Stocks That Tom Russo Keeps Buying and Keeps Selling
Russo was born in Staten Island, New York, in 1943. He is a graduate of Dartmouth College (BA, 1977) and Stanford Business and Law Schools (MBA/JD, 1984). Mr. Russo is also an adjunct professor at the Columbia University Graduate School of Business. He also joined Gardner Russo & Gardner as a partner in 1989. Prior to joining AIG in February 2010, Mr. Russo was senior counsel at Patton Boggs LLP. Before joining Patton Boggs, Mr. Russo served as vice chairman of Lehman Brothers and chief legal officer of Lehman Brothers Holdings. While at Lehman he was responsible for the firm’s corporate advisory division, which included legal, compliance, corporate audit, government relations, and transaction management. Prior to joining Lehman Brothers in January of 1993, Russo was a partner and member of the Management Committee of the law firm Cadwalader, Wickersham & Taft. At Cadwalader, Mr. Russo specialized in SEC enforcement and broker-dealer operations, CFTC enforcement and regulation, and derivatives, financial and general corporate law. From 1975 to 1977, Russo was the deputy general counsel of the Commodity Futures Trading Commission, where he served as the first director of the agency's Division of Trading and Markets. From 1969 to 1971, he was an attorney in the Division of Market Regulation of the Securities and Exchange Commission, and from 1971-1975, an associate with Cadwalader, Wickersham & Taft. Mr. Russo also served as adviser to the Brady Commission in 1987.
Russo’s investment philosophy emphasizes return on invested capital, principally through equity investments. His approach to stock selection stresses two main points: value and price. He looks for companies with strong cash-flow characteristics, where large amounts of "free" cash flow are generated. Portfolio companies tend to have strong balance sheets and a history of producing high rates of return on their assets.
He is a member of The Economic Club of New York and holds board positions with the March of Dimes (vice chairman, National Board of Trustees, Executive Committee and Finance Committee; chairman, Pensions Investment Committee; member, Nominating Committee); The Institute for Financial Markets. (vice chairman, Board of Trustees; member, Executive Committee and Audit Committee); the Institute of International Education, which administers the Fulbright Scholarship Program (chairman, Executive Committee; member, Development Committee, Vision & Outreach Committee, Executive Compensation Committee, Scholar Rescue Fund Committee, Scholar Rescue Fund Selection Committee, and the Scholar Rescue Fund Board; co-founder, Scholar Rescue Fund); United States Council for International Business and the Committee on Capital Markets Regulation.
Stocks That Tom Russo Keeps BuyingNo. 1: Philip Morris International (PM), Weightings: 10.2478% - 8,126,378 Shares Philip Morris International is the international tobacco company, with products sold in over 160 countries. Philip Morris International has a market cap of $114.4 billion; its shares were traded at around $65.13 with a P/E ratio of 14.9 and P/S ratio of 1.69. The dividend yield of Philip Morris International stocks is 4.73%.
What separates Philip Morris from the pack is the net profit margin, which is 11.4% against a 2.1% industry average. Philip Morris is trading for 13.4 times forward earnings. Director Sergio Marchionne bought 1,100 more shares at the end of August. Philip Morris has gained more than 16% year-to-date with a 4.74% yield at current prices.
Philip Morris International Inc. announced the election of Robert B. Polet to its board of directors. The Board of directors amended Article II, Section 2 of its Amended and Restated By-Laws, in order to increase the size of the board from ten to eleven directors effective September 13, 2011. Mr. Polet was chairman, chief executive officer and president of Gucci Group NV from 2004 until March 2011, prior to which he spent 26 years in a variety of executive roles in the group, including president of Unilever's Worldwide Ice Cream and Frozen Foods division, chairman of Unilever Malaysia, chairman of Van den Bergh and executive vice president of Unilever's European Home and Personal Care division. Mr. Polet was also elected a member of the Finance, Nominating and Corporate Governance, and Product Innovation and Regulatory Affairs Committees. The board of directors determined that Mr. Polet is an independent director under the New York Stock Exchange listing standards and the company's Corporate Governance Guidelines.
