Charles Brandes

Charles Brandes

Last Update: 08-11-2016

Number of Stocks: 190
Number of New Stocks: 26

Total Value: $6,546 Mil
Q/Q Turnover: 4%

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

Charles Brandes Watch

  • Charles Brandes Trimmed Holdings in 2nd Quarter

    In six of his top 10 quarterly transactions, Charles Brandes (Trades, Portfolio), chairman of Brandes Investment Partners, trimmed positions in the portfolio in the second quarter.


    Three of the companies are based in South America, one is based in London, one is based in Luxembourg, and the sixth is based in Chicago.

      


  • Sanofi Sues Merck Over Patent Infringement

    French pharmaceutical giant Sanofi SA (NYSE:SNY) filed a lawsuit against Merck & Co. (NYSE:MRK) for supposed patent infringements last Friday.


    The company has taken action in an attempt to prevent its American rival from releasing a competing version of its best-selling insulin Lantus. Sanofi claims Merck’s international division, Merck Sharp & Dohme Corp., violated up to 10 patents held by the company. Among them are its Lantus and SoloStar products.

      


  • Arnold Schneider Adds to Approach Resources

    Arnold Schneider (Trades, Portfolio) of Schneider Capital Management added to his position in Approach Resources Inc. (NASDAQ:AREX) on Aug. 31.


    Schneider is president, chief investment officer and principal of Schneider Capital, which he founded in 1996. Schneider believes disciplined value investing produces the best investing success over time. He depends on research geared toward identifying stocks and securities that are undervalued but have potential for positive change.

      


  • Mario Gabelli Buys Stake in Higher One

    Mario Gabelli (Trades, Portfolio) purchased a 69,100-share stake in Higher One Holdings (ONE) at an average price of $3.78 per share during the second quarter. Since the purchase Higher One’s market price has gained an estimated 36% in value.


      


  • ITT Tech Shuts Its Doors Amid Investigation

    ITT Technical Institute, a subsidiary of ITT Educational Services Inc. (ESI), closed its doors Tuesday after the government banned the institution from enrolling new students receiving federal aid in August.


    The closure follows accusations by the Institute’s accreditor of mismanagement of its finances and using questionable recruiting tactics. ITT Educational Services is also under investigation by state and federal authorities. After sanctions were implemented by the government, the institution released a statement indicating the chances of staying open were bleak as the institution was not only restricted from receiving federal aid for tuition but also required to increase cash reserves from $94.4 million to $247.3 million.

      


  • Charles Brandes Continues to Invests in Pain Therapeutics

    Charles Brandes (Trades, Portfolio) is the chairman of Brandes Investment Partners. He started the firm in 1974. In both the first and second quarters the guru bought shares in the following stocks:


    ITT Educational Services Inc. (ESI)

      


  • Brandes Funds Comments on Ericsson

    The All-Cap Investment Committee initiated a position in Sweden-based Ericsson (NASDAQ:ERIC). The company is the global leader in wireless infrastructure, with 40% of the world’s mobile traffic running through its networks.

      


  • Brandes Funds Comments on Fuji Media Holdings

    During the quarter, the Small-Cap Investment Committee initiated a position in Japanese Fuji Media Holdings (TSE:4676).

      


  • Brandes Funds Comments on Nokia

    Nokia (NYSE:NOK) has evolved quite significantly over the past few years, divesting several businesses while integrating and acquiring others in an effort to improve its scale and competitive positioning. Historically known as a mobile phone manufacturer, Nokia sold this business to Microsoft for $7.2 billion in 2013. The company also sold its HERE mapping business to a consortium of German carmakers for € 2.55 billion in 2015.


    Nokia largely retained its mobile technology patents after selling off its phone business. As a result, the company now has a patent/technology licensing business which has generated close to $1 billion/year in high-margin revenue. The company is also working to license non-essential patents.

      


  • Brandes Funds Comments on Embraer

    For Embraer (NYSE:ERJ), which derives the majority of its sales outside Brazil, the real’s appreciation continued to present a headwind. The company has also been experiencing margin compression, mainly due to the mature state of its current product mix ahead of the launch of its second-generation models expected in 2018. We see the challenges facing Embraer as temporary in nature and we continue to believe the company represents an attractive investment opportunity.

