Columbia Management's Top 5 New Buys with Positive Outlook
In the second quarter, the firm found that positive housing and employment data pushed U.S. equity averages to all-time highs. While Federal Reserve Chairman Ben Bernanke’s tapering announcement caused a ripple, investors eventually realized that the Fed will tighten its easing program only in a “demonstrably strong U.S. economy,” Columbia said in its second quarter letter.
Its near-term outlook for equities was therefore buoyant. From the Columbia Select Large-Cap Fund Letter:
“Given the strength of the housing and employment gains, we believe that we may see U.S. gross domestic product accelerate in the second half of the year, particularly if consumer spending picks up. (Second quarter spending data was mediocre.) We also believe that further gains in equities are possible over the coming months, with the magnitude of gains driven by whatever the consensus may be on fair value. We continue to believe that a significant rotations from fixed income to equities is long overdue, which may act as a further catalyst for further gains.”
The largest new positions made at Columbia Wanger during the quarter include: Allscripts Healthcare Solutions Inc. (MDRX), WuXi PharmaTech (Cayman) Inc. (WX), Blackhawk Network Holdings Inc. (HAWK), KAR Auction Services Inc. (KAR) and Tahoe Resources Inc. (TAHO).
Allscripts Healthcare Solutions Inc. (MDRX)
Columbia purchased 6,996,000 shares of Allscripts at about $13 on average, giving it a 0.4% portfolio weight. The price since increased 17% to $15.62 on Monday.
Allscripts-Misys Healthcare Solutions Inc. is a provider of clinical, financial, connectivity and information solutions and related professional services that empower hospitals, physicians and post-acute organizations to deliver world-class outcomes.
Allscripts Healthcare Solutions Inc. has a market cap of $2.76 billion, with a P/E ratio of 58.70 and P/S ratio of 1.90. Allscripts Healthcare Solutions Inc. had an annual average earnings growth of 29.7% over the past five years.
Notably, Allscripts’ price, P/E and P/S ratio are each near their respective one-year high.
Allscripts’ long-term revenue and earnings history:
The Peter Lynch chart for MDRX:
WuXi PharmaTech (Cayman) Inc. (WX)
Columbia purchased 2,708,477 shares of WuXi PharmaTech Inc. at about $20 per share on average. The price has since gained 21% to trade at $23.68 on Monday.
WuXi PharmaTech Inc. is a Cayman Islands holding company. WuXi PharmaTech (Cayman) Inc. has a market cap of $1.67 billion, with a P/E ratio of 19.50 and P/S ratio of 3.30. WuXi PharmaTech (Cayman), Inc. had an annual average earnings growth of 69.2% over the past five years.
WuXi’s revenue and earnings history:
The Peter Lynch chart suggests that stock is overvalued:
Blackhawk Network Holdings Inc. (HAWK)
Columbia purchased 2,090,500 shares of Blackhawk Network Holdings for about $24 per share on average, giving it a 0.21% portfolio weight. The price on Monday is near the original purchase price.
Blackhawk Network Holdings is a prepaid and financial payments provider and subsidiary of Safeway Inc. Blackhawk Network Holdings Inc. has a market cap of $1.29 billion, with and P/S ratio of 1.30.
HAWK’s revenue and earnings history:
KAR Auction Services Inc. (KAR)
Columbia purchased 1,782,000 shares of KAR Auction Services at about $22 per share, giving it a 0.18% portfolio weight. It has since gained 19% and trades for $26.63 on Monday.
KAR Auction Services (formerly KAR Holdings Inc.) was incorporated in 2006 and commenced operations in April 2007 upon the consummation of the 2007 transactions.
KAR Auction Services Inc. has a market cap of $3.68 billion, with a P/E ratio of 35.60 and P/S ratio of 1.80. The dividend yield of KAR Auction Services Inc. stocks is 2.10%. KAR Auction Services Inc. had an annual average earnings growth of 15.5% over the past five years.
Its price and P/B ratios have hit five-year highs, its P/S ratio is close to a three-year high and its P/E ratio is near a one-year high.
KAR’s revenue and earnings history:
The Peter Lynch chart of KAR suggests it is overvalued:
Tahoe Resources Inc. (TAHO)
Columbia bought 2,599,739 shares of Tahoe Resources for about $15 per share on average, giving it a 0.16% portfolio weight. It has since gained 6% and trades at $16.20 on Monday.
Tahoe Resources Inc. was incorporated in 2009 under the laws of Province of British Columbia and is focused on the exploration and development of resource properties in the Americas for the mining of precious metals. Tahoe Resources Inc. has a market cap of $2.36 billion.
Tahoe’s price history:
To see more of Columbia Wanger Asset Management’s trades, go to its portfolio here. Also check out the Undervalued Stocks, Top Growth Companies and High Yield stocks of Columbia Wanger.
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