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Joel Greenblatt's Gotham Capital Top 5 New Stocks

May 16, 2014 | About:
Holly LaFon

Holly LaFon

254 followers
Joel Greenblatt (Trades, Portfolio) is the developer of the famous investing strategy for the everyday person, the “Magic Formula.” He also along with a partner manages a hedge fund called Gotham Funds. The stock selection process at the fund involves valuing all U.S. large and mid-cap companies, then taking positions in those trading at the greatest discounts and shorting the most overvalued, controlling for risk. They describe their views as follows:

“We believe that although stock prices often react to emotion over the short term, they generally trade toward fair value over the long term. Therefore, if we are good at identifying mispriced businesses (a share of stock represents a percentage ownership stake in a business), the market will agree with us...eventually. For an individual stock selection, we believe the waiting period for the market to get it “right” is no more than 2 or 3 years in the vast majority of cases. For a portfolio of stocks, we believe the average waiting period can often be much shorter.”

In the first quarter, Greenblatt’s Gotham Asset Management bought 229 new stocks for their portfolio, bringing the total to 994, for 52% turnover. The total value of the portfolio is $6.64 billion.

The largest new positions added were: Wesco International Inc. (WCC), Ingram Micro Inc. (IM), Bunge Ltd. (BG), News Corp (NWS) and Salix Pharmaceuticals Ltd. (SLXP).

Wesco International Inc. (WCC)

Greenblatt bought 485,151 shares of Wesco International as his largest holding at 0.61% of the portfolio. The share price averaged $86 for the quarter.

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Wesco International Inc. is incorporated in 1993. The company is a provider of electrical, industrial and communications maintenance, repair and operating ("MRO") and original equipment manufacturers ("OEM") products, construction materials, and advanced supply chain management and logistics services. Wesco International Inc. has a market cap of $4.16 billion; its shares were traded at around $85.21 with a P/E ratio of 16.20 and P/S ratio of 0.60. Wesco International Inc. had an annual average earnings growth of 7.10% over the past 10 years. GuruFocus rated Wesco International Inc. the business predictability rank of 1-star.

Ingram Micro Inc. (IM)

Greenblatt bought 1,139,353 shares of Ingram Micro, representing 0.51% of his portfolio. The stock’s price averaged $27 per share in the first quarter.

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Ingram Micro Inc. began its business in 1979, operating as Micro D Inc. Ingram Micro Inc. has a market cap of $4.09 billion; its shares were traded at around $26.33 with a P/E ratio of 15.0 and P/S ratio of 0.10. Ingram Micro Inc. had an annual average earnings growth of 12.90% over the past five years.

Bunge Ltd. (BG)

Greenblatt purchased 422,653 shares of Bunge Ltd., representing 0.51% of the portfolio. The share price average was $79 for quarter one.

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Bunge Limited is a limited liability company formed under the laws of Bermuda. Bunge Ltd. has a market cap of $11.3 billion; its shares were traded at around $76.74 with a P/E ratio of 361.80 and P/S ratio of 0.20. The dividend yield of Bunge Ltd. stocks is 1.60%. Bunge Ltd. had an annual average earnings growth of 1.80% over the past 10 years.

News Corp (NWS)

Greenblatt’s new News Corp holding consists of 1,931,963 shares, sized at 0.5% of the portfolio. The share price average was $17 for the quarter.

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News Corporation is a diversified media and information services company focused on creating and distributing authoritative and engaging content to consumers. News Corp has a market cap of $9.69 billion; its shares were traded at around $16.73 with and P/S ratio of 1.10.

Salix Pharmaceuticals Ltd. (SLXP)

His fifth largest new holding was 307,445 shares of Salix Pharmaceuticals, equal to 0.48% of the portfolio. The share price average was $102 in the first quarter.

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Salix Pharmaceuticals Ltd. incorporated in the state of Delaware. Salix Pharmaceuticals Ltd. has a market cap of $6.84 billion; its shares were traded at around $107.92 with a P/E ratio of 49.80 and P/S ratio of 6.30.

See more Joel Greenblatt (Trades, Portfolio) buys and sells at his portfolio here. Not a Premium Member of GuruFocus? Try it free for 7 days here!


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