Mariko Gordon (Trades, Portfolio) purchased one new stock — a manufacturing company — and sold out of three other holdings during the first quarter, according to GuruFocus Real Time Picks.
Gordon founded Daruma Capital Management in 1995 with zero assets. Over five years, the firm grew to $1 billion in assets under management. According to the firm’s website, Gordon and her team run a concentrated portfolio with active management, investing in 25 to 35 stocks.
Despite an unorthodox education for an investor (she majored in comparative literature at Princeton), Gordon began her career as an apprentice at Manning & Napier, and managed her first portfolio at Royce & Associates.
In 2013, the Small-Cap Equity Composite portfolio returned 43.09%, outperforming the Russell 2000 return of 38.82%.
New buy
Entegris Corp (ENTG, Financial)
Gordon purchased 1,406,741 shares of Entegris for an average price of $13.18 per share. The only new stock added during the quarter has a 0.86% portfolio weighting.
Entegris develops and manufactures products and materials used in the semiconductor and technology industry. The stock has increased 23% over the past year and now trades at $13.62. The current P/E ratio is 248.4, while the P/S ratio is 1.81.
Over the past five years, the revenue growth rate was 10%, while book value grew by 15.3%. However, the company reported net income of $7.9 million in 2014, a steep decline from $74.5 million the year before.
Sold out
Lumber Liquidators Holdings (LL, Financial)
Gordon sold out of 1,218,910 shares in Lumber Liquidators, selling them for an average $51.17 per share.
The stock dropped 68% over the past year, mainly due to recent controversy in which the company was accused of selling Chinese-made flooring with formaldehyde. Whitney Tilson (Trades, Portfolio) has famously shorted the company due to the allegations.
Revenue grew by 15.2% over the past five years, and EBIT grew by 26.8% over the same time period. In 2014, Lumber Liquidators reported net income of $63 million, down from $77 million the year before.
She also sold 28,494 shares of Perrigo, which traded for an average price of $159.50 during the quarter. Perrigo develops and manufactures over-the-counter and generic pharmaceuticals.
The stock increased 49% over the past year and is currently priced at $197.91, with a P/E ratio of 128.3 and P/S ratio of 6.4.
Revenue grew by 11.8% over the past five years, while EBIT grew by 16.3%. In 2014, Perrigo reported net income of $205 million, less than half of the $442 million reported the year before.
The company’s current dividend yield is 0.2%, which is close to the 10-year low. The payout ratio is 30%.
Western Digital Corp (WDC, Financial)
Gordon also sold her stake in Western Digital, selling 35,502 shares for an average price of $103.47 per share.
Western Digital manufactures data storage solutions including hard disk drives and solid-state drives. The stock increased 15% over the past year and is currently priced at $96.24.
GuruFocus rates the business predictability as 4 out of 5 stars based on consistent revenue and earnings growth. Indeed, revenue grew by 14% over the past five years, and EBIT grew by 18.4%.
In 2014, net income was $1,617 million, up from $980 million the year before.
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