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GuruFocus Real Time Picks of the Week
Posted by: Monica Wolfe (IP Logged)
Date: April 18, 2014 05:13PM
The following information is a highlight of the real-time guru activity we saw this week. To view more information on these gurus, check out their guru portfolios. The “Real Time Picks” reports the stock purchases and sells that Gurus have made within the prior two weeks. If a Guru makes a purchase or sell of a company in which they own a greater-than 5% stake, SEC regulations require them to report their transaction within two days. This week we saw notable increases and buys in Real Time activity from Bill Ackman (Trades, Portfolio) and Edward Lampert (Trades, Portfolio).
On April 14, the guru cut his holdings -21.85% by selling a total of 2,550,000 shares of Beam stock. The guru sold them at an approximate share price of $83.29 per share, and since then the price per share has dropped slightly to $83.27 per share.
More recently, on April 16, Ackman cut his holdings an additional -38.38% by selling 3,500,000 shares of the company’s stock. He sold these shares at $83.28 per share, and since this transaction the price per share is trading at approximately $83.27 per share.
Ackman has been consistently cutting his holdings in Beam over the first and second quarters of 2014. The guru started the year holding over 20 million shares of the company’s stock, and now he holds little over five million. These consecutive sells are also the first transactions Ackman has made since his fund bought in to the company in the fourth quarter of 2011.
Beam is one of the world’s leading premium spirits companies. The company’s portfolio contains Jim Beam, Maker’s Mark, Sauza, Skinnygirl Cocktails, and various others. As of 2013, the company maintained sales of $2.55 billion and a volume of 37 million 9-liter equivalent cases.
Beam’s historical revenue and net income:
Recently the company’s shareholders approved the acquisition by Suntory Holdings. Beam shareholders are entitled to receive $83.50 per share upon the completion of the transaction, the transaction is set to finish during the week of April 28. This acquisition was proposed and ultimately approved on March 25, and adds up to a $16 billion acquisition.
The Peter Lynch Chart suggests that the company is currently overvalued:
The analysis on Beam reports that the company’s revenue has been in decline over the past five years, its price is near a 10-year high and its dividend yield is near a 10-year low. The analysis also notes that the company’s operating margin is expanding.
Beam has a market cap of $13.77 billion. Its shares are currently trading at around $83.27 with a P/E ratio of 37.20, a P/S ratio of 5.30 and a P/B ratio of 2.70.
Over the past week Edward Lampert (Trades, Portfolio) made an increase in his holdings of Sears Hometown & Outlet Stores (SHOS). The guru increased his holdings 3% by purchasing 173,574 shares of the company’s stock. Lampert bought these shares at an average price of $22.34 per share, and the company is still trading at around the same price.
The guru now holds on to 5,959,990 shares of Sears’s stock, representing 25.7% of the company’s shares outstanding.
Lampert’s historical holding history as of yearend:
Sears Hometown & Outlet Stores is a national retailer primarily focused on selling home appliances, hardware, tools and lawn and garden equipment. The Company and its dealers and franchisees operate approximately 1,238 stores.
Sears Hometown & Outlet Stores’ historical revenue and net income:
The analysis on Sears Hometown & Outlet Stores reports that the company’s price is near a 2-year low, its inventory has been building up and its P/E, P/S and P/B ratios are all trading near historical lows.
The company announced its fourth quarter 2013 results in the middle of March which reported:
- Operating income down 55% to $7.8 million.
- EPS decreased 61.9% to $0.16 per share.
- EBITDA decreased 33.7% to $13.2 million.
- 155,151 shares were repurchased for $4.2 million.
The Peter Lynch Chart suggests that the company is currently undervalued:
Sears Hometown & Outlet Stores has a market cap of $508.2 million. Its shares are trading at around $22.34 with a P/E ratio of 12.50, a P/S ratio of 0.20 and a P/B ratio of 0.80.
Guru Discussed: Bill Ackman: Current Portfolio, Stock Picks
Stocks Discussed: SHOS, BEAM,