      


  • Brandes Global Equity Fund 2nd Quarter Commentary

    Market Overview

      


  • Brandes Funds Comments on Kasikornbank

    Established a year later in 1945, Kasikornbank (BKK:KBANK) is Thailand’s fourth-largest bank. The company provides a broad range of consumer, commercial and corporate banking services, including lending, deposit-taking, credit-card services, international-trade financing, custodian services, asset management, investment banking, life insurance and leasing. Moreover, Kasikornbank is the leader in Thailand’s small-/mid-enterprise lending market, which offers higher margins than retail and corporate lending segments.


    The Thai banking industry is in the midst of a credit cycle where asset quality started deteriorating in 2015 due to the slowing economy. In descending order of credit risk, small-/ mid-enterprise lending has represented the highest level of non-performing loans, followed by retail and corporate lending. However, we believe both Bangkok Bank and Kasikornbank are well positioned in the market and offer a margin of safety at their current prices—even after adjusting for further credit deterioration over the next few years.

      


  • Brandes Funds Comments on Bangkok Bank

    Founded in 1944, Bangkok Bank (BKK:BBL) is the largest commercial bank in Thailand with assets, loans, and deposits all commanding over 15% in market share. Bangkok Bank offers a universal banking platform with a full range of consumer, small-/mid-enterprise and corporate financial products and services. Additionally, the company boasts a strong franchise with nearly 1,200 domestic branches, 39 international branches and over 9,000 ATMs.

      


  • Brandes Funds Comments on Companhia de Saneamento Basico do Estado de Sao Paulo

    We’ve highlighted our investment in SABESP (NYSE:SBS) in past commentaries when economic fear in Brazil, coupled with a severe drought, brought the market valuation for the company down to what we considered attractive levels. However, there have been a number of incremental positives for SABESP over the past year, including:


    • Rainfall: Thanks to the long-awaited rainfall, the water reservoirs in Sao Paolo region have improved—albeit still low—from the critical levels observed a year ago.
    •   


  • Brandes Funds Comments on Eletrobras

    A long-time position in the Fund, Eletrobras (BSP:LIPR3) is a holding company that operates across the entire electricity value chain. The company is Brazil’s largest electricity provider, controlling 33% of the country’s generation capacity, mainly via hydro plants, and nearly 50% of the transmission grid.


    In late April, Brazil’s Ministry of Mines and Energy announced very favorable compensation payment terms for the residual value of transmission assets built prior to 2000 (previously arbitrarily set to zero). The change marked a significant regulatory turnabout for Eletrobras and drove up its shares. The share-price increase, combined with a strong rally for Brazilian securities in general, led us to believe that the risk/reward tradeoff no longer warranted an investment in Eletrobras.

      


  • Brandes Funds Comments on Erste Group Bank

    Also weighing on performance in the quarter was Erste GroupBank (WBO:EBS), an Austria-domiciled bank with a majority of assets in emerging Europe. European financial companies—Erste was no exception—were negatively impacted by the Brexit news due to increased fears of a euro break-up, prolonged macroeconomic uncertainty and more downward pressure on interest rates. Compared to other developing markets, emerging Central and Eastern European countries tend to have higher exposure to exports to the United Kingdom and the euro zone, as well as currencies that are more correlated to the euro. However, we believe Erste will be relatively resilient due to its strong capital adequacy and improving asset quality.

      


  • Brandes Funds Comments on Embraer

    For Embraer (NYSE:ERJ), which derives the majority of its sales outside Brazil, the real’s appreciation continued to present a headwind. The company has also been experiencing margin compression, mainly due to the mature state of its current product mix ahead of the launch of its next-generation models expected in 2018. We see the challenges facing Copa and Embraer as temporary in nature and we continue to believe they represent attractive investment opportunities.

