|New Threads Only:|
|New Threads & Replies:|
Forum List » Guru News and Commentaries|
Guru News, Stock picks and commentaries
Longleaf’s Mason Hawkins Decreases DineEquity Inc. Shares
Posted by: Dianne Tordillo (IP Logged)
Date: November 30, 2012 10:04AM
As of Nov. 27, Mason Hawkins of Tennessee-based Southeastern Asset Management, which is the adviser to Longleaf Partners Funds, has reported a 10 percent decrease in his stake of franchising company DineEquity Inc. (DIN), according to GuruFocus Real Time Picks.
Reducing more than 310,000 of his shares at an average price of $62, this is Hawkins’ fourth stake reduction of DineEquity since acquiring the stock in the third quarter of 2008. Starting off with about 3.2 million shares in the beginning of his holding history, Hawkins now has a shareholding of 2,798,762.
DineEquity’s stock price is close to its 10-year high, trading at $63.06 this morning.
With a market cap of $1.14 billion, DineEquity is the parent company of restaurant chains, IHOP and Applebee’s Neighborhood Grill and Bar. Based in California, DineEquity operates more than 3,500 restaurants in 18 countries, making it one of the largest full-service restaurant companies in the world.
DineEquity has had consistent growth over the years, its value shooting in a positive direction especially over the last five years, with a revenue growth rate of 26.7 percent.
Hawkins, along with Southeastern Asset Management chief investment officer, G. Staley Cates, recognized this value growth in its third quarter shareholder letter released in October, stating:
“Many management teams have taken steps to remove their stocks’ discounts through spinning out divisions, selling all or portions of their companies, and initiating, reinstating, or meaningfully increasing dividends… In Small-Cap, DineEquity has sold the last of its owned Applebees restaurants to become 99% franchised.”
In its third quarter fiscal results, DineEquity reported to decreasing its debt by $167.2 million, due to generating strong free cash flow in the three months ending Sept. 30. Combining the company’s booming free cash flow with its reduction in expenses and net proceeds, DineEquity was able to reduce its total debt by $255.5 million in the first nine months of 2012.
Out of the 41 stocks in Hawkins’ portfolio, the consumer services sector is the second largest sector represented, right after the financials sector. As of the end of the third quarter, the portfolio is valued at $22.4 billion, with a quarter-over-quarter turnover rate of 2 percent.
Before choosing investments, Hawkins places heavy emphasis on a company’s management and its ability to operate the business. His firm's research especially focuses on four key areas:
Pertaining to Southern’s investments, Hawkins and Cates said they predict their stocks will do well over the next five years, stating:
“Most of our companies are market leaders with competitive advantages that should enable some degree of pricing power as well as unit growth…Many have increased their shareholder alignment by buying shares personally over the last year. To the extent needed, we will push as hard as is feasible to insure that managements and boards remain focused on their obligation to act in the best interest of owners. We will move on to better opportunities if we believe our engagement will not produce positive change.”
With its P/E ratio close to its three-year low, DineEquity is ranked 6 out of 10 in Profitability and Growth on GuruFocus, despite a Financial Strength of 4 out of 10 and a 1-star rank in Business Predictability.
To read more about Mason Hawkins and Longleaf Funds, visit our GuruFocus article archives. Also see his top holdings, his undervalued stocks and his high yield stocks.
About GuruFocus Real Time Picks
GuruFocus Real Time Picks alerts you of the stock purchases and sales that Gurus have made within the last two days. Follow your favorite Gurus closely with GuruFocus' Premium Membership! If you are not a Premium Member, we invite you for a 7-Day Free Trial.
Guru Discussed: Mason Hawkins: Current Portfolio, Stock Picks
Stocks Discussed: DIN,
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.