The founder and chief investment officer of Snow Capital Management, Richard Snow (Trades, Portfolio), cut his stakes by significant percentages in two high-yielding stocks, according to GuruFocus Real Time Picks.
The firm employs a contrarian, fundamental, relative value investment strategy, searching for companies with depressed stock prices due to short-to intermediate-term difficulties. Over the past 15 years, the All Cap Equity Composite strategy returned an annualized 8.9% per year, compared to the S&P 500’s 4.2%.
Snow reduced his stake in American Eagle Outfitters (AEO, Financial) by more than 88% following an 18% rise in the stock price since the beginning of the year, selling the shares for an average price of $15.24 per share.
The specialty clothing and accessories retailer markets to teenagers and young adults. Over the past five years, EBIT per share declined 19%, recording at $0.80 in 2014. Similarly, net income declined 15% over the same time period and amounted to $80 million in 2014.
In the fourth quarter earnings reported on March 4, AEO said the operating margin expanded to 10.5%, while selling, general and administrative expenses increased 5% to $227 million, due to investments in marketing and incentive compensation.
During the fiscal year, the company closed 42 stores, of which three were aerie stores, AEO’s intimates and sleepwear line.
Snow also trimmed his holding in Health Net (HNT, Financial) by 96%, selling 1,095,517 shares for an average price of $56.34 per share. He now holds 45,290 shares of the company. The graph below shows Snow’s holding history.
HealthNet delivers managed health care services; its health plan subsidiaries provide health benefits through HMOs, PPOs and point of service (POS). The stock rose 11% year-to-date and is currently priced at $58.51, with a P/E ratio of 32.3 and P/S ratio of 0.3.
In the Q1 2015 earnings released on May 4, HealthNet reported net income of $30 million, up from $28.8 million in the year-ago quarter. Over the past five years, the company’s EBIT per share increased 7.87%, recording at $2.86 in FY 2014.
Joel Greenblatt (Trades, Portfolio), Jim Simons (Trades, Portfolio), and Paul Tudor Jones (Trades, Portfolio) also hold positions in HealthNet. Tudor Jones also reduced his stake in the first quarter, selling almost 15% of the holding, leaving 22,534 shares in the position.
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