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First Pacific Advisors Reports Second Quarter Top Holdings

Monica Wolfe

Monica Wolfe

118 followers

First Pacific Advisors Capital Fund and the FPA New Income Fund, reported their second quarter portfolio holdings earlier this week. FPA Capital primarily invests in the stocks of smaller companies, and according to his investing philosophy they base their investments on the following criteria: strong balance sheets, free cash flow, an understandable and successful business strategy under capable management and unique business characteristics.

Over the past quarter the portfolio managers at FPA Capital added one new stock to their portfolio, keeping the total number of stocks to 29 which are valued at $1.032 billion.

The following five stocks are FPA Capital’s largest holdings as of the close of the second quarter.

Rosetta Resources (ROSE)

The fund’s largest holding is in Rosetta Resources where they maintain 1,458,800 shares of the company’s stock. This position makes up for 7.8% of their total portfolio as well as 2.39% of the company’s shares outstanding.

During the first quarter FPA increased their position 9% by purchasing 120,500 shares. They bought these shares in the price range of $44.79 to $54.85 per share, with an estimated average quarterly price of $48.50 per share. Since then the price per share has increased approximately 16.7%.

The fund’s holding history of Rosetta as of the second quarter:

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Rosetta is an exploration and production company involved in the acquisition and development of onshore energy resources in the U.S. The company owns producing and non-producing oil and gas properties in proven or prospective basins that are primarily located in South Texas.

Rosetta Resources’ historical revenue and net income:

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The analysis on Rosetta reports that the price is nearing a 10-year high, its P/S ratio is nearing a 1-year high and it has issued $769 million of debt over the past three years.

The Peter Lynch Chart suggests that the company is currently undervalued:

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Rosetta Resources has a market cap of $3.24 billion. Its shares are currently trading at around $52.74 with a P/E ratio of 17.60, a P/S ratio of 3.80 and a P/B ratio of 2.30.

Rowan Companies (RDC)

The fund’s second largest holding goes to Rowan Companies where they hold on to 2,119,700 shares of the company’s stock. This position in the company represents 6.6% of their total portfolio as well as 1.71% of the company’s shares outstanding.

The fund increased their holdings in Rowan Companies 2.61% over the past quarter, buying 54,000 shares of the company’s stock. The guru bought these shares near the estimated average quarterly price of $31.31 per share and since then the price per share has dropped approximately -1.4%.

FPA Capital’s historical holding history:

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Rowan Companies is a provider of international and domestic contract drilling services. The company also owns and operates a manufacturing division that produces equipment for the drilling, mining and timber industries.

Rowan Companies’ historical revenue and net income:

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The analysis on Rowan Companies reports that the revenue has been in decline for the past five years, the operating margin has been in a 5-year decline and the P/S ratio is nearing a 2-year low.

The Peter Lynch Chart suggests that the company is currently overvalued:

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Rowan Companies has a market cap of $3.9 billion. Its shares are currently trading at around $31.39 with a P/E ratio of 16.00, a P/S ratio of 2.50 and a P/B ratio of 0.77. The company had an annual average earnings growth of 4.40% over the past ten years.

Arrow Electronics (ARW)

FPA Capital’s third largest holding is in Arrow Electronics where they hold on to 1,129,600 shares of the company’s stock. The fund position represents 6.6% of their total portfolio and 1.13% of the company’s shares outstanding.

Over the past quarter the portfolio managers at FPA Capital cut their holdings in ARW -10% by selling 125,500 shares of the company’s stock. The fund sold these in the second quarter price range of $48.82 to $59.79, with an estimated average quarterly price of $58.22. Since then the price per share has increased approximately 3.8%.

Rodriguez’s historical holding history:

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Arrow Electronics is a global provider of products, services and solutions to industrial and commercial users of electronic components and computer products. The company offers products and services such as materials planning, new product design, programming, inventory management and a variety of online supply chain tools.

Arrow Electronics’ historical revenue and net income:

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The analysis on Arrow Electronics reports that the company’s revenue has slowed down over the past year, the price is nearing a 10-year high and it has issued $695.574 million of debt over the past three years.

The Peter Lynch Chart suggests that the company is currently undervalued:

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There are currently nine gurus with positions in Arrow Electronics. Check out their holdings here.

Arrow Electronics has a market cap of $6.02 billion. Its shares are currently trading at around $60.44 with a P/E ratio of 14.50, a P/S ratio of 0.30 and a P/B ratio of 1.40. The company had an annual average earnings growth of 25.20% over the past five years.

Avnet Inc. (AVT)

The fund’s fourth largest position is in Avnet where they hold on to 1,541,600 shares of the company’s stock. This position makes up for 6.6% of the fund’s total portfolio as well as for 1.12% of the company’s shares outstanding.

FPA did not alter their holdings in Avnet over the past quarter. The fund sold shares in the first quarter of 2014 at around the Q1 estimated average quarterly price of $42.84 per share, and since then the price per share has increased a minor 1.5%.

The fund’s historical holding history:

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Avnet is an industrial distributor of electronic components, enterprise computer and storage products and embedded subsystems. The company creates a link in the technology supply chain that connects the world's electronic component and computer product manufacturers and software developers with its customer base.

Avnet’s historical revenue and net income:

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The analysis on Avnet reports that the company’s revenue has slowed down over the past year, its price is nearing a 10-year high and it has issued $513.415 million of debt.

The Peter Lynch Chart suggests that the company is currently undervalued:

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Avnet has a market cap of $6.01 billion. Its shares are currently trading at around $43.40 with a P/E ratio of 12.60, a P/S ratio of 0.20 and a P/B ratio of 1.30.

Apollo Education (APOL)

The fund’s fifth largest holding is in Apollo Education Group where they maintain 2,107,600 shares of the company’s stock. This position makes up for 6.4% of their total portfolio as well as 1.87% of the company’s shares outstanding.

During the second quarter FPA increased their position 17.93% by adding 320,500 shares. They bought these shares in the price range of $26.64 to $34.70 per share, with an estimated average quarterly price of $28.74 per share. Since then the price per share has increased approximately 8.8%.

FPA Capital’s historical holding history:

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Apollo Group offers distinctive educational programs and services both online and on-campus at the undergraduate, masters and doctoral levels principally through these wholly-owned educational subsidiaries: The University of Phoenix, Institute for Professional Development and The College for Financial Planning Institutes Corporation.

Apollo Group’s historical revenue and net income:

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The analysis on Apollo Group reports that the company’s revenue has been in decline over the past year and that its operating margin has been in a 5-year decline.

The Peter Lynch Chart suggests that the company is currently overvalued:

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Apollo Education Group has a market cap of $3.24 billion. Its shares are currently trading at around $29.57 with a P/E ratio of 16.60, a P/S ratio of 1.10 and a P/B ratio of 2.69. The company had an annual average earnings growth of 9.70%.

Check out Robert Rodriguez’s completer second quarter holdings here.

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