Free 7-day Trial
All Articles and Columns »

Howard Marks' Oaktree New Buys

Holly LaFon

Holly LaFon

210 followers
Howard Marks oversees more than $76 billion in assets as founder and chairman of Oaktree, a value-oriented investment management firm, and just reported his second-quarter portfolio. Marks’ current view of the market is that investors can expect low returns going forward because the 30-year Treasury – which sets the bar for everything else – offers only a 3% yield, as he said in a Manual of Ideas interview in July. He cautioned investors not to overreach for yield by incurring too much risk.

In the second quarter he bought nine new stocks, for a total of 80 in his $4.92 billion portfolio. The largest are Orbotech Ltd. (ORBK), E*Trade Financial Corp. (ETFC), Value SA (VALE.P) and New York Community Bancorp Inc. (NYCB).

Orbotech Ltd. (ORBK)

For his largest new buy, Marks bought 1.4 million shares of Orbotech at a price of $11 per share on average. So far the stock has gained 22% and is trading for $13.31 Monday. It is a position that represents 0.35% of his portfolio.

Orbotech Ltd. was incorporated in Israel. The Company is principally engaged in the design, development, manufacturing and marketing of yield-enhancing, production support solutions for specialized applications in the supply chain of the electronics industry, primarily for PCBs and FPDs. Its website boasts its systems are used in “virtually every electronic device in the world.”

Orbotech Ltd. has a market cap of $572.6 million; its shares were traded at around $13.13 with a P/E ratio of 60.80 and P/S ratio of 1.40.

The company’s stock price saw a steep increase in August when it announced its second quarter and first-half results. Revenues for the second quarter increased to $108.8 million, exceeding guidance, versus $97.8 million a year previously. GAAP net income increased to $10.5 million, or $0.24 per diluted share, versus a GAAP net loss of $0.08 million, or $0.02 per share, a year previously.

Orbotech CEO Asher Levy attributed the results to improved business conditions, operational efficiency measures and solid consumer demand.

Below is Orbotech’s long-term revenue and earnings history:



E*Trade Financial Corp. (ETFC)

Second, Marks purchased 875,000 shares of E*Trade Financial for $11 per share on average. Afterward, the stock has gone up 39%, to $15.31 on Monday.

E*Trade Financial Corp. is an online brokerage and services company in two segments: trading and investing, and balance sheet management. E*Trade Financial Corp. has a market cap of $4.37 billion; its shares were traded at around $15.31 with a P/E ratio of 61.60 and P/S ratio of 2.60.

Its stock rose markedly in July on announcements of its second quarter results. E*Trade reported a net loss of $54 million, or $0.19 loss per share, versus net income of $40 million, or $0.14 per share, the previous year. Excluding a goodwill impairment, the company would have had $60 million in net income, or $0.21 per share. Revenue totaled $440 million, versus $452 million a year previously.

E*Trade’s long-term revenue and net income history:



Vale SA (VALE.P)

Marks bought 845,600 shares of Vale SA for $15 on average, representing 0.21% of his portfolio. Since then the price has declined 16% to $12.50 Monday. Year to date, the stock has fallen almost 39%.

Vale is a metals and mining company incorporated in Brazil, producing iron, iron ore, nickel, kaolin, aluminum, copper, coal and many other products. Vale has a $70.8 billion market cap and P/E of 10.03.

Long-term revenue and earnings history of Vale:



New York Community Bancorp Inc. (NYCB)

Marks purchased 150,000 shares of New York Community Bancorp for $49 per share on average, representing 0.15% of his portfolio. The stock has advanced 16% year to date to $15.25 per share Monday.

New York Community Bancorp Inc. is the 20th largest bank holding company in the nation. New York Community Bancorp Inc. has a market cap of $6.68 billion; its shares were traded at around $15.25 with a P/E ratio of 13.30 and P/S ratio of 4.60. The dividend yield of New York Community Bancorp Inc. stocks is 6.50%. New York Community Bancorp Inc. had an annual average earnings growth of 45.4% over the past five years.

In the second quarter 2013, the bank reported revenue of $354 million, versus $395 million a year previously. It had GAAP earnings of $122.5 million, or $0.28 per diluted share, versus $131.2 million, or $0.30 per diluted share, the previous year.

New York Community Bancorp’s long-term revenue and earnings history:



The Peter Lynch chart on New York Community Bancorp suggests it is undervalued:



See the rest of Marks’ new buys in his portfolio here. Also check out the Undervalued Stocks, Top Growth Companies and High Yield stocks of Howard Marks.

Not a GuruFocus Premium Member? Click here for a 7-Day Free Trial.


Rating: 2.6/5 (10 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK
Hide