The board of directors of Philip Morris International Inc. increased the company's regular quarterly dividend by 20.3%, to an annualized rate of $3.08 per common share. The new quarterly dividend of $0.77 per common share, up from $0.64 per common share, is payable on Oct. 11, 2011, to stockholders of record as of Sept. 27, 2011. The ex-dividend date is Sept. 23, 2011.
Tom Russo of Gardner Russo & Gardner, keeps more than 10% of his fund’s portfolio in PM, with 8,126,378 shares, valued as $543 million as of June 30, 2011, which accounts for 10.2478% of his equity portfolio. Tom Russo added his positions in the March 31, 2011 quarter by 2.87%, again in the June 30, 2011 quarter by 1.68%. He had owned this stock since mid-2008 with 6.177 million shares and has been increasing modestly over the years and so has the stock price from early 2009.
No. 2: Berkshire Hathaway Inc. Cl A (BRK.A), Weightings: 8.1463% - 3,715 Shares Berkshire Hathaway Inc. is a holding company owning subsidiaries engaged in a number of diverse business activities. Berkshire Hathaway Inc. Cl A has a market cap of $178.37 billion; its shares were traded at around $108,100 with a P/E ratio of 14.72 and P/S ratio of 1.31. Berkshire Hathaway Inc. Cl A had an annual average earnings growth of 18.2% over the past 10 years.
Berkshire Hathaway Inc. announced that it the hiring of Ted Weschler to be a portfolio manager at the company. Weschler was the founder and managing partner at hedge fund Peninsula Capital Advisors.
On Aug. 15, 2011, Berkshire Hathaway Inc. issued (i) $750,000,000 aggregate principal amount of its 2.20% Senior Notes due 2016; (ii) $500,000,000 aggregate principal amount of its 3.75% Senior Notes due 2021 ((i) and (ii) collectively, the "Fixed Rate Notes"); and (iii) $750,000,000 aggregate principal amount of its Floating Rate Senior Notes due 2014, under a registration statement on Form S-3 under the Securities Act of 1933, as amended, filed with the Securities and Exchange Commission on February 1, 2010 (Registration No. 333-164611). The Notes were sold pursuant to an underwriting agreement entered into on August 10, 2011, by and between Berkshire and Goldman, Sachs & Co. The Notes are issued under an Indenture, dated as of February 1, 2010, by and among Berkshire, Berkshire Hathaway Finance Corporation, and The Bank of New York Mellon Trust Company, N.A., as trustee, and an officers' certificate dated as of August 15, 2011.
Looking ahead to final months of 2011, Buffett's foresees continued strength, Buffett expects many of the largest businesses under his watch will see record, or near-record earnings this year even with nearly $50 billion in cash sitting on the sidelines.
Tom Russo owns 3,715 shares of BRK.A, valued as $431 million as of June 30, 2011, which accounts for 8.1463% of his equity portfolio. Tom Russo added his positions in the March 31, 2011 quarter by 2.48%, again in the June 30, 2011 quarter by 4.47%. He had owned this stock in early 2006 with 3000 shares. Russo’s position dropped from 4000 shares in late 2008 just as the stock price dropped but both his position and stock price rose to today’s level.
No. 3: Wells Fargo & Co. (WFC), Weightings: 4.2797% - 8,075,615 Shares
Wells Fargo & Company is a diversified financial services company providing banking, insurance, investments, mortgage and consumer finance services through stores, its Internet site and other distribution channels across North America as well as internationally. Wells Fargo & Co. has a market cap of $129.57 billion; its shares were traded at around $24.54 with a P/E ratio of 9.51 and P/S ratio of 1.39. The dividend yield of Wells Fargo & Co. stocks is 1.96%. Wells Fargo & Co. had an annual average earnings growth of 5.4% over the past 10 years.
Bora Sila had been appointed as the new Head of its consumer and retail M&A at Wells Fargo & Company. The financial services company also announced the appointment of Adam Berger as Head of Healthcare M&A. Berger has experience of over 22-year in M&A banking. Before this new appointment, Berger worked as Head of M&A at Leerink Swann, from 2008 to 2011. Sila has experience of over 20-year in Consumer and Retail M&A.; before this new appointment, Sila worked as Head of Americas Retail Investment Banking at UBS, from 2009 to 2011.