      


  • Brandes Funds Comments on Copa

    After starting the year with strong performance buoyed by the currency strengthening of a number of Latin American countries in which it operates, Copa (NYSE:CPA) saw its shares decline due to downward revisions to its 2016 guidance on revenue per available seat mile (or RASM, normally used to measure an airline’s efficiency) and operating margins.

      


  • Brandes Funds Comments on Lifestyle International

    Lifestyle International (HKSE:01212) announced in April a proposal to spin off all of its businesses and investments in China as a separate entity in an effort to unlock hidden value. Lifestyle’s Hong Kong and Chinese assets have different growth paths, risk profiles and historical cash-flow generation properties. We generally view the spinoff as positive news as it may increase financial transparency, enable management teams to better focus on their respective businesses, and allow greater access to debt and equity markets.

      


  • Brandes Funds Comments on Estacio

    A bidding war for Estacio (BSP:ESTC3) erupted in early June after Kroton Educacional and Ser, two of Estacio’s peers, made non-binding merger offers for the company. In mid-June, Estacio’s chief executive officer resigned and was replaced on an interim basis by a member of the Zaher family. This development magnified the bidding war as there has been speculation that the Zaher family, which owns 14% of Estacio, is also considering a possible tender offer for 36%-61% of the company in order to acquire majority control.


    While the situation is ongoing, shares of Estacio and Kroton (BSP:KROT3) have appreciated materially on the news of the potential acquisition. The merger between the two companies could produce meaningful synergies, including scale and operational improvements, especially considering Kroton’s margins are materially higher than Estacio’s.

      


  • Brandes Emerging Markets Value Fund 2nd Quarter Commentary

    Market Overview

      


  • John Rogers Continues to Buy Morgan Stanley, Ansys

    John Rogers (Trades, Portfolio) is the founder of Ariel Investment LLC, which he started in 1983. In both fourth quarter 2015 and first quarter 2016 the guru bought shares in the following stocks:


    HSBC Holdings PLC (HSBC)

      


  • Charles Brandes Continues to Buy Avon, Higher One Holdings

    Charles Brandes (Trades, Portfolio) is the chairman of Brandes Investment Partners, the firm he started in 1974. In both fourth quarter 2015 and first quarter 2016, the guru bought shares in the following stocks:


    Endeavour Silver Corp. (EXK)

      


  • Honda Approaches Its 10-Year P/B Ratio Low

    Honda Motor Co. Ltd. (NYSE:HMC) is traded at a P/B ratio of 0.80, close to its 10-year low of 0.72. The company is owned by eight gurus.


    Honda has a market cap of $47.89 billion; its shares were traded around $26.57 with a P/E ratio of 17.38 and P/S ratio of 0.39. The trailing 12-month dividend yield of Honda stock is 2.89%. Honda's forward dividend yield is 3.25%. Honda had an annual average earnings growth of 3.90% over the past 10 years. GuruFocus rated Honda the business predictability rank of 2.5-star.

      


  • Brandes Investments Comments on Chesapeake

    The uncertainty with Chesapeake (NYSE:CHK) is (and has been) the natural gas price. We believe that supply and demand warrant a much higher price than the current sub-$2 per mmBtu level (currently even lower in Pennsylvania where Chesapeake has a significant percentage of its acreage), likely in the $4-$6 range in the medium to long term. At the current natural gas price, producers are cutting capex significantly, which could ultimately impact the supply of natural gas. The path of natural gas prices is uncertain with a lag between capex cuts and changes to production levels. At higher long-term price levels we believe that Chesapeake’s enterprise value would be substantially more than what was valued by the market.


    However, as Chesapeake built out its acreage, it utilized a significant amount of debt, making it one of the more leveraged oil and natural gas companies today. As a result, while we think it likely has access to liquidity to survive the depressed natural-gas price environment for the next year or two, we cannot rule out that the management and board will choose to preemptively file for reorganization under the bankruptcy code in order to restructure the company and reduce the substantial debt burden.

