What the Gurus Sold this Week
This week we saw the most notable transactions coming in the form of sells from Carl Icahn, Jeff Ubben and Chase Coleman. We also saw portfolio dates from the Tweedy Browne Global Value, Ken Fisher and Scott Black.
Icahn disclosed that he had taken a 10% stake in Netflix (NFLX) in Nov. 2012 when the company was trading at about $60 per share. Since last year, the stock is up over 400% and is trading at around $327 per share.
According to the GuruFocus Real Time Picks, Icahn cut his holdings -51.89% by selling a total of 2,875,509 shares at an average price of $354.99 per share. Since the announcement of his sell, shares are trading down around 9%. With this sell Icahn raked in about $800 million.
Despite the size of his sell, Icahn still holds on to 2,665,557 shares, maintaining a 4.5% stake in the company.
Icahn’s historical holding history:
Icahn said regarding his sell:
As a hardened veteran of seven bear markets I have learned that when you are lucky and/or smart enough to have made a total return of 457% in only 14 months it is time to take some of the chips off the table. I want to thank Reed Hastings, Ted Sarandos and the rest of the Netflix team for a job well done. And last but not least, I wish to thank Kevin Spacey.
Netflix is the world’s leading internet television network with over 40 million members in 41 countries, watching over a billion hours of TV shows and movies every month. The company charges its customers a monthly price and then the users can watch as much as they want, whenever they want.
Netflix’s historical revenue and net income:
The company brought in a third quarter revenue of $1.1 billion, but the net income totaled only $31.8 million, or $0.52 per share, demonstrating a net profit margin of only 2.9%. The company also reported that this year, already, Netflix has committed to spending $5.4 billion on content, and $2.5 billion of that will have to be paid within the next year.
To see the entire Netflix third quarter interview, read here.
Netflix has a market cap of $19.31 billion. Its shares are currently trading at around $327.63 with a P/E ratio of 407.40, a P/S ratio of 5.00 and a P/B ratio of 17.40. The company had an annual average earnings growth of 42.10% over the past ten years.
GuruFocus rated Netflix the business predictability rank of 5-star.
Over the past week Ubben made a reduction to his position in Adobe Systems (ADBE). The guru cut his position -12.05% by selling a total of 3,466,894 shares. Ubben sold these shares at an average price of $53.08per share; the price is up 1% today at $53.81 per share.
Ubben now holds on to a total of 25,303,362 shares of Adobe stock, representing 5.04% of the company’s shares outstanding.
Ubben’s historical holding history:
Adobe Systems is a global software company. The Company offers a line of software and services used by creative professionals, marketers, application developers, enterprises and consumers for creating, managing, delivering and engaging with content and experiences across multiple operating systems, devices and media.
Adobe’s historical revenue and net income:
The company’s third quarter financial results reported:
· Marketing cloud achieved year-over-year revenue growth of 28%.
· Diluted EPS of $0.16.
· Cash flow from operations was $215.5 million.
· Revenue of $995.1 million.
· The Adobe Creative Cloud surpassed one million subscriptions during the quarter.
The Peter Lynch Chart suggests that the company is currently overvalued:
Adobe Systems has a market cap of $26.22 billion. Its shares are currently trading at around $52.46 with a P/E ratio of 59.60, a P/S ratio of 6.50 and a P/B ratio of 3.80. The company had an annual average earnings growth of 11.70% over the past ten years.
GuruFocus rated Adobe Systems the business predictability rank of 3.5-stars.
Over the past week guru Chase Coleman’s fund, Tiger Global Management, made an interesting reduction of its stake in the Chinese education company TAL Education Group (XRS).
Tiger Global cut its stake back -17.82% by selling a total of 1,800,000 shares of their stock. These shares traded at an average price of $14.93, up almost 30% from their most recent buying price on Sept. 18. This raked in about $26.87 million for the fund. The price is now trading up about 25%.
As of Tiger Global’s most recent transaction the fund holds on to 10.63% of the company’s shares outstanding.
Chase Coleman and Tiger Global’s historical holding history:
TAL (Tomorrow Advancing Life) Education Group is a K-12 after-school tutoring service provider in China. It delivers its tutoring services through small classes, personalized premium services and online course offerings.
TAL Education’s historical revenue and net income:
The company’s first fiscal quarter reported:
· Net revenues increased 24.5% year-over-year to US$61.4 million.
· Income from operations increased 10.8% to $6.7 million.
· Net income attributable to TAL increased by 62.7% year-over-year to US$8.1 million.
· Cash and cash equivalents equaled US$271.1 million.
· Total student enrollments increased by 17.1% year-over-year.
The analysis on TAL Education reports that the company holds no debt, its revenue has been in decline over the past three years and its price is nearing a two-year high.
Several stock analysts have recently upped TAL Education to “outperform.”
TAL Education Group has a market cap of $1.46 billion. Its shares are currently trading at around $18.69 with a P/E ratio of 44.10, a P/S ratio of 5.60 and a P/B ratio of 7.80. The company’s dividend yield of TAL Education stocks is 3.30%.
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