Wells Fargo & Company has named Leigh Collier as new president for the Alabama, Tennessee and Mississippi region. Her last position was as Wells Fargo's regional chief in Mobile. She replaces Mike Donnelly, who was promoted to head the bank's Atlanta region in August.
Wells Fargo & Company Presents at 10th Biennial World Financial Information Conference (WFIC), Oct-11-2011 09:10 AM. Venue: 2 New Montgomery Street, San Francisco, CA 94105, California, United States. Speakers: Steve Listhaus, Market Data Services Manager.
Wells Fargo is a diversified financial services company. Miller had $190 million and Buffett had $9.9 billion invested in the stock. John Paulson also had nearly $1 billion invested in WFC has been rising lately, and news for the company has centered on a deal with Golden Capital Management. Wells Fargo now has 65% ownership of the firm, which cements an already strong relationship between the two companies.
Wells Fargo's (WFC) third quarter 2011 earnings call Oct. 17, 2011 stated that their diversified businesses generated record net income of $4.1 billion in the third quarter, an increase of 21% from a year ago, and a record EPS of $0.72, an increase of 20% from a year ago.
Tom Russo owns 8,075,615 shares of WFC, valued as $227 million as of June 30, 2011, which accounts for 4.2797% of his equity portfolio. Tom Russo added his positions in the March 31, 2011 quarter by 3.79%, again in the June 30, 2011 quarter by 17.7%. He had owned this stock in early 2006 with 5 million shares. After some fluctuations to his position, Russo is currently at his peak position with the most substantial increase last quarter compared to any previous quarter.
No. 4: Mastercard Cl A (MA), Weightings: 4.2346% - 744,059 Shares
Mastercard advances global commerce by providing a critical economic link among financial institutions, businesses, cardholders and merchants worldwide. Mastercard Cl A has a market cap of $39.57 billion; its shares were traded at around $311.46 with a P/E ratio of 19.29 and P/S ratio of 7.14. The dividend yield of Mastercard Cl A stocks is 0.19%.
Stock price has performed well recently despite the European debt crisis and global economic uncertainty. As of 10/10/11, Mastercard has increased 45.38% year to date, outperforming the -4.99% return of the S&P 500. A brief summary of the current market sentiment for Mastercard include FY2011 analyst EPS estimates increased 4% over the past 90 days ($17.73 vs. $17.04 and an average analyst target price for Mastercard $331.50 (currently trading at $325.81).
Mastercard Incorporated announced that its Board of Directors has declared a quarterly cash dividend to holders of shares of its Class A common stock and Class B common stock. The cash dividend of 15 cents per share will be paid on Nov. 9, 2011 to holders of record of its Class A common stock and Class B common stock as of Oct. 10, 2011.
Mastercard Incorporated's third quarter 2011 earnings call is on Nov. 2, 2011.
Tom Russo owns 744,059 shares of MA, valued as $224 million as of June 30, 2011, which accounts for 4.2346% of his equity portfolio. Tom Russo added his positions in the March 31, 2011 quarter by 15.34%, again in the June 30, 2011 quarter by 7.99%. He owned this stock in late 2008 with only 29,000 shares but substantially increased his position in mid-2010 to over 300,000 shares. The stock price has been generally increasing during this time except for a downward peak in quarter 3 of 2010.
No. 5: Unilever N.v. Ads (UN), Weightings: 4.0238% - 6,485,557 Shares
Unilever is the world's second-largest maker of branded household products. Unilever N.V. Ads has a market cap of $95.06 billion; its shares were traded at around $31.9 with a P/E ratio of 15.19 and P/S ratio of 1.55. The dividend yield of Unilever N.v. Ads stocks is 3.27%.
