Almost all investors GuruFocus follows have reported their third quarter portfolios, making it possible to see their buying trends. GuruFocus’ feature, the S&P 500 Grid, shows the consensus buys of Gurus during the period.
According to the grid, the S&P stocks the most Gurus bought were: AIG (NYSE:AIG), Citigroup (NYSE:C), Google (NASDAQ:GOOG), JPMorgan Chase (NYSE:JPM) and Apple (NASDAQ:AAPL).
The most-purchased stock of the third quarter of 2012 among Gurus was American International Group (NYSE:AIG). Twenty-five Gurus bought the stock. None sold the stock.
AIG’s stock rallied 40% year to date to trade for $32.46 per share on Wednesday.
AIG, the insurance company rescued from collapse by the U.S. government during the 2008 financial crisis, has seen its revenue drop by an average rate per share of 35.7% for the last five years. Book value per share declined at an annual rate of 6.6% over the last five years.
In the third quarter, the company continued its turn around, reporting net income of $1.9 billion, increased from a net loss of $4 billion a year previously. Total revenues increased to $17.7 billion from $12.72 billion.
Also during the quarter, the U.S. Department of the Treasury sold approximately $26.5 billion worth of shares, which reduced its remaining investment in AIG to approximately 234.2 million shares, or approximately 15.9% of outstanding shares.
AIG has a P/E of 7.1, which is close to a 10-year low. Its P/B is 0.5 and P/S is 0.9.
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- AIG 15-Year Financial Data
- The intrinsic value of AIG
- Peter Lynch Chart of AIG
AIG data by GuruFocus.com
Twenty-two Gurus bought or added to their existing holdings of Citigroup in the third quarter. Ten reduced or eliminated their positions.
Citigroup’s stock has advanced 36% overall year to date, after a mid-year pullback.
In the last five years, revenue per share at Citigroup declined at an annual rate of 41.4% and book value at a rate of 10.7%.
In the third quarter the company reported to having a Tier I Capital and Tier 1 Common ratio of 13.9% and 12.7%, up from 13.5% and 11.7%, respectively, a year previously.
Its third quarter net income was $468 million, or $0.15 per diluted share, a decline from $3.8 billion a year previously. The quarter’s results were impacted by a pre-tax loss of $4.7 billion from the sale of its 14% interest and other charges related to its partial ownership of Morgan Stanley Smith Barney, a joint venture on Sept. 11. Other adjustments related to tightening credit spreads cut into revenue by several billion dollars. Excluding all one-time losses, the bank would have earned $3.3 billion.
Revenues net if interest expense declined 33% to $14 billion. Excluding the charges and losses it would have increased 3% to $19.4 billion.
The bank announced on Oct. 16 that its CEO, Vikram Pandit, had resigned, and was replaced by board-appointed Michael Corbat. In the fourth quarter, the company’s results of operations could include costs incurred from Hurricane Sandy.
Citigroup has a P/E of 10.3, which is close to a 10-year low. Its P/B is 0.5 and P/S is 1.3.
C data by GuruFocus.com
Twenty Gurus either introduced Google to their portfolios or added to their stakes in the company. Five Gurus either reduced their shares or removed it from their portfolio.
Google’s stock gained 3% year to date.
The company has a five-year annual revenue per share growth rate of 25.1%, EBITDA growth of 25.1%, free cash flow growth of 41.4% and book value growth of 26.4%.
Cash on its balance sheet is $45.7 billion and long-term liabilities and debt amount to $7.2 billion.
In the third quarter Google’s revenue increased 45% year-over-year, surpassing $14 billion for the first time, aided by the acquisition of Motorola, whose revenues were 18% of total revenues.
Google has a P/E of 19.5, P/B of 3.1 and P/S of 5.6.
GOOG data by GuruFocus.com
JPMorgan Chase (NYSE:JPM)
Twenty Gurus bought or added to their existing holdings of JPMorgan Chase in the third quarter, while eight reduced or sold out of their positions.
Year to date, JPMorgan Chase stock has gained 22.5%, including a brief pullback mid-year.
The bank’s revenue has declined at a rate of 1%, EBITDA at a rate of 6.6% and book value at a rate of 7% annually over the past five years.
In the third quarter, it reported net income of $5.7 billion, or a record $1.40 per share, on revenue of $25.9. In the same period of 2011, it reported net income of $4.3 billion, or $1.02 per share, on revenue of $25.9 billion.
Regarding its balance sheet, the bank ended the third quarter with a Basel I Tier I common ratio of 10.4%, up from 9.9% in the second quarter, and a Basel III Tier I common ratio estimated at approximately 8.4%, up from 7.9% in the second quarter.
Citigroup CEO Jamie Dimon commented on his outlook for the mortgage industry and its effect on the bank’s operations in the third quarter press release:
“Importantly, we believe the housing market has turned the corner. In our Mortgage Banking business, we were encouraged that credit trends continued to modestly improve, and, as a result, the Firm reduced the related loan loss reserves by $900 million. Despite this improvement, the absolute level of charge-offs remains elevated. We also expect to see high default-related expense for a while longer. We are acting responsibly to help homeowners and prevent foreclosures, offering nearly 1.4 million mortgage modifications and completing 578,000 since 2009. Credit trends in our credit card portfolio continued to improve, and the wholesale credit environment remained stable.”
JPMorgan has a P/E of 8.6, which is close to a 10-year low. Its P/E is 1.62 and P/S is 0.77.