      


  • Brandes Investments Comments on Total

    We purchased France-based Total (NYSE:TOT), a vertically integrated oil company operating at all levels within the oil & gas industry, including exploration & production as well as refining & marketing. We had owned Total in the past and sold it in 2014 after the company had several positive developments. However, over the past year the stock declined significantly with the fall in oil prices and has traded near book value. We believe the company has positive attributes, including:


    • Solid fundamentals: While the market is concerned about the fall in oil prices, we see a strong company with industry-
    •   


  • Brandes Investments Comments on Express Scripts

    Express Scripts (NASDAQ:ESRX) declined 20% during the quarter due to a dispute with its largest client, health insurer Anthem (which accounts for 15%-20% of Express Scripts’ sales), as Anthem believes that Express Scripts needs to pass on larger drug cost savings to its customers. Under the existing contract, Anthem is entitled to a good-faith repricing of the contract terms, the deadline for which was December 15, 2015. As the deadline has passed and Express Scripts still has not provided Anthem with an offer that Anthem deems acceptable, Anthem has recently decided to take legal action against Express Scripts. Express Scripts’ CEO stated the company intends to resolve the dispute and keep Anthem as a customer.


    We believe the market has over-reacted to the dispute as the current valuation prices in more than a complete loss of the Anthem contract. While there are multiple possibilities, we believe the most likely outcome is a renegotiation to extend the contract, likely at a lower margin but with increased volumes due to Anthem’s acquisition of Cigna. However there is a risk that Anthem switches to another vendor or brings the business in-house, although it lacks scale relative to peers. Given that the market seems to have priced in the worst-case outcome, we continue to believe that Express Scripts offers an attractive margin of safety.

      


  • Brandes Investments Comments on Credit Suisse

    Credit Suisse (NYSE:CS) declined over 30% during the quarter as the market remained concerned about the company’s restructuring/turnaround and the possible negative effect on financial results over the next year. Nonetheless, we continue to believe Credit Suisse has an economically attractive business model and is significantly discounted at its current valuation of 0.7x tangible book value. Accordingly, we increased our allocation during the quarter.


    From Brandes' Global Equity Fund first quarter 2016 commentary.

      


  • Brandes Investments Comments on Citigroup

    Citigroup (NYSE:C) has energy-loan exposure of less than 4% of total loans, and is, in our view, positioned to benefit from an eventual increase in interest rates. At its current valuation (as of March 31) of just 60% of book value and 7.7x earnings on depressed net interest margins, we believe the stock offers a compelling investment opportunity.


    From Brandes' Global Equity Fund first quarter 2016 commentary.

      


  • Brandes Global Equity Fund 1st Quarter Commentary

    Equity markets worldwide closed a volatile first quarter of 2016 with mixed performance. After posting losses through mid-February, many markets recovered, fueled by a rebound in oil prices and data pointing to the U.S. economy’s relative strength. Federal Reserve officials gave upbeat assessments of the economy while scaling back the number of rate increases expected this year, citing risks posed by global economic and financial developments.

      


  • Charles Brandes Sells Out Stake in OmniVision Technologies

    Guru Charles Brandes (Trades, Portfolio) sold out his 1,622,993-share stake in Omnivision Technologies (NASDAQ:OVTI) for an average price of $28.16 per share in the first quarter.


    Brandes netted a 13.43% return on investment (ROI) after he increased his stake by fivefold during the third quarter of 2015.

      


  • Brandes Funds Comments on Publicis

    Publicis (XPAR:PUB) is the world’s third-largest global ad agency holding company, with many valuable brands such as Saatchi & Saatchi, Leo Burnett, Razorfish, ZenithOptimedia, and Starcom MediaVest. Publicis has historically been a well-run company with a sound balance sheet and industry-leading margins.


    In our view, the business model of ad agencies has attractive economics given their variable cost structure, industry consolidation, and exposure to long-term ad spending and global gross domestic product growth. While the industry as a whole appears to be valued somewhat fully by the market, Publicis has been the recent exception due to concerns over slowing organic growth, a handful of recent account losses and its acquisition of Sapient (its largest acquisition to date), which was seen as expensive.

