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A Look at Charles Brandes Top Second Quarter Positions

August 12, 2014 | About:
Monica Wolfe

Monica Wolfe

133 followers

A disciple of value investing Guru Benjamin Graham, Charles Brandes founded Brandes Investment Partners in 1974. Brandes' funds continue to perform well, with both the Global Equity fund and the International Equity fund producing double digit returns over the past year.

Over the first quarter, Brandes bought 22 new stocks bringing his total number of stocks held to 161. The guru’s portfolio is currently valued at over $8.27 billion.

Petroleo Brasileiro SA Petrobras (PBR.A)

Brandes’ largest holding goes to Petrobras where the guru maintains 31,607,107 shares of the company’s stock. Brandes’ position makes up for 6.4% of his entire portfolio as well as 0.48% of the company’s shares outstanding.

During the second quarter Brandes increased his position 36.49% by purchasing 8,305,491 shares. The guru purchased these shares in the second quarter price range of $13.48 to $16.99, with an estimated average quarterly price of $15.43. Since then the price per share has increased 14.3%.

Brandes’ holding history as of the second quarter:

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It is an integrated oil and gas company in Brazil and in Latin America who is the supplier of crude oil and oil products. Its activities comprise five business segments: Exploration and Production, Supply, Distribution, Gas and Energy and International.

Petrobras’ historical revenue and net income:

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The analysis on Petrobras reports that the company’s revenue has been in decline over the past five years. It also notes that the company has issued $48.2 billion of debt over the past three years but that its debt level is acceptable.

According to the Peter Lynch Chart Petrobras appears to be undervalued:

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Petroleo Brasileiro SA Petrobras has a market cap of $114.99 billion. Its shares are currently trading at around $17.63 with a P/E ratio of 11.30, a P/S ratio of 0.80 and a P/B ratio of 0.48. The company had an annual average earnings growth of 3.10% over the past ten years.

America Movil SAB de CV (AMX)

The guru’s second largest holding is in America Movil where he owns 17,862,260 shares. His position in the company makes up for 4.5% of his entire portfolio as well as 0.51% of the company’s shares outstanding.

During the second quarter Brandes increased his position 8.22% by purchasing 1,357,417 shares of the company’s stock. He bought these shares in the quarterly price range of $19.33 to $20.84, with an estimated average quarterly price of $20.01 per share. The price per share has increased 17.2% since then.

Brandes’ holding history:

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America Movil, based in Mexico, is the largest provider of wireless communications services in Latin America based on subscribers. The company offers services in 18 countries, maintains more than 263 million mobile customers and holds the capability of coverage for a combined population of 847 million.

America Movil’s historical revenue and net income:

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The analysis on America Movil reports that its revenue has been in decline over the past year, it has issued MXN12.3 billion of debt over the past three years and its dividend yield is at a 10-year high.

The Peter Lynch chart shows that America Movil appears to be overvalued:

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America Movil has a market cap of $82.98 billion. Its shares are currently trading at around $23.55 with a P/E ratio of 16.80, a P/S ratio of 1.40 and a P/B ratio of 4.29. The company had an annual average earnings growth of 17.20% over the past ten years.

GuruFocus rated America Movil the business predictability rank of 4-star.

Tim Participacoes SA (TSU)

The guru’s third largest holding is in Tim Participacoes, formerly known as Tim Holding Company. The guru holds on to 10,767,304 shares of the company’s stock, representing 3.5% of the company’s shares outstanding.

Over the past quarter Brandes increased his holdings 1.03% by purchasing a total of 110,382 shares of the company’s stock. He bought these shares near the estimated average quarterly price of $27.30 per share. And since this sell the shares are trading down about -10.3%.

Brandes’ historical holding history:

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Tim Participacoes is the largest company in Brazil that offers mobile cellular service throughout the Brazilian territory, by means of its subsidiaries TIM Celular S.A. and TIM Nordeste S.A. The company is the largest GSM (Global System for Mobile communications) operator of the country, in terms of clients and revenues.

Tim Participacoes’ historical revenue and net income:

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The analysis on Tim Participacoes SA reports that the company’s revenue has slowed over the past year, its dividend yield is close to a 5-year low and that its operating margin is expanding.

Charles Brandes, Jim Simons and Steven Cohen are the only gurus that currently hold a position in Tim Holding.

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

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Tim Participacoes has a market cap of $11.87 billion. Its shares are currently trading at around $24.54 per share with a P/E ratio of 31.50 and a dividend yield of 1.50%. The company had an annual average earnings growth of 5.50% over the past ten years.

Embraer SA (ERJ)

The guru’s fourth largest position is in Embraer SA where he holds on to 7,117,204 shares of the company’s stock. This position makes up for 3.1% of his total assets managed as well as 3.84% of the company’s shares outstanding.

Over the past quarter Brandes upped his holdings 20.29% by purchasing 1,200,255 shares of the company’s stock. He bought these shares near the estimated average quarterly price of $35.28 per share, and since then the price per share is trading up about 9.4%.

Brandes’ holding history as of the close of the second quarter:

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Embraer is an aerospace company manufacturing commercial, executive, defense and agricultural aircrafts. The company also provides maintenance and repair services and markets spare parts to its jets.

Embraer’s historical revenue and net income:

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The analysis on Embraer reports that the company has shown predictable revenue and earnings growth, its operating margin is expanding and its dividend yield is near a 3-year high. It also notes that the price per share is near a 5-year high, it has issued $924.9 million of debt over the past three years and it has had operating loss over the past three years as well.

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

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Embraer SA has a market cap of $7.1 billion. Its shares are currently trading at around $38.71 with a P/E ratio of 12.40 and a P/S ratio of 1.10. The company had an annual average earnings growth of 3.90% over the past ten years.

GuruFocus rated Embraer SA the business predictability rank of 2-star.

Microsoft (MSFT)

The guru’s fifth largest position is in Microsoft where he owns 6,234,462 shares of the company’s stock. His position represents 3.1% of his entire holdings as well as 0.08% of the company’s shares outstanding.

During the past quarter Brandes dropped -1.42% of his holdings by selling 89,588 shares. He sold these shares for an estimated average quarterly price of $40.47 per share. Since then the price per share has increased approximately 6.7%.

Brandes’ historical holding history:

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Microsoft develops, manufactures, licenses and supports a wide range of software products and services for many different types of computing devices.

Microsoft’s historical revenue and net income:

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The analysis on Microsoft reports that the company’s price is near a 10-year high, its gross and operating margins have been in a 5-year decline and its interest coverage is comfortable, meaning they have enough cash to cover all debt. The company has also shown predictable revenue and earnings growth.

The Peter Lynch chart shows that Microsoft currently appears to be overvalued:

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Microsoft has a market cap of $356.8 billion. Its shares are currently trading at around $43.31 with a P/E ratio of 16.50, a P/S ratio of 4.00 and a P/B ratio of 3.57. The company has a dividend yield of 2.50%. The company has also seen average earnings growth of 11.60% over the past ten years.

GuruFocus rated Microsoft the business predictability rank of 3.5-star.

Check out Charles Brandes’ complete second quarter portfolio here.

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