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Westport Funds Selects 1 Stock in Q2

August 08, 2013 | About:
Holly LaFon

Holly LaFon

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Westport Funds, a firm led by Andrew Knuth and Edmund Nicklin that has beat its index since inception, is having a strong year as well. The Westport Select Cap Fund has returned 22.06% from the start of the year through July 31, even through higher volatility in May and June. “A focus on the long-term and avoidance of short-term fads, even those that seem compelling, is a key factor in these long-term results,” the fund’s manager wrote in their second quarter shareholder letter.

In Westport’s second quarter portfolio, released today, it reported one new purchase: Time Warner Inc. (TWX). The total portfolio contains 67 stocks and is valued at $1.03 billion.

Time Warner (TWX)

Westport added 230,000 shares purchased at $59 per share on average to their portfolio. The stock has since advanced 8% to $63.96.

Holding history:



Time Warner is a global media and entertainment company owning television network, film, entertainment and publishing businesses. The company is separated into four operating divisions: Home Box Office, Time Inc., Turner Broadcasting System and Warner Bros.

Time Warner Inc. has a market cap of $59.62 billion; its shares were traded at around $63.96 with a P/E ratio of 19.60 and P/S ratio of 2.10. The dividend yield of Time Warner Inc. stocks is 1.70%.

In the second quarter, Time Warner revenue increased 10% to $7.4 billion, as growth in its film and TV entertainment and networks segments outweighed a slight decline in its publishing segment. Adjusted EPS also rose 46%, to $0.83.

Time Warner also announced on March 6 that it would separate its publishing segment from the company.

The share repurchase program of Time Warner is $4 billion as of Jan. 1, 2013. From Jan. 1 through Aug. 2, the company repurchased roughly 32 million shares, costing $1.8 billion.

Westport Funds commented on its new purchase of Time Warner in its second quarter letter:

The largest new commitment during the quarter was Time Warner, Inc. whose businesses are the production of movies and video content for cable TV networks, TV series, and premium pay channel HBO. In addition, Time Warner, Inc. is spinning off its publishing unit later this year so the growth of the entertainment businesses will no longer be diluted. There is substantial interest from consumers and investors in streaming video sites accessed via the internet for a monthly subscription fee. Indeed, this is one of the key drivers in the performance of Netflix, Inc. shares this year. It is also attracting new entrants. With a new form of distribution and new distributors, quality programming should be increasingly valuable. Time Warner, Inc. is arguably one of the best producers of the needed content in a variety of formats.

Time Warner is one of Westport Funds' medium-sized positions. Its largest holdings are Precision Castparts Corp. (PCP), Universal Health Services (UHS) and Willis Group Holdings PLC (WSH).

See Westport Funds’ portfolio here. Also check out the Undervalued Stocks, Top Growth Companies and High Yield stocks of Westport Asset Management.

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