Chieftain Capital Management Inc., an iconoclastic investment firm with a strong two-decade track record, is splitting up following personality conflicts among its leaders, according to people familiar with the matter.
Co-founder Glenn Greenberg, who came into the headlines nearly two years ago for his campaign against management at cable company Comcast Corp., plans to stay at the firm, according to a letter that he, co-founder John Shapiro and two partners sent to investors. Mr. Greenberg's firm will be renamed Brave Warrior Advisors, according to a person familiar with the matter.
Mr. Shapiro and Chieftain partners Tom Stern and Joshua Slocum plan to launch a new investment firm that will retain the name Chieftain Capital Management, effective Jan. 1, according to the letter. Chieftain manages about $3 billion in assets. Messrs. Shapiro and Stern are cousins.
GuruFocus will follow wherever the Guru goes. In this case we will retain Glenn Greenberg and drop the Chieftain Partners.
Since Glenn Greenberg and Shapiro started the firm in 1984, the firm e firm has generated annual gains averaging about 18% before fees focusing on "value" investing, or buying inexpensive, sometimes out-of-favor shares in which the firm has deep conviction. Chieftain's returns are roughly in line with the market so far this year, according to people familiar with the matter. The firm counts among its clients Yale University's endowment, according to the WSJ article.
The firm maintains a highly concentrated portfolio that he describes as a "defense against ignorance." Glenn Greenberg believes that the more companies you own, the less you will know about each, and the less you know about a business, the more likely you are to make mistakes due to fear and greed. He usually owns less than 10 stocks. Greenberg invests in companies with little competition, and places a great deal of emphasis on Return On Invested Capital.
Here are the top holdings of Greenberg as of September 30, 2009:
No. 1: Lockheed Martin Corp. (LMT), Weightings: 16.17% - 5,645,303 Shares
Lockheed Martin Corp. is a global enterprise principally engaged in the research, design, development, manufacture and integration of advanced-technology systems, products and services. The corporation's core businesses are systems integration, space, aeronautics, and technology services. Lockheed Martin Corp. has a market cap of $30.21 billion; its shares were traded at around $78.6 with a P/E ratio of 10.2 and P/S ratio of 0.7. The dividend yield of Lockheed Martin Corp. stocks is 3%. Lockheed Martin Corp. had an annual average earning growth of 5.1% over the past 10 years.
No. 2: Comcast Corp. Special (CMCSK), Weightings: 14.69% - 24,894,294 Shares
Comcast Corporation is principally involved in the development, management and operation of broadband cable networks, and in the provision of electronic commerce and programming content. Comcast Corp. Special has a market cap of $41.58 billion; its shares were traded at around $14.25 with and P/S ratio of 1.2. The dividend yield of Comcast Corp. Special stocks is 1.9%. Comcast Corp. Special had an annual average earning growth of 46.5% over the past 5 years.
No. 3: Ryanair Holdings plc (RYAAY), Weightings: 13.28% - 12,461,330 Shares
Ryanair Holdings provides airline services for passengers for point-to-point trips between Ireland and the United Kingdom with over 100 flights a day. They operate a fleet of approximately 13 Boeing 737-200A jet aircrafts. Ryanair Holdings Plc has a market cap of $7.72 billion; its shares were traded at around $26.13 with a P/E ratio of 24.9 and P/S ratio of 1.9. Ryanair Holdings Plc had an annual average earning growth of 57% over the past 5 years.
No. 4: U.S. Bancorp (USB), Weightings: 12.44% - 15,507,682 Shares
U.S. Bancorp is a financial services holding company. They operate full-service branch offices and ATMs, and provides a comprehensive line of banking, brokerage, insurance, investment, mortgage, trust and payment services products to consumers, businesses and institutions. U.s. Bancorp has a market cap of $45.07 billion; its shares were traded at around $23.57 with a P/E ratio of 29.1 and P/S ratio of 2.3. The dividend yield of U.s. Bancorp stocks is 0.9%. U.s. Bancorp had an annual average earning growth of 13.4% over the past 10 years. GuruFocus rated U.s. Bancorp the business predictability rank of 3.5-star.
No. 5: Laboratory Corp. of America Holdings (LH), Weightings: 10.91% - 4,525,238 Shares
Laboratory Corporation of America Holdings, is one of the largest independent clinical laboratory company's in the United States. Through a national network of laboratories, the company offers different clinical laboratory tests which are used by the medical profession in routine testing, patient diagnosis, and in the monitoring and treatment of disease. Laboratory Corp. Of America Holdings has a market cap of $8.05 billion; its shares were traded at around $74.31 with a P/E ratio of 15.3 and P/S ratio of 1.8. Laboratory Corp. Of America Holdings had an annual average earning growth of 10.3% over the past 10 years.
No. 6: Varian Medical Systems Inc. (VAR), Weightings: 10.52% - 6,803,610 Shares
Varian Medical Systems, Inc., of Palo Alto, California is the world's leading supplier of equipment and software for treating cancer. The company is also a premier supplier of components including X-ray tubes and flat-panel detectors for medical, scientific, and industrial imaging. Varian Medical Systems Inc. has a market cap of $5.96 billion; its shares were traded at around $47.44 with a P/E ratio of 17.8 and P/S ratio of 2.7. Varian Medical Systems Inc. had an annual average earning growth of 19.6% over the past 10 years.
Conclusion
Glenn Greenberg is a very concentrated value investor. We count to the sixth largest holding and still see more than 10% of portfolio weighting.
Two of the top six top holdings are health care related.
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User Comments:
1. Iang says on Dec 01, 2009 at 10:55 AM:
Ryanair have over 200 737-800 aircraft not 13, see item 3
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