Auxier Buys New Stake in Allstate

Auxier added only two new stocks during the 3rd quarter

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Nov 13, 2015
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Value investor Jeff Auxier (Trades, Portfolio) heads Auxier Asset Management in Portland, Ore., far from the noise of Wall Street. When evaluating potential investments, Auxier and the firm look for companies that have strong or improving fundamentals, consistency in operating results and understandable products, among other attributes.

Auxier spoke with GuruFocus in August in a wide-ranging Q&A, and discussed the advice Warren Buffett (Trades, Portfolio) gave him personally, how his strategy has evolved and even his notable investing missteps. That interview can be read here.

During the third quarter, Auxier added two new holdings to the portfolio, while exiting seven other positions.

New buys

Auxier purchased 83,103 shares of Altera Corp. (ALTR, Financial) for an average price of $49.71 per share. Altera designs and sells programmable logic devices, power system-on-chip devices, among other semiconductor products. Over the past year, the stock has risen 51%, and now trades at 47.66x earnings at $52.59.

In the third quarter, Altera reported EPS of 29 cents, down from 46 cents from the year-ago quarter. The graph below depicts the annual EPS trend over time.

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Altera’s operating margin is well-above the semiconductor industry’s median of 5.2% — at the end of FY 2014, Altera’s margin was 28%, and has not dipped below 20% since 2003.

His other purchase during the quarter was 23,965 shares in Allstate Corp. (ALL, Financial), which traded for an average of $62.53 during the quarter. The insurance company offers its products in the U.S. and Canada and the stock has declined by 7% over the past year. It currently trades at 10.9x earnings at $62.48.

Allstate’s EPS has been in an upward trend since it posted loss per share of $3.06 in 2008 — its only negative year in the past 15 years. In 2014, the company earned $6.27 per share.

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Its dividend yield is 1.89% with a payout ratio of 21%. Andreas Halvorsen (Trades, Portfolio), Richard Pzena (Trades, Portfolio) and Jeremy Grantham (Trades, Portfolio) also own positions in Allstate.

Sold out

Auxier closed seven positions during the quarter, the largest of which was the position in Hospira Inc. (HSP, Financial). Hospira became a subsidiary of Pfizer (PFE, Financial) on Sept. 3, and shareholders received $90 per share for shares held as of that day. His total estimated gain since Q4 2011, when he initiated the position, is 106%.

He also closed his position with DirecTV (DTV, Financial) as a result of the merger with AT&T (T, Financial), receiving an average of $93.18 for 16,159 shares.

Auxier exited five other positions in PetroChina Co. Ltd. (PTR, Financial), Daimler AG (DDAIF, Financial), Qualcomm Inc. (QCOM, Financial), Berkshire Hathaway (BRK.A, Financial) and The Chemours Co. (CC, Financial).

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