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What Low P/E Stocks Jeremy Grantham Is buying

January 11, 2012 | About:
Mara Kohn

Mara Kohn

4 followers
“People are naturally much more responsive to finite resources than they are to climate change. Global warming is bad news. Finite resources are investment advice.”

Jeremy Grantham is the chairman of the board of Grantham Mayo Van Otterloo. This Boston-based firm is an asset management company. Grantham is considered a great investor with vast knowledge in various stock, bond,

and commodity markets.

GMO was founded in 1977. Before co-funding the firm, Grantham co-founded Batterymarch Financial Management. However, his career started as an economist with Royal Dutch Shell.

Since he started, Grantham focused on speculative market "bubbles.” Grantham avoided investing in Japanese equities and real estate in the late '80s, as well as technology stocks during the Internet bubble in the late '90s.

I personally like a lot BSBR, I think it has a lot of potential and I do not like at all RIMM.

Here are some of his low P/E stocks:

Banco Santander Brasil SA/Brazil (BSBR): Banco Santander is the third largest bank in Brazil that is not controlled by government. It has thousands of branches and a 10% deposit and loan market share. Its loan book is made up of commercial loans, which represent 70% of it while credits for individuals account for the rest.

BSBR is the best-capitalized bank among the largest banks in Brazil. Equity makes up 20% of assets. The group behind the bank is Grupo Santander. Santander Brazil has plenty of capital to deploy in its expansion plans without needing to raise any new equity to support its growth.

In terms of future expectation, the bank's segments will definitely grow.

ITT Corp (ITT): ITT manufactures a diverse collection of highly engineered industrial products and provides high-tech solutions from its four segments: industrial process (37% of revenue), motion technologies (28%), interconnect solutions (21%), and control technologies (14%). Europe and emerging markets constitute about 37% and 25% of sales, respectively.

ITT is financially healthy. This situation should help management increase revenue between 2% to 3% annually. Furthermore, the creation of this new ITT should increase its position in the marketplace. ITT is growing in emerging markets.

Research In Motion Limited (RIMM): Research In Motion designs and markets wireless handsets, software and services. The primary revenue driver is the sale of handsets to carriers worldwide that promote the company's BlackBerry line of devices.

In terms of sales, North America represents 50% of revenue. The QNX operating system has been well received in its limited use. It is a clear step up from RIM's legacy BlackBerry OS.

LDK Solar Company Ltd. ADR (LDK): LDK Solar is a vertically integrated solar manufacturer and now is considered one of the largest. In 2009, the company started with solar module production that is expected to increase its business. LDK also manufactures polysilicon, which it plans to split evenly between internal usage and sales to external customers.

Its vertically integrated structure is highly boosted by cost reduction plans. The company wants to emerge as a cost leader in crystalline solar manufacturing.

Its Chinese location affords LDK lower operating expenses and access to cheaper input costs than its Western and Japanese competitors.

Leucadia National Corporation (LUK): Leucadia is an investment company. It currently holds $9 billion in balance sheet assets. In terms of holdings, they are highly diversified. They include lumber and plastics manufacturers, a hotel and casino, wineries, an oil and gas contract driller, energy production facilities, medical product developers and other real estate interests.

The firm's philosophy is to invest in companies with low intrinsic value so as to build wealth for shareholders. Leucadia has few investments, such as early-stage biotech company Sangart and its interests in nascent energy facilities, which could pay off spectacularly if successful.

Leucadia will definitely continue benefiting from the global demand for its supplies.

Rating: 3.8/5 (8 votes)

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