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Hold the Sizzle - Michael Price’s Low P/E Stocks in Review

December 28, 2013 | About:
Sally Jones

Sally Jones

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It’s hard to imagine that renowned money manager Michael F. Price learned the ropes as a $200-a-week research assistant for his mentor Max Heine at Heine Securities, starting in 1974. Price bought the company as sole owner in 1988, according to Forbes. By 1996, Price had increased the value of the funds he managed to over $17 billion before selling the company to Franklin Securities for $670 million.

An expert value investor, Michael Price manages his own personal wealth through his private firm, MFP Investors LLC, a value focused hedge fund that he founded in 1998. MFP Investors has around $1.6 billion under management. On the 2012 Forbes 400 list, Guru Michael F. Price was ranked 328th richest. His net worth is around $1.25 billion, as of September 2013.

Price has a value based approach to investing. He buys stock in undervalued or out-of-favor small cap companies that are a good value. According to Price, a potential investment is best evaluated through a simplified focus on equity and debt. He once told Columbia students that everything else had been invented by Wall Street as a rip off and to generate fees. Price looks at a company’s balance sheet and reads the fine print on the financials. He once commented that he focuses on the steak and not the sizzle, figuring out what is cheap and buying it.

The updated portfolio of MFP Investors has 88 stocks, five of them new, a total value at $752 million, with a quarter-over-quarter turnover of 8%. The portfolio is currently weighted with top three sectors: financial services at 33.3%, healthcare at 13% and energy at 12.4%. The stocks bought by Price averaged a 12-month return of 76.12%. Price is among the top five highest returning gurus over 12 months.

Here’s an update on the lowest P/E stocks in the Michael Price portfolio, as of Sept. 30, 2013.

Gyrodyne Company of America (GYRO), P/E: 2.40

Current Shares: 47,210

Value: $3,536,000

Weightings: 0.47%

Down 3% over 12 months, Gyrodyne Company of America has a market cap of $102.01 million; its shares were traded at around $69.75 with a P/E ratio of 2.40. The company does not pay a dividend.

Organized in 1946, Gyrodyne Company of America Inc. is a self-managed and self-administered real estate investment trust (REIT) formed under the laws of the State of New York. The company's primary business is the investment in and the acquisition, ownership and management of a geographically diverse portfolio of medical office and industrial properties and development of industrial and residential properties.

Guru Action: As of Sept. 30, 2013, Michael Price took a loss of 2.7% on his holding of 47,210 shares bought at an average price of $71.67 per share. His four-year history shows an average loss of 17% on 45,019 shares at an average price of $83.59 per share. Selling, he had an average loss of 21% on 3,200 shares at an average price of $88.08 per share.

Track historical share pricing, revenue and net income:

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Hess Corp. (HES), P/E: 8.20

Current Shares: 625,000

Value: $48,338,000

Weightings: 6.4%

Up 57% over 12 months, Hess Corp. has a market cap of $28.04 billion; its shares were traded at around $83.07 with a P/E ratio of 8.20.

The dividend yield is 0.84%.

Incorporated in 1920, Hess Corp., together with its subsidiaries, is a global integrated energy company that operates in two segments: Exploration and Production (E&P) and Marketing and Refining (M&R). The E&P segment explores for, develops, produces, purchases, transports and sells crude oil and natural gas. The M&R segment purchases, markets and trades refined petroleum products, natural gas and electricity. The company also operates terminals and retail gasoline stations, most of which include convenience stores that are located on the East Coast of the U.S.

Guru Action: As of Sept. 30, 2013, Michael Price gained 11.5% on his holding of 625,000 shares bought at an average price of $74.50 per share.

Over three quarters, he gained 27% on 625,000 bought at an average price of $65.49 per share.

Track historical share pricing, revenue and net income:

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Pfizer Inc. (PFE), P/E: 8.40

Current Shares: 347,100

Value: $9,970,000

Weightings: 1.3%

Down 22% over 12 months, Pfizer Inc. has a market cap of $198.58 billion; its shares were traded at around $30.64 with a P/E ratio of 8.40.

The PFE dividend yield is 3.13%, and close to a five-year low.

1388261212482.png

Founded in 1849, Pfizer Inc. is a global pharmaceutical firm that develops and produces medicines and vaccines for a range of conditions including the fields of immunology, inflammation, oncology, cardiovascular and metabolic diseases, neuroscience and pain management.

Guru Action: As of Sept. 30, 2013, Michael Price gained 6.8% on his holding of 347,100 shares bought at an average price of $28.68 per share.

Over a five-year trading history, he gained 64% on 575,000 shares bought at an average price of $18.66 per share. Selling, he gained 9% on 355,000 shares at an average price of $28.12 per share.

Track historical share pricing, revenue and net income:

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Here’s the complete portfolio of Michael Price, MFP Investors LLC.

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About the author:

Sally Jones
Sally Jones writes about Real Time Picks. She says, "I truly enjoy watching the Gurus in realtime and telling their story."

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