Smith Hayes Advisers Buys Visa, JP Morgan

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Aug 19, 2015

At the end of the second quarter of 2015, the hedge fund Smith Hayes Advisers reported a total value of its portfolio of $505.6 million, which increased by 0.51% over the previous quarter.

During Q2 2015, the hedge fund bought 136 new stocks and increased 89 of its stakes. The following are the most heavily weighted buys during the quarter.

It bought shares of Visa Inc (V) with an impact of 2.08% on its portfolio. It is a payment technology company that connects consumers, businesses, banks and governments in more than 200 countries and territories to fast, secure and reliable electronic payments. The Company operates processing networks, VisaNet, offering fraud protection for consumers and assured payment for merchants.

The company has a profitability and growth rating of 8 out of 10 with good returns (ROE 21.11%, ROA 15.23%) that are outperforming 78% of the Global Credit Services industry. Financial strength has a rating of 7 out of 10 and both interest coverage and cash to debt ratios say the company is out of debt.

The price of the stock has risen by 325% during the last 5 years, by 12% year-to-date and by 39% during the last 12 months. The current price is -3.19% from its 52-week high and +52.61% from its 52-week low.

Net operating revenue in the fiscal third quarter of 2015, driven by solid growth in service, data processing and international transaction revenues had an increase of 12% nominally or 14% on a constant dollar basis over the prior year. For the rest of year, they continue to deliver solid financial results and operating metrics without the help of an improving economic environment. Strong underlying fundamentals continue to offset the drag from geopolitical tension and the strengthening dollar on our business.

The main shareholder holding shares of the company is Frank Sands (Trades, Portfolio) with 2.20% of outstanding shares that is 7.96% of his total assets, followed by Ken Fisher (Trades, Portfolio) with 0.66% and PRIMECAP Management (Trades, Portfolio) with 0.52%.


It bought shares of JPMorgan Chase & Co (JPM) with an impact of 1.08% on its portfolio. It is a financial services firm and banking institution with operations around the world. The company's activities are organized, for management reporting purposes, into various business segments, such as Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking, and Asset Management.

The company has a profitability and growth rating of 5 out of 10 with weak returns (ROE 8.93%, ROA 0.90%) that are outperforming 53% of in the Global Banks - Global industry. Financial strength has a rating of 4 out of 10 and both interest coverage ratio of 3.77 and cash to debt of 1.18 show the company has enough cash to cover its debts and interests.

The price of the stock has risen by 84% during the last 5 years, by 9% since the beginning of the year and by 18% during the last 12 months. The current price is -3.40% from its 52-week high and +25.71% from its 52-week low.

The company is in advanced talks with U.S. regulators to pay to resolve allegations that it steered private-banking clients to its own products.

In its last quarter, the net income was 5% higher compared to the same quarter of a year ago and earning per shares was $0.8 more than in Q2 2014. However, net revenue declined 3% compared to Q2 2014.

The main shareholder is James Barrow (Trades, Portfolio) with 0.9% of outstanding shares that is 3.08% of his total assets, followed by Dodge & Cox with 0.71% and Chris Davis (Trades, Portfolio) with 0.5%.


It bought shares of Nielsen NV (NLSN) with an impact of 0.95% on its portfolio. The company together with its subsidiaries provides clients an understanding of what consumers watch and what they buy and how those choices intersect. The company delivers critical media and marketing information, analytics and manufacturer and retailer expertise about what and where consumers buy and what consumers read, watch and listen to on a local and globally.

The company has a profitability and growth rating of 6 out of 10 with positive returns (ROE 8.29%, ROA 2.78%) that are outperforming 50% of the Global Business Services industry. Financial strength has a rating of 7 out of 10 with a very low cash to debt of 0.04 and an interest coverage ratio of 3.63.

The price of the stock has risen by 93% during the last 5 years, by 8% year-to-date and did not face any change during the last 12 months. The current price is -2.07% from its 52-week high and +19.21% from its 52-week low.

Adjusted EBITDA for the second quarter increased 1.7% and income from continuing operations for the second quarter increased 52.6%. Revenues within the Buy segment decreased 5.3%, while it increased 1.9% in the Watch segment.

The main shareholder is Ron Baron (Trades, Portfolio) with 0.38% of outstanding shares that is 0.25% of his total assets, followed by RS Investment Management (Trades, Portfolio) with 0.18% and Jim Simons (Trades, Portfolio) with 0.14%.

Increased stakes

The hedge fund also increased seven of its stakes, and the most important are the following:

Wells Fargo & Co (WFC) by 10%, Apple Inc (AAPL) by 16%, Johnson Controls Inc (JCI) by 13%, International Business Machines (IBM) by 15%, Abbott Laboratories Com (ABT) by 10%, Autodesk Inc (ADSK) by 6.71% and Chevron Corp (CVX) by 20.21%

Smith Hayes Advisers Top Buys Q2 2015
Ticker Value(x1000) Impact % Trade
V 10,523 2.08% New Buy
SPY (etf) 6,347 1.26% New Buy
JPM 5,446 1.08% New Buy
FV 4,949 0.98% New Buy
NLSN 4,813 0.95% New Buy

After the last trades, the hedge fund has its portfolio divided by the following sectors :

Main Sectors
Finance 30%
Information Technology 15%
Health Care 9%
Industrials 9%
Consumer Staples 9%
Consumer Discretionary 8%
Energy 6%
Utilities & telecommunications 4%
Transports 3%