      


  • Brandes Funds Comments on Credit Suisse

    Credit Suisse (NYSE:CS) saw its shares fall over 30% in the quarter as the market remained concerned about the company’s restructuring and its negative effect on financial results over the next year. Nonetheless, we continue to believe Credit Suisse has an economically attractive business model and is significantly discounted at its valuation of 0.7x tangible book value as of March 31.


    From Brandes International Equity Fund first quarter 2016 commentary.

      


  • Brandes Funds Comments on Barclays

    Barclays (LSE:BARC) declined as it announced a dividend cut and a rationalization of some of its businesses in efforts to focus on its core U.K. and U.S. markets and improve its capital position. Trading at 50% of tangible book value at quarter end, Barclays offers, in our opinion, an attractive risk/reward tradeoff as we believe it should see the benefits of its restructuring over the next couple of years.


    From Brandes International Equity Fund first quarter 2016 commentary.

      


  • Brandes International Equity Fund Q1 Commentary

    Market Overview

      


  • Brandes Funds Comments on Embraer

    Brazilian regional jet manufacturer Embraer (NYSE:ERJ) also weighed on returns as the real’s appreciation presented a headwind for the company, which derives the majority of its sales outside Brazil. Moreover, Embraer’s 2015 earnings indicated margin compression and the company issued guidance that was lower than market expectations. Pressure on the defense segment also hurt performance.


    The margin compression was not surprising to us given the product transition that is underway in Embraer’s commercial aircraft division. With regard to the defense segment, we see the issue astemporary as it is driven by a cut in the Brazilian defense budget and we believe Embraer will generate more defense revenue from abroad over the longer term. Accordingly, it is our view that the long-term investment thesis for Embraer remains compelling.

      


  • The Investors’ Dilemma: Why 2016 May Be a Turning Point - Brandes Investment Funds

    Many institutional investors ostensibly support the idea of focusing on long-term horizons. “Short-termism” suggests speculation, with exposure to the randomness of volatile markets. For institutions, the investors’ dilemma is that their obligations are long term but regulatory and behavioral pressures increasingly exert short-term influences on their decisions. Institutional funds and their investment managers are stewards of the capital entrusted to them, with liabilities that may have a multi-decade or even a multi-generational time horizon. They must maintain a long-term perspective.

      


  • Avon's Price Looks Attractive Enough

    Avon Products Inc. (NYSE:AVP) is a $1.64 billion market cap company, which is the world's leading direct marketer of cosmetics, toiletries, fashion jewelry and fragrances, with about 6 million sales representatives worldwide.


    Strategic alternatives

      


  • Charles Brandes Trims Stake in South American Petroleum Company

    Charles Brandes (Trades, Portfolio) of Brandes Investment bought more than two dozen new stakes in the first quarter, but most were comparatively small investments in companies serving primarily the Northern Hemisphere. His largest transaction was his reduction of a South American stake.


    Brandes sold more than 37% of his stake in Petroleo Brasileiro SA Petrobras (NYSE:PBR.A), a Brazilian petroleum company. The guru sold 22,297,024 shares for an average price of $3 per share. The transaction had a -1.15% impact on Brandes’ portfolio.

      


  • Brandes Emerging Markets Value Fund 1st Quarter Commentary

    Market Overview

      


  • Guru Stocks With Low PS Ratio, Wide Margin of Safety

    According to GuruFocus' All-in-One Screener, the following are companies with a market cap above $5 billion that are trading with a very low P/S ratio.


    Telecom Italia SpA (TI) is trading at about $12 with a P/S ratio of 1 and an estimated forward P/E multiple of 11.68. The company has a market cap of $22.45 billion and over the last 10 years, the stock has dropped by 61%. During the last 52 weeks, the price has been as high as $14.18 and as low as $8.89.

      


  • Charles Brandes' Top Buys During the 4th Quarter

    Charles Brandes (Trades, Portfolio), chairman of Brandes Investment Partners, increased his stakes in many stocks in the fourth quarter.


    He raised his stake in Credit Suisse Group AG (CS) by 121.44%. The deal had an impact of 0.52% on the portfolio.