Unilever returned 4.38% since the beginning of this year. It is expected to grow at a rate of 5.85% over the next five years. The production and supply of consumer goods is a tough and volatile market to be sitting in. Despite this, UN comes out to be in better shape than it has in earlier quarters, with strong second quarter sales growth of 7.1%. First half underlying sales growth of 5.7% was comprised of volume growth of 2.2% and price growth 3.5%. The total turnover as of June 2011 is $25 million and the cost of financing net borrowings was $220 million, which is $22 million lower than last year. Ken Fisher invested $503 billion in UN shares.
The stock is trading just under its 20-day and 50-day SMAs, -4.50% and -3.36%, respectively, but has resisted falling below its 200-day SMA and is now 0.68% above this average. As it is currently just above linear, up-trending support (shown below) and its 200-day SMA support, Unilever NV could be making a move toward analysts' $36.33 price target, with a current stock price around of only $33.
Unilever PLC (UN, UL) Friday said it has agreed to acquire 82% of Russian beauty company Concern Kalina for EUR390 million, as it strategically ramps up its presence in the Eastern European powerhouse, with access to booming neighboring economies of the fast-growing region.
Tom Russo owns 6,485,557 shares of UN, valued as $213 million as of June 30, 2011, which accounts for 4.0238% of his equity portfolio. Tom Russo added his positions in the March 31, 2011 quarter by 4.62%, again in the June 30, 2011 quarter by 4.8%. He owned this stock in early 2006 with just over 3 million shares. Russo kept a constant position until 2009 when he started to increase his position. The stock price went through huge upswings in 2007 and 2008 massive drops in 2009, but Russo only barely reacted to the price change by buying more when prices were increasing and selling when prices were dropping. It seems right when prices seem to be finally steady, Russo doubled his position.
No. 6: Altria Group Inc. (MO), Weightings: 3.5238% - 7,064,590 Shares Altria Group is the parent company of Philip Morris USA, U. Altria Group Inc. has a market cap of $56.81 billion; its shares were traded at around $27.43 with a P/E ratio of 14.07 and P/S ratio of 2.33. The dividend yield of Altria Group Inc. stocks is 5.98%.
Altria Group Inc. announced that its board of directors voted to increase company's regular quarterly dividend by 7.9% to $0.41 per common share versus the previous rate of $0.38 per common share. The new annualized dividend rate is $1.64 per common share. The quarterly dividend is payable on Oct. 11, 2011 to shareholders of record as of Sept. 15, 2011. The ex-dividend date is Sept. 13, 2011.
Altria is for long-term investors who would not want to be swayed by short-term thinking, because the stock has an annualized average gain over the past decade of 13%, meaning long-time investors would face massive capital gains.
MO gained 18.8% during the past 12 months and a total debt/equity ratio of 2.95. MO also had an EPS growth rate of -13.7% during the last five years.
Altria Group Inc.'s third-quarter 2011 earnings call is on Oct. 27, 2011.
Tom Russo holds the largest position in MO owning 7,064,590 shares of MO, valued as $187 million as of June 30, 2011, which accounts for 3.5238% of his equity portfolio. Tom Russo added his positions in the March 31, 2011 quarter by 2.93%, again in the June 30, 2011 quarter by 1.79%. He owned this stock early 2006 with over 4 million shares. Russo increased his position over a few years until his peak in late 2008 with 7.4 million shares from which he continued to hold a relatively steady position from before. The stock price happened to have dropped dramatically early 2008 from $73 to $21 and stayed low.
Stocks That Tom Russo Keeps Selling
No. 1: Comcast Corp. Special (CMCSK), Weightings: 3.1541% - 6,892,436 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. It has a P/E ratio of 15.17. The dividend yield of Comcast Corp. Special stocks is 2.06%. Comcast Corp. Special had an annual average earnings growth of 14.9% over the past 10 years.
Comcast's EPS forecast for the current year is $1.61 and next year is $1.93. According to consensus estimates, its top line is expected to grow 48.40% in the current year and 7.80% next year.
Microsoft Corp. intends to offer online pay television service from Comcast Corp. And Verizon Communications Inc. through Xbox Live, Bloomberg News reported Thursday citing people with knowledge of the situation.
Comcast is in the "top of the first inning" in growing its business-services unit. The company has hired 700 people this year to provide services to medium-sized businesses, a market he sees as worth up to $15 billion in revenue.
