This share reduction of the company makes the second in two months, and has since totaled almost 2 million shares from its prior reporting, bringing Davis’ shareholding to 15,245,796 from 17,223,574 shares. In the past five years, Davis has reduced more in the stock than added, and now stands at 8.8 percent owner of Iron Mountain.
Davis’ investment philosophy requires three things (from davisfunds.com):
1. Proven Management - “Often these are individuals who think like owner-operators, who consider the strategic and operational implications of their decisions, who allocate capital on a day-to-day basis in a financially productive fashion, and who manage risk in a manner that maximizes shareholder value over full market cycles.”
2. Durable, Financially Strong Business Models – Companies that are “well-positioned to benefit from long-term secular winds.”
3. Sustainable Competitive Advantages – Businesses with “wide (and growing) competitive moats which may include globally recognized brands, a dominant or growing share in a growing market, a superior profit model, a lean cost structure, unique distribution advantages, unique intellectual property, etc.”
In a 13D filing to the SEC dated Nov. 19, the purpose of Davis’ recent transaction with Iron Mountain stated: “
“On March 23, 2011 via an article published in a major newspaper, Davis Advisors announced that it will likely support the four candidates nominated to the [Iron Mountain’s] board of directors by existing shareholders. DavisAdvisors may have additional conversations with [Iron Mountain] and/or third parties regarding opportunities to maximize the [Iron Mountain]'s value…”
With a market cap of $5.61 billion, Boston-based Iron Mountain provides information storage and management solutions through its 1,000 facilities in 32 countries. Some of its solutions include records management, data backup and recovery, and secure shredding that help organization “lower storage costs, comply with regulations, recover from disaster and better use their information for business advantage,” according to the website.
In its third quarter fiscal report, Iron Mountain reported that its revenue was down 2.6% compared to the same time last year, while its adjusted earnings per share rose to $0.34 per share compared to prior year’s $0.31 per share on a GAAP basis.
“Reported results were negatively impacted by significantly lower recycled paper prices and weakened foreign currencies,” said Richard Reese, Iron Mountain’s chairman and CEO, in the company’s fiscal report. “Our organization is performing well and remains on-track towards achieving our financial targets for the year. Iron Mountain is a durable, high-return business with significant opportunities to grow cash flow for a very long time.”
In Iron Mountain’s 10-Year Financials, its Free Cash Flow growth has experienced an upward trend for the past five years, consistently expanding at a rate of 94.7 percent.
GuruFocus ranks Iron Mountain 4 stars in Business Predictability. Despite three Severe Warning signs that indicate a declining operating margin and an Altman Z-Score in distress, its three Good Signs show a growth in per share revenue, reflective of its recent third quarter reports, a dividend yield close to a two-year high, and a P/E ratio close to a one-year low.
Iron Mountain is currently trading at $33.04, and is up 1.06 percent for today’s afternoon trading. It has a P/E (ttm) ratio of 35.9, a P/B ratio of 4.3 and a P/S ratio of 1.9.
Besides Davis, other Gurus who have holding of Iron Mountain include Jim Simons, Joel Greenblatt and Ray Dalio. (View its Guru holding history on IRM: Holding History).
Davis also reported his third quarter portfolio updates recently consisting of 47 transactions, one of which was yet another reduction of his Iron Mountain stake by 22.42 percent. In total, the updates consisted:
|Additions to Current Shares||12|
View the rest of Chris Davis’ portfolio updates here.
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