Black’s strategy focuses on fundamentals of companies rather than short-term stock price performance and invests only in long positions of U.S.-listed companies.
Royal Bank of Canada (RY)
Black bought 103,180 shares of Royal Bank of Canada for $54 per share on average. The company’s stock gained 20% year to date.
In its second quarter reported Aug. 30, RY had net income of C$2.24 million, a 73% increase from the prior year. The record earnings were driven by growth in the bank’s Canadian retail franchise and strong results in its investment banking.
ROE was 22.7%, a 14.5% increase, and its Tier I capital ratio of 13% was down 20 basis points primarily due to risk-weighted asset increases on growth in its wholesale and retail credit portfolios. The day it released its earnings, it raised its quarterly dividend 5% to $0.60 per share.
RY’s P/E ratio is close to a 10-year low, its price is close to a one-year high and its P/S ratio is close to a two-year high.
RY data byGuruFocus.com
Bonanza Creek Energy (BCEI)
Black bought 186,785 shares of Bonanza Creek Energy for $19 per share on average. The company’s stock gained almost 57% over the past year.
Based in Denver, oil and natural gas company Bonanza Creek Energy focuses on the acquisition, exploration, development and production of onshore oil and associated liquids-rich natural gas in the U.S., according to its web site.
In the third quarter the company reported record levels of production, with natural gas sales remaining flat and crude sales increasing 13%, sequentially. Production increased 117% compared to a year previously.
Revenue in the third quarter was $59.6 million, a 118% increase from $27.4 million a year previously, comprised 92% of crude oil and liquids revenue. Net income was $3.4 million, or $0.09 per diluted share, down from $4.8 million, or $0.17 per diluted share a year previously.
Black bought 46,429 shares of Ingredion Inc. in the third quarter. Its stock gained 25% over the past year to $62 on Wednesday.
Ingredion provides ingredients to the food, beverage, brewing and pharmaceutical industries and sectors in over 50 countries globally.
In the third quarter, the company’s EPS increased 29% year over year to $1.45. Net sales increased 3% to $1.67 billion.
"We delivered a strong third quarter in spite of ongoing macroeconomic volatility," said Ilene Gordon, chairman, president and chief executive officer. "Our third quarter adjusted earnings per share were the highest quarterly adjusted EPS in our company's history. Underlying this performance were volume improvement, operating efficiencies and price increases to cover higher raw material costs and foreign exchange headwinds. As a result of the third quarter performance, we are increasing our full year guidance and now expect adjusted EPS to grow between 17 and 19 percent in 2012.
Ingredion has a P/E ratio of 12.15, P/B ratio of 1.96 and P/S ratio of 0.78.
UnitedHealth Group (UNH)
Black bought 30,645 shares of UnitedHealth Group for $54 per share on average. The company’s stock has risen 9% over the past year.
UNH is a health and well-being company with two platforms: UnitedHealthcare, a health care coverage and benefits services provider, and Optum, an information and technology-enabled health services provider.
The company’s third quarter revenues increased 8% year over year to $27.3 billion, driven by UnitedHealthcare Medicare and Medicaid benefit offerings, as well as high growth from offerings in Optum health service and technology offerings. UNH’s net earnings increased year over year to $1.56 billion from $1.3 billion.
Its net margin increased to 5.7% from 5% a year previously. The company raised its dividend 26% year over year and repurchased 48 million shares at a cost of $2.6 billion in the first nine months of 2012.It has a debt to total capital ratio of 30%.
UNH has a P/E of 10.1 which is close to a 10-year low, P/B of 1.8 and P/S of 0.5 which is close to a three-year high.