Earlier this summer, Hulu was put up for sale by Providence Equity Partners LLC, News Corp., Walt Disney Co. and Comcast Corporation. Google Inc. has made the highest bid for Hulu LLC, according to a report on Business Insider. Google made a bid of $4 billion; however, the consideration has certain caveats, including extensions on Hulu's content deals.
Tom Russo owns 6,892,436 shares of CMCSK, valued as $167 million as of June 30, 2011, which accounts for 3.1541% of his equity portfolio. Tom Russo reduced his positions in the March 31, 2011 quarter by 3.13%, again in the June 30, 2011 quarter by 3.15%. He owned this stock in early 2006 with over 8 million shares and gradually increased his position over the years until his peak position of 10.1 million shares in mid-2009. Ever since mid-2010, Russo has been more drastically selling than he has ever traded this stock before when the stock price has been generally rising since early 2009.
No. 2: Washington Post Co. Cl B (WPO), Weightings: 0.9875% - 124,804 Shares
The Washington Post Company's principal business activities consist of newspaper publishing (principally The Washington Post), television broadcasting (through the ownership and operation of six network-affiliated stations), the ownership and operation of cable television systems, magazine publishing (principally Newsweek magazine), and (through its Kaplan subsidiary) the provision of educational and career development services. Washington Post Co. Cl B has a market cap of $2.62 billion; its shares were traded at around $330.33 with a P/E ratio of 10.42 and P/S ratio of 0.55. The dividend yield of Washington Post Co. Cl B stocks is 2.85%. Washington Post Co. Cl B had an annual average earnings growth of 4.4% over the past 10 years. GuruFocus rated Washington Post Co. Cl B the business predictability rank of 2-star.
Early august Washington Post Co. said its board of directors has OK'd the repurchase of up to 750,000 shares of its Class B common stock.
The media and educational-services company reported second-quarter net income of $45.6 million, or $5.74 a share, down from $91.9 million, or $10 a share, earned in the same period last year. Quarterly revenue of $1.07 billion dropped 10% from the prior year's $1.2 billion. There were about 13% diluted average shares outstanding in the latest quarter than a year earlier. The company said it spent $131.5 million on stock repurchases over the first half of 2011.
Operates as a diversified education and media company in the U.S. and internationally. TTM Diluted EPS at $24.07, MRQ Book Value per Share at $341.53, Graham number at $430.07 (vs. current price at $319.91, implies a potential upside of 34.44%). The stock is a short squeeze candidate, with a short float at 9.24% (equivalent to 12.03 days of average volume). The stock has lost 20.48% over the last year.
Shares of WPO recently traded at $326.97 with a trailing price to earnings of 12.35 and a forward price to earnings of 18.95. The stock has a market cap of $2.6 billion and a total debt/equity ratio of 0.15. Buffett has $724 million invested in WPO shares.
Tom Russo owns 124,804 shares of WPO, valued as $52 million as of Jun. 30, 2011, which accounts for 0.9875% of his equity portfolio. Tom Russo reduced his positions in the March 31, 2011 quarter by 2.89%, again in the June 30, 2011 quarter by 4.78%. He owned this stock in early 2006 of 167,000 shares with a slight increase in position prior to mid-2008 and then a decline in position afterwards except for a minor spike late 2009. The stock price had a massive drop in 2008 kept stable buy volatile price range afterwards.
No. 3: Herman Miller Inc. (MLHR), Weightings: 0.238% - 462,861 Shares Herman Miller & Co. is engaged primarily in the design, manufacture and sale of furniture systems and furniture, and related products and services, for offices, and, to a lesser extent, for health-care facilities and other uses. Herman Miller Inc. has a market cap of $1.09 billion; its shares were traded at around $18.72 with a P/E ratio of 14.4 and P/S ratio of 0.66. The dividend yield of Herman Miller Inc. stocks is 0.47%. Herman Miller Inc. had an annual average earnings growth of 35.7% over the past 10 years.
