Pioneer Investments Purchases Time Warner Cable, Kohl's in Q4

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Feb 10, 2015
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Pioneer Investments (Trades, Portfolio) is a global investment manager that launched in 1928. Its Pioneer Fund, which launched in that year, is a large-cap equity fund that focuses on well-established companies.

The fund’s investment approach takes a long-term value-oriented, risk-managed view. John Carey, the current portfolio manager, has led the fund since 1996.

During the fourth quarter, Pioneer purchased 59 new stocks. The following are the largest new holdings in terms of portfolio impact.

Time Warner Cable (TWC, Financial)

The fund purchased 307,345 shares of Time Warner Cable at an average price of $144.08 per share. Pioneer had previously held much smaller positions in the company. The graph below shows Pioneer’s holding history.

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TWC provides video, high-speed data, and voice services mainly in five geographic areas: New York State, the Carolinas, the Midwest, Southern California and Texas.

One cause for concern is that the company’s current ratio is 0.51, which indicates TWC cannot cover its short-term obligations with cash on hand.

Last year, Comcast announced it would take over TWC in a $45 billion merger. A year later, the deal is still under scrutiny from the Federal Communications Commission since the companies are two of the largest cable providers in the U.S.

Over the past year, the stock has been up 8% and is overvalued according to the Peter Lynch chart.

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Exelon (EXC, Financial)

The fund also purchased 1,266,860 shares of Exelon at an average price of $35.95 per share. Pioneer sold out of its previous position in the company during Q2 2013.

Exelon is a public utility holding company that operates through its subsidiaries Commonwealth Edison, PECO Energy, and Baltimore Gas and Electric.

Over the past five years, Exelon has seen its revenue and earnings growth rates decline, as indicated in the chart below.

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The company’s operating margin has also been in long-term decline. Over the past five years, the margin growth has declined almost 20%.

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The current dividend yield is 3.6%, which is near the five-year low. Exelon’s dividend payout ratio is 51%.

Endo International (ENDP, Financial)

Pioneer bought 389,510 shares of Endo for an average price of $68.40 per share. Endo is a healthcare company that manufactures and distributes pharmaceutical and generic products, as well as medical devices.

The company has been operating at a loss since FY 2012. Returns on assets, equity and invested capital have all been in the red. The operating margin was -16.26% in FY 2013.

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The debt-to-equity ratio jumped significantly in FY 2013 to 7.11.

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Other gurus who own Endo stock include Mario Gabelli (Trades, Portfolio), Larry Robbins (Trades, Portfolio), and Julian Robertson (Trades, Portfolio).

Kohl’s (KSS, Financial)

Pioneer purchased 436,833 shares of Kohl’s for an average price of $57.81 per share. The purchase had a 0.1% impact on the portfolio.

GuruFocus rates Kohl’s business predictability as a perfect 5-stars due to its consistent revenue and earnings growth. The stock has been up 35% over the past year and currently trades at $69.81. The DCF model projects a fair value of $49.19, giving a margin of safety of -42%.

The company’s operating margin was 9.15% in FY 2014, higher than the retail apparel industry average of 3.2%.

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Kohl’s current P/E ratio is 17.5, and the P/S ratio is 0.77.

Other gurus who own Kohl’s stock include Brian Rogers (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), and Bill Nygren (Trades, Portfolio).

Shire (SHPG, Financial)

Pioneer’s fifth-largest purchase during the quarter was 110,458 shares of Shire at an average price of $212.33 per share. The purchase had a 0.09% impact on the portfolio.

Shire is a biopharmaceutical company that focuses on developing medicines to treat patients with significant unmet needs. Its four areas of focus are rare diseases, neuroscience, gastrointestinal and internal medicine.

The company’s operating margin has been steadily increasing, growing 11.35% over the past five years. In FY 2013, the margin was about 35%.

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Shire has a comfortable with current ratio with $4,288 million in current assets and $1,808 million in current liabilities. The company also holds no long-term debt.

Jean-Marie Eveillard (Trades, Portfolio), Ken Fisher (Trades, Portfolio), and Mario Gabelli (Trades, Portfolio) also hold positions in Shire.

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