Spanish Warren Buffett Francisco Paramés Buys 2 Stocks
The self-taught guru applies strict Graham and Buffett-style value principles to his stock selection, with stellar results: He has a 20-year cumulative return of 1,771.1% compared to 388.1% for the S&P 500. His Bestinfond returned 30.8% in 2013 and has a 2,347.7% accumulated return since inception.
As the chief investment officer of Spanish firm Bestinver, Paramés’ portfolio contains 101 stocks valued at $1.4 billion total, with quarter-over-quarter turnover of 9%.
His two new third quarter positions are: Hyundai Motor Co. Ltd. (XKRX:005387) and Endesa SA (XMCE:ELE).
Hyundai Motor Co. Ltd. (XKRX:005387)
Paramés purchased 398,996 shares of Hyundai in the third quarter when the price averaged 106,704 won. The new holding makes up 2.2% of his portfolio.
Hyundai Motor is the largest automaker in South Korea and is composed of three divisions: vehicle division, financial division and other business division. Its stock year to date gained almost 70%, reaching a 52-week high this week.
In Hyundia’s third quarter, it reported a 6% increase in vehicle unit sales from the previous year, and a 5.6% increase in net income to 2.14 trillion won, its first earnings growth in four quarters. Sales revenue increased 6% over the previous year to 20.82 won.
For the first nine months of the year, sales have risen 5.9% from the previous year to 65.37 trillion won, due to improved sales outside Korea. Operating profit and net profit both fell 4.9% and 4.2%, respectively, to 6.29 trillion won and 6.86 trillion won, on a lower operation rate at its Korean plants and one-time provisions from the first quarter.
Below is Hyundai’s 10-year revenue and earnings history:
Hyundia has a PE of 8.46.
Endesa SA (XMCE:ELE)
For his second purchase, Paramés bought into a company from his home country, buying 171,384 shares of Spain’s Endesa SA. In the third quarter the shares averaged $18 per share, giving the holding a 0.24% portfolio weighting.
Endesa is a Spanish electricity company and the largest private electricity multinational in Latin America, serving 25 million customers. It is 92.06% owned by Enel Group, a multinational collective based in Italy.
In the company’s third quarter, net income fell 6.7% to 1.55 billion euros due to adverse fiscal and regulatory measures in Spain and Portugal, which partially offset 31% growth in Latin America. EBITDA declined 3.8% to 5.25 billion euros, primarily as a result of a 12.2% decline in Spain and Portulgal EBITDA, while Latin America increased 7.1%.
Regulatory measures implemented by Spain’s government in the beginning of 2012 have cost the company a combined 868 million euros in EBITDA for the first nine months of 2013.
Endesa’s third quarter revenue fell 4.1% to 7.32 billion euros due to a reduction in remuneration for distribution activity put forth in Royal Decree Law starting in February and July 2013. The company generated 286 million euros of free cash flow, and has 8.7 billion euros of cash on its balance sheet, with total liabilities of 9.01 billion and no long-term debt.
Below is the company's 10-year revenue and earnings history:
Endesa has a P/E ratio of 26.4, P/B ratio of 0.78 and P/S ratio of 2.76, which is near a two-year high. Its Thursday share price at $21.30 is also near a two-year high.
For more stocks of Francisco Paramés, see his portfolio here.
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