      


  • Charles Brandes Bets on Aaron's, Small-Cap ETF

    Charles Brandes (Trades, Portfolio) is the portfolio manager for the US Equity and Global Equity strategies at Brandes Investment Partners, the firm he founded in 1974. During the fourth quarter, he initiated new positions in 13 new stocks, according to data reported by GuruFocus Real Time Picks.

    Aaron’s Inc. (NYSE:AAN)  


  • Brandes Makes a Variety of Reductions in 4th Quarter

    Charles Brandes (Trades, Portfolio), chairman of Brandes Investment Partners, reduced 89 stakes in his portfolio in the fourth quarter. His most noteworthy reductions crisscrossed the globe and spanned an investing spectrum that included several in oil and gas companies but also touched on banking and financial services and technology stocks.


    Brandes made his most significant fourth-quarter reduction in his stake in Embraer SA (NYSE:ERJ), a Brazilian aerospace and defense company. Brandes trimmed his stake by more than 8%, selling 980,533 shares for an average price of $29.38 per share. The transaction had a -0.37% impact on Brandes’ portfolio.

      


  • Brandes Investment Trust Comments on MediaTek

    Fund activity was relatively light in the quarter. The emerging markets investment committee initiated a position in Taiwanese semiconductor company MediaTek. MediaTek (TRE:2454) is the world’s second-largest supplier of mobile phone-related semiconductors. The company has benefited significantly over the past few years due in large part to its strong relationships with smartphone vendors in China, where growth has been significant.


    MediaTek competes in a difficult market environment, with relatively low barriers to entry and low customer stickiness. In addition, it is unlikely that MediaTek’s core end market (i.e. Chinese smartphones) can sustain the growth it has delivered in recent years, potentially keeping future returns from being as strong as they have been.

      


  • Brandes Investment Trust Comments on Cemex

    Holdings in Mexico hurt returns in the fourth quarter, notably cement company Cemex (NYSE:CX). With the majority of Cemex’s debt denominated in U.S. dollars, concerns about the impact of rising U.S. interest rates have added to investor worries over intensifying competition in the company’s home market. Although leverage remains a key concern for Cemex, it is not, in our opinion, as big of a risk as it was a few years ago. We have been encouraged by the initiatives the company’s management has taken in terming out debt maturities, locking in lower interest rates, successfully negotiating with key creditors, and minimizing shareholder dilution. Moreover, while rising U.S. rates may be a near-term concern, we view Cemex primarily as a U.S.-dollar denominated business and believe the company has the ability to preserve its long-term earnings power by potentially increasing its prices to offset the impact of any foreign-currency devaluations.


    Brandes Emerging Markets Value Fund fourth quarter commentary.

      


  • Brandes Investment Trust Comments on Adecoagro

    Another positive contributor to returns was Adecoagro (NYSE:AGRO), a Latin American agricultural company with assets in Argentina, Brazil and Uruguay. Adecoagro’s shares, which performed well throughout 2015, benefited in the fourth quarter from a December announcement by the recently elected Argentinian president, Mauricio Macri, that he would sign a decree to lower export taxes on soybeans, corn and wheat.


    Brandes Emerging Markets Value Fund fourth quarter commentary.

      


  • Brandes Investment Trust Comments on APR Energy

    APR (LSE:APR)’s share price increased following the company’s announcement in October that it had agreed to a buyout by a group of investment firms for approximately £175 million. The company supplies interim power plants, mainly in emerging-market countries, and has faced a difficulty in recent years after being forced to exit previously profitable markets.


    Brandes Emerging Markets Value Fund fourth quarter commentary.

      


  • Brandes Investment Trust Comments on Reliance Infrastructure

    Reliance Infrastructure (BOM:500390) performed well after announcing a number of divestment initiatives intended to reduce debt, including the sale of a stake in its Mumbai -based power-transmission business. Additionally, the company has short- listed a number of potential buyers for its cement assets and has been in talks to monetize 11 revenue-generating road projects. These moves should allow Reliance Infrastructure to increase its focus on the defense sector.


    Brandes Emerging Markets Value Fund fourth quarter commentary.

      


  • Brandes Emerging Markets Value Fund 4th Quarter Commentary

    Market Overview

      


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