yields a portfolio that trades for 8.3x normal earnings and 1.2x book value, which represents a considerable discount to the Russell 1000 Value Index (13.2x and 1.7x, respectively) and an even larger discount to the S&P 500 Index (15.9x and 2.6x, respectively).

      


  • Hotchkis & Wiley Sells Out of Comstock Resources

    Hotchkis & Wiley sold its 4,669,830-share stake in Comstock Resources Inc. (NYSE:CRK) on March 31.


    Comstock Resources is based in Frisco, Texas, and is engaged in the acquisition, development, production and exploration of oil and natural gas with operations concentrated in Texas, Louisiana and Mississippi. The company's proven oil and natural gas reserve base is 91% natural gas and 9% oil and was 59% developed as of Dec. 31, 2015.

      


  • Hotchkis & Wiley Sells Stake in Most Heavily Weighted Sector

    Financial Services is the most heavily weighted sector in HOTCHKIS & WILEY’s portfolio, and the guru’s most noteworthy fourth-quarter transaction was in that sector, but it was a divestiture, not an acquisition.


    HOTCHKIS & WILEY sold its 2,466,713-share stake in Chubb Ltd. (NYSE:CB), an insurance and finance company based in Zurich, for an average price of $118.27 per share. The divestiture had a -1.21% impact on the guru’s portfolio.

      


  • Stocks Bring High Dividend Yields to HOTCHKIS & WILEY

    HOTCHKIS & WILEY has focused exclusively on finding and owning undervalued companies that have a significant potential for appreciation. Following are the stocks that have high dividend yields in that portfolio.


    Denbury Resources Inc. (DNR)

      


  • Hotchkis & Wiley Invests in International Paper, Packaging Corp. of America and Eaton

    Hotchkis & Wiley Capital Management LLC made a dozen new buys in the third quarter.


    Hotchkis & Wiley was founded in 1980 by John Hotchkis and George Wiley. They shared the belief that discipline and independent analysis are the keys to finding undervalued securities that have the potential for appreciation. For more than 35 years, Hotchkis & Wiley has been managing value portfolios for institutional and individual investors. Following are the stocks that got new positions in the portfolio during the third quarter.

      


  • Tom Gayner Buys Harley-Davidson and JPMorgan in 3rd Quarter

    Tom Gayner (Trades, Portfolio) is the executive vice president and chief investment officer of Markel Corp. (NYSE:MKL) and president of Markel Gayner Asset Management Inc. He thinks stock is part of a business, and the business is worth what the present value of the future cash flows are.


    His portfolio is composed of 122 stocks, and the following are the most heavily weighted trades during the third quarter.

      


  • Hotchkis & Wiley Sells Stake in UnitedHealth Group

    Hotchkis & Wiley was founded in 1980 and is based in Los Angeles. The firm follows a value strategy, focusing on important investment parameters such as a company's tangible assets, sustainable cash flow and potential for improving business performance.


    Hotchkis & Wiley sold the following stocks in the third quarter and had good gains of 83%, 62% and 52% from UnitedHealth Group, Lowe's Companies and Symetra Financial Corp.

      


  • HOTCHKIS & WILEY Buys More Than 7 Million Shares in Oil and Gas Company

    Since its founding in 1980, HOTCHKIS & WILEY has emphasized finding and owning undervalued companies with significant potential for appreciation. Its approach has regularly produced double-digit returns for its clients in recent years.


    HOTCHKIS & WILEY’s most noteworthy third-quarter transaction was its purchase of a 7,683,558-share stake in Hess Corp. (NYSE:HES), a New York-based oil and gas company, for an average price of $57.23 per share. The deal had a 1.54% impact on HOTCHKIS & WILEY’s portfolio.

      


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