|New Threads Only:|
|New Threads & Replies:|
Forum List » Guru News and Commentaries|
Guru News, Stock picks and commentaries
Marty Whitman's Latest Buys and Adds: HUWHY.PK, TLAB, AMAT
Posted by: guruhl (IP Logged)
Date: January 5, 2012 05:37PM
Marty Whitman, chairman of Third Avenue Management, is a bottom-up, value-oriented investor. He seeks companies with strong finances, competent management, and easily understandable businesses. He is also a long-term, buy-and-hold investor who buys companies selling at a discount to inherent value. He has a 91.5 10-year cumulative return, versus 16.4% for the S&P.
He initiated one new position and added to two existing positions in the quarter ended Oct. 31, 2011: Hutchison Whampoa Ltd. (HUWHY.PK), Tellabs Inc. (TLAB) and Applied Materials Inc. (AMAT).
Hutchison Whampoa Ltd. (HUWHY.PK)
Whitman owns 16,819,000 shares of Hutchison Whampoa Ltd., and it comprises 4.72% of his portfolio. Hutchison Whampoa is an investment holding company with interests in ports, real estate projects, retail, consumer electronics, electrical appliances, airport retailing, energy and infrastructure and mobile telecommunications and data services. Its stock dipped 16.7% over the last year and trades for about $67 on Thursday.
Hutchison Whampoa’s revenue grew 8% in 2010 to HK$326 billion from HK$301 billion in 2009. The company has also increased its earnings per share for the last three years and in 2010, increased its dividend 11% to HK$1.92 per share, from HK1.73 per share.
Chairman Li Ka-Shing stated that though the economy of 2008 created sever economic challenges, the economy of Hong Kong “continues to benefit from the Mainland’s rapid development.” It has completed a major investment that will soon begin generating revenue rather than draining it, and an IPO of its HPO Trust raised HK45,000 million strengthened its balance sheet significantly. It continues to increase its investments around the world.
Tellabs Inc. (TLAB)
Tellabs helps the world's communications service providers build tomorrow's converged networks of voice, data and video. Tellabs Inc. has a market cap of $1.41 billion; its shares were traded at around $3.87 with and P/S ratio of 0.9. The dividend yield of Tellabs Inc. stocks is 2.1%.
Tellabs’ stock collapsed 43% over the past year and sells for just $3.90 on Thursday. The stock dropped almost $2 in January when it reported fourth-quarter results, including a net loss of $11 million for the fourth quarter of 2010, compared to net earnings of $62 million in the fourth quarter of 2009. Its gross profit margin also decreased to 38% in the fourth quarter of 2010 from 45.3% the fourth quarter of 2009. The company’s revenue grew 8% in 2010 from 2009, however.
Tellabs’ free cash flow has been increasing for the last four years, reaching $233 million in 2010. It also has $1.2 billion on its balance sheet and little debt, at $73.7 million in long-term liabilities. It began paying a dividend of 8 cents per share in 2010.
Applied Materials Inc. (AMAT)
Whitman sold out his position in Applied Materials in the fourth quarter of 2008, and reinitiated with 1 million shares in the fourth quarter of 2010 at about $12.70 per share. In the quarter ended Oct. 31, 2011, he doubled his holding to 2 million shares.
Applied Materials develops, manufactures, markets and services semiconductor wafer fabrication equipment and related spare parts for the worldwide semiconductor industry. Applied Materials Inc. has a market cap of $14.18 billion; its shares were traded at around $10.76 with a P/E ratio of 8.2 and P/S ratio of 1.3. The dividend yield of Applied Materials Inc. stocks is 3%.
Applied Materials is another stock Whitman bought that has seen a decline in stock price. Applied Materials fell 21% over the last year, though it has a strong balance sheet. Its revenue has increased each year from 2009 to 2011, reaching a record $10.5 billion in 2011. Free cash flow also reached a peak of $2.2 billion in 2011 after growing for three years. Its cash holdings recently ballooned. It went from having about $2.6 billion in 2010, to $6.2 billion in 2011.
Whitman’s stock has a 3% dividend yield, which it increased to 30 cents per share in 2011, and with all of the cash it has accumulated, the dividend is likely safe.
In November 2011, the company received approval from the Chinese Ministry of Commerce to acquire Varian Semiconductor Associates Inc., a leading supplier of ion implantation equipment used to create semiconductor chips. It began the acquisition process in May 2011. The combination of the companies created the industry’s leading supplier of equipment and services for transistor technology. The new market exposure has the potential to garner the company close to an additional $1.5 billion annually.
See Marty Whitman’s complete investment portfolio here.
Guru Discussed: Martin Whitman: Current Portfolio, Stock Picks
Stocks Discussed: HUWHY.PK, TLAB, AMAT,
Disclaimers: GuruFocus.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on GuruFocus.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The gurus may buy and sell securities before and after any particular article and report and information herein is published, with respect to the securities discussed in any article and report posted herein. In no event shall GuruFocus.com be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on GuruFocus.com, or relating to the use of, or inability to use, GuruFocus.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. The gurus listed in this website are not affiliated with GuruFocus.com, LLC. Stock quotes provided by InterActive Data. Fundamental company data provided by Morningstar, updated daily.