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Donald Smith Reveals New Holdings of Tidewater and Noble Corp

May 14, 2014 | About:
Chris Mydlo

Chris Mydlo

31 followers

Donald Smith’s new additions to his portfolio in the first quarter of 2014 were Noble Corp PLC (NE) and Tidewater Inc. (TDW) according to the Form 13F disclosed today. Donald Smith (Trades, Portfolio) is a deep-value manager employing a strict bottom-up approach. He invests in stocks of out-of-favor companies selling at discounts to tangible book value. He looks for companies in the bottom docile of price-to-tangible book ratios and a positive outlook for earnings potential over the next two to four years.

You can follow Donald Smith (Trades, Portfolio)’s portfolio at GuruFocus: Donald Smith Latest Trades.

Noble and Tidewater are part of the offshore drilling industry that has been beaten down within the past year. Most of the major offshore drilling stocks are down between 10 percent to 30 percent for the past year. The lagging performance of the offshore drillers is due to concerns about lower day rates for drilling rigs and lower capital expenditures from the major oil companies.

Stock

1-Year Perfomance

Price/Tangible Book

TDW

-9%

1.1

NE

-24%

0.9

SDRL

-10%

2.6

RIG

-23%

1.1

ESV

-17%

1.3

DO

-27%

1.5

Tidewater is headquartered in New Orleans, La. The company is not directly involved in the offshore drilling. It has a fleet of offshore support vehicles. Tidewater has a global footprint, with over 90 percent of its fleet working internationally in more than 60 countries. The company transports crews and supplies, tows and anchors mobile rigs, assists in offshore construction projects and performs a variety of specialized marine support services. The average price-to-tangible book value for the Shipping and Ports industry is 1.30. Tidewater is trading at a price-to-tangible book of 1.1, a 15.4 percent discount to the industry average. The stock is also undervalued by about 6 percent compared to its five-year median price-to-book ratio. The company has a market cap of 2.55 billion and a P/E ratio of 17.70.

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Noble Corp is headquartered in London, UK. It provides contract drilling services with a fleet of 77 offshore drilling units. The drilling units include: 14 semisubmersibles, 14 drillships and 49 jackups, including two ultra-deepwater drillship and four high-specification jackup drilling rigs under construction. The average price-to-tangible book value for the Oil & Gas Drilling industry is 1.36. Noble is trading at a price-to-tangible book of 0.9, a 33.8 percent discount to the industry average. The stock is also undervalued by about 28 percent compared to its five-year median price-to-book ratio. The company has a market cap of 7.8 billion and a P/E of 10.0.

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Donald Smith (Trades, Portfolio) is an excellent guru to follow if you are interested in low price-to-book investing ideas. You can follow his portfolio at GuruFocus. We also have our own portfolio that we are tracking: “Top 25 Historical Low P/B Ratio Companies.” The portfolio is beating the S&P 500 by 27.38 percent since its inception in 2010.


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