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Deep-Value Investor Richard Pzena's Top 5 Stocks

August 12, 2013 | About:
Monica Wolfe

Monica Wolfe

122 followers
As of the second quarter Richard Pzena, the founder and co-chief investment officer at Pzena Investment Management, held 122 stocks (seven of which he bought during the quarter) valued at over $15 billion.

The following five stocks are the companies he holds the largest stake in.



Hewlett-Packard (HPQ)

Richard Pzena’s top holding is in the computer company Hewlett-Packard. The guru currently holds 32,922,187 shares of Hewlett-Packard, representing 1.69% of the company’s shares outstanding and 5.4% of his total portfolio. Richard Pzena is the second largest guru shareholder of HPQ.

During the second quarter, Pzena made a minor decrease to his holdings in HP. The guru reduced his position-4.09% by selling a total of 1,403,698 shares. He sold these shares at an average price of $22.48 per share. Since this sell, the share price has increased 19.1%.

Pzena’s holding history as of the second quarter:



HP is the world’s largest technology company that brings together a portfolio that spans printing, personal computing, software, services and IT infrastructure to solve customer problems.

HP’s historical revenue and net income:

1376319102585.png

The company’s second quarter financials reported:

· Non-GAAP diluted EPS of $0.87, down 11% from the prior year.

· GAAP diluted EPS of $0.55, down 31% from last year.

· Net revenue of $27.6 billion, down 10% from last year.

· Cash flow from operations of $3.6 billion, up 44% from last year.

· Returned $1.1 billion in cash to share holders in dividends and share buybacks.

Hewlett-Packard has a market cap of $51.63 billion. Its shares are currently trading at around $26.77 with a P/E ratio of 5.30, a P/S ratio of 0.50 and a P/B ratio of 2.10. The company currently maintains a dividend yield of 2%.

Staples (SPLS)

Pzena’s second largest holding is in Staples. The guru holds on to 34,969,289 shares of Staples, representing 5.23% of the company’s shares outstanding and 3.7% of his total portfolio.

During the second quarter Pzena cut his holdings by 10.22% by selling a total of 3,979,046 shares. He sold these shares at an average price of $14.31 per share and since this reduction, the share price has increased an additional 18.4%.

Pzena’s holding history as of June 30:



Staples is an office products company. Its three reportable segments are North American Delivery, North American Retail and International Operations.

Staples’ historical revenue and net income:

1376318806372.png

Staples has a market cap of $11.25 billion. Its shares are currently trading at around $16.95 with a P/E ratio of 11.70, a P/S ratio of 0.50 and a P/B ratio of 1.80. The company’s dividend yield is at 2.70%. The company had an annual average earnings growth of 3.2% over the past 10 years.

Omnicom Group (OMC)

Richard Pzena’s third largest holding is in Omnicom Group where he holds 3.2% of his portfolio. As of the second quarter, the guru holds on to 7,662,119 shares of Omnicom, representing 2.93% of the company’s shares outstanding.

During the second quarter Pzena made a slight increase to his holdings in Omnicom, increasing his position by 1.29%. The guru bought 97,938 shares at an average price of $61.30 per share. Since his increase, the price per share is up about 2.3%.

Pzena’s holding history of Omnicom as of the second quarter:



Omnicom is a global advertising, marketing and corporate communications company. Omnicom provides professional services to clients through multiple agencies operating in all main markets around the world.

Omnicom’s historical revenue and net income:

1376318484273.png

The Peter Lynch Chart shows that Omnicom currently appears to be overvalued:

1376318589320.png

Omnicom has a market cap of $16.12 billion. Its shares are currently trading at around $62.68 with a P/E ratio of 16.40, a P/S ratio of 1.20 and a P/B ratio of 5.50. The company had an annual average earnings growth of 7.4% over the past 10 years.

GuruFocus rated Omnicom the business predictability rank of 3.5-star.

American International Group (AIG)

American International Group comes in as Brandes’ fourth largest holding where the guru holds 3.1% of his total portfolio. Brandes owns 10,562,975 shares of AIG, representing 0.72% of the company’s shares outstanding.

During the second quarter Brandes made a slight reduction in his holdings of AIG. The guru cut his holdings by 1.71% by selling 183,343 shares of the company’s stock. Since that sell, the price per share has increased approximately 55%.

Pzena’s holding history as of the second quarter:



AIG is a holding company which, through its subsidiaries, is engaged in a range of insurance and insurance-related activities in the United States and abroad. The Company's four reportable segments are as follows: General Insurance, Domestic Life Insurance & Retirement Services, Foreign Life Insurance & Retirement Services and Financial Services.

AIG’s historical revenue and net income:

1376317914390.png

The Peter Lynch Chart shows that AIG appears to be overvalued:

1376317959767.png

American International Group has a market cap of $70.91 billion. Its shares are currently trading at around $48.03 with a P/E ratio of 10.40, a P/S ratio of 1.10 and a P/B ratio of 0.70.

Microsoft (MFST)

Pzena’s fifth largest position is in the ever-popular Microsoft. The guru holds 2.9% of his total portfolio in the company. Pzena holds on to 12,425,297 shares of Microsoft, representing 0.15% of the company’s shares outstanding.

During the second quarter Pzena reduced his position in Microsoft by 6.79%. The guru sold a total of 904,583 shares at an average price of $32.76. Since this sell, the price per share has dropped a slight 0.2%.

Pzena’s holding history as of the second quarter:



Microsoft develops, manufactures, licenses and supports a wide range of software products and services for many different types of computing devices.

Microsoft’s historical revenue and net income:

1376317725302.png

The Peter Lynch Chart shows that Microsoft appears to be undervalued:

1376317756410.png

Microsoft has a market cap of $272.39 billion. Its shares were traded at around $32.70 with a P/E ratio of 12.70, a P/S ratio of 3.60 and a P/B ratio of 3.50. The company had an annual average earnings growth of 14.3% over the past 10 years.

GuruFocus rated Microsoft the business predictability rank of 3.5-star.

You can view Richard Pzena’s second quarter portfolio here.

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