Net sales within the Non-North American Furniture Solutions segment were $84.9 million in the first quarter, an increase of $18.1 million from the first quarter of fiscal 2011 net sales of $66.8 million. This increase is attributable to significant increases in Europe, Asia and Latin America. Operating income in the quarter for the Non-North American segment was $9.6 million, an increase of $6.9 million from operating income of $2.7 million in the first quarter of last year. During the first quarter we estimate the impact of changes in foreign currency exchange rates to have improved operating income by approximately $2 million.
Net sales within the Specialty and Consumer segment were $42.7 million compared to $28.0 million in the prior year period. This increase is attributable to significant growth across all products within this segment. Operating Income in the quarter for the Specialty and Consumer segment was $4.2 million compared to $2.0 million in the prior year period.
Tom Russo owns 462,861 shares of MLHR, valued as $13 million as of Jun. 30, 2011, which accounts for 0.238% of his equity portfolio. Tom Russo reduced his positions in the March 31, 2011 quarter by 13.59%, again in the June 30, 2011 quarter by 9.58%. He owned this stock in early 2006 with 663,000 shares and increased to his peak of just over 1 million shares in early 2008, but has been slowly selling ever since.
No. 4: Crane Co. (CR), Weightings: 0.1779% - 190,597 Shares Crane Co. is a diversified manufacturer of highly engineered industrial products. Crane Co. has a market cap of $2.21 billion; its shares were traded at around $37.98%, payout ratio at 26.44%, a P/E ratio of 12.74, and P/S ratio of 0.99. The dividend yield of Crane Co. stocks is 2.74%. Crane Co. had an annual average earnings growth of 1% over the past 5 years.
MRQ net profit margin increased to 7.84% from 7.24% year-over-year, sales/assets increased to 0.23 from 0.21, while assets/equity decreased to 2.56 from 3.0. The stock has gained 9.27% over the last year.
Crane Co. raised its full-year profit projection as it reported second-quarter financial results. The company now sees 2011 earnings in a range of $3.30 to $3.45 a share, with sales growth now forecast at 14% to 16%, up from a previously estimated range of 10% to 12%. In addition, the company announced a 13% increase in its quarterly dividend. Also, core business sales increased by 10% in the second quarter of 2011 compared to the second quarter of 2010 and 11% in the first six months of 2011 compared to the first six months of 2010, reflecting continued recovery in our later, longer cycle businesses within our Aerospace & Electronics and Fluid Handling segments. Aerospace and Fluid Handling businesses is the slightly more favorable foreign exchange and the additional sales from the July 2011 acquisition of W. T. Armatur ("WTA"), a specialty valve company suggests these predictions.
Crane Co. third quarter 2011 results come out on Oct. 24, 2011.
Tom Russo owns 190,597 shares of CR, valued as $9 million as of Jun. 30, 2011, which accounts for 0.1779% of his equity portfolio. Tom Russo reduced his positions in the March 31, 2011 quarter by 0.77%, again in the June 30, 2011 quarter by 1.55%. He owned this stock in early 2006 and always kept a fairly constant position. The stock price took a huge dive late 2008 but has been rising ever since.
No. 5: Markel Corp. (MKL), Weightings: 0.1753% - 23,394 Shares
Markel Corporation markets and underwrites specialty insurance products and programs to a variety of niche markets. Markel Corp. has a market cap of $3.51 billion; its shares were traded at around $361.67 with a P/E ratio of 15.58 and P/S ratio of 1.58. Check out the complete list of the stocks that Tom Russo keeps on buying.
Markel Corp. took a minority stake in GoodHaven Capital Management and ranks as the firm’s first separate account client.
Tom Russo owns 23,394 shares of MKL, valued as $9 million as of June 30, 2011, which accounts for 0.1753% of his equity portfolio. Tom Russo reduced his positions in the March 31, 2011 quarter by 15.41%, again in the June 30, 2011 quarter by 5.21%. He owned this stock in early 2006 with a peak 74,000 shares. Russo has been selling ever since and increased his progress late 2008 to sell even faster but still at a steady rate.
Also check out the Undervalued Stocks, Top Growth Companies, and High Yield stocks of Tom Russo.