Brave Warrior Advisors, LLC is an employee owned investment firm. The firm provides client focused equity portfolios, and also manages hedge funds. The original Chieftain hedge fund was founded by Glenn Greenberg (Trades, Portfolio) and John Shapiro in 1984 in New York City. Due to disagreements regarding management, the duo announced in 2009 that they would split the $2 billion fund, and in January 2010 Mr. Shapiro started the new Chieftain and Mr. Greenberg renamed his own fund Brave Warrior Advisors.
The following are the most undervalued stocks in Brave Warrior’s portfolio.
1. Primerica Inc (PRI)
The company is a distributor of financial products to middle income households in the United States and Canada.
Shares of PRI appreciated by 2.46% during the past week but lost 1.11% on a 4-week basis. In the past week, the stock has outperformed the S&P 500 by 2.4%.
Greenberg started to buy PRI in 2011 Q3. He is currently holding 2,108,727 shares at an average price of $25.18/share, with an average gain of 88%.
Based on the DCF model, PRI's fair value is $48.83, and these days the stock is trading with a margin of safety of 7%, at a P/E (ttm) ratio of 13.80 and P/B ratio of 1.90. Even the Peter Lynch earnings line gives the same margin of safety.
Over the last five years the company’s revenue dropped by 0.70%, EBITDA dropped by 7.30% and even EPS dropped by 10.00%. PRI has positive returns (ROE at 14.18%, ROA at 1.69% and ROC at 254.70%) and good financial strength, rated 8/10.
For the quarter ended March 31, the company reported total revenues of $345.1 million and net income of $43.4 million, or $0.82 per diluted share and operating revenues increased by 6% to $343.9 million.
They started the year with great momentum in key business drivers including term life sales and policy persistency as well as Investment and savings products sales and client asset values.
Ruane Cunniff is the Guru with the largest amount of outstanding shares of PRI (7.05%), followed by Ron Baron (Trades, Portfolio) (7.01%) and Glenn Greenberg (Trades, Portfolio) (4.11%).
2. JPMorgan Chase & Co (JPM)
The company is a financial services firm and banking institution in the United States with operations around the world.
Glenn Greenberg started to buy JPM in 2014 Q3. He is currently holding 4,817,762 shares at an average price of $58.75/share, with an average gain of 16%.
Based on the DCF model, JPM’s fair value is $85.95, and these days the stock is trading with a margin of safety of 21%, at a P/E (ttm) ratio of 12.70 and P/B ratio of 1.20.
The Peter Lynch earnings line’s fair value is set to $80 with a margin of safety of 16%
The fair value votes of GuruFocus give a fair price of $59.91 that put the stock as overpriced by 16%.
Over the last five years the company revenue dropped by 0.70%, EBITDA grew by 9.20%, and EPS growth rate is 14.50. JPM has positive returns (ROE at 9.77%, ROA at 0.88% and ROC at 202.29%) and average financial strength, rated 5/10.
James Barrow (Trades, Portfolio) is the Guru with largest amount of outstanding shares of JPM (0.9%), followed by Dodge and Cox (0.64%) and Chris Davis (Trades, Portfolio) (0.5%).
3. Comcast Corp (CMCSA)
The company is a media and technology company with two main businesses, Comcast Cable and NBCUniversal.
On June 10, 2015 CMCSA announced Daniel C. Murdock has joined the company as Vice President, Corporate Controller. In this role, Mr. Murdock serves as a senior leader within Comcast’s Finance department and oversees accounting policies and procedures, reporting controls, and Sarbanes-Oxley compliance.
Glenn Greenberg started to buy CMCSA in 2010 Q1. He is currently holding 15,547 shares at an average price of $48.16/share, with an average gain of 21%.
Based on the DCF model, CMCSA’s fair value is $93.95, and these days the stock is trading with a margin of safety of 38%, at a P/E (ttm) ratio of 18.00 and P/B ratio of 2.80.
The Peter Lynch earnings line’s fair value is set to $48.8 with a margin of safety of 21%.
The fair value votes of Guru Focus give a fair price of $72.87 with a margin of safety of 19%.
Over the last five years the company revenue grew by 17.60%, EBITDA grew by 13.70%, and EPS growth rate is 29.20%. CMCSA has top ratios for the Global Pay TV industry (ROE at 16.39%, ROA at 5.41% and ROC at 50.09%) and good financial strength, rated 7/10. During the first quarter of 2015 consolidated revenue increased 2.6%, operating cash flow increased 7.6%, operating income increased 9.0%. Free cash flow increased 12.7% to $3.2 billion. Earnings per share increased 14.1% to $0.81; excluding adjustments, EPS increased 16.2% to $0.79.
Dodge and Cox is the Guru with largest amount of outstanding shares of CMCSA (1.82%), followed by Ken Fisher (Trades, Portfolio) (0.48%) and Bill Nygren (Trades, Portfolio) (0.16%).
4. Bank of America Corporation (BAC)
The company through its banking and various non-banking subsidiaries provides a diversified range of banking and non-banking financial services and products.
On June 5, Mr.Peek became executive vice chairman at BAC. In his new role he will focus mainly on working with banks, insurers and other financial institutions.
Greenberg started to buy BAC in 2010 Q1. He is currently holding 14,532 shares at an average price of $14.83/share, with an average negative return of 4%.
Based on the DCF model, BAC fair value is $9.74, and these days the stock is trading with a margin of safety of 80%, at a P/E (ttm) ratio of 25.50 and P/B ratio of 0.80.
The Peter Lynch earnings line’s fair value is set to $7.6 so the company is overpriced by 143%.
The fair value votes of GuruFocus give a fair price of $20.85 so even here the company has a good margin of safety of 15%
Over the last five years the company revenue dropped by 12.40% and EBITDA grew by 15.10%. Returns of BAC are ranked lower than 76% of other companies in the the Global Banks industry (ROE at 3.52%, ROA at 0.40% and ROC at 121.89%) and its financial strength rated 6/10 has ratios that are at their all-time-high (cash to debt and equity to asset). The last quarter recorded a net income of $3.4 billion, or $0.27 per diluted share. Net interest income, on an FTE basis, was $9.7 billion, down $616 million from the year-ago quarter. Revenue was down 3% from the first quarter of 2014 to $7.5 billion.
Dodge & Cox is the main guru holding BAC with 1.49% of shares outstanding, followed by James Barrow (Trades, Portfolio) (0.81%) and Bruce Berkowitz (Trades, Portfolio) (0.73% that represent the 22.11% of his total assets.
