Arnold Van Den Berg Buys 6 New Stocks, Gets More Bullish on Oil Companies

His firm expects $70 oil

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Jul 25, 2016
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During the second quarter, founder of Austin-based Century Management Arnold Van Den Berg (Trades, Portfolio) cut back on his sizable positioning in gold miners while increasing holdings in health care and oil.

Overall, Century Management bought six new stocks and sold 36. It had 47 stock investments in total at quarter-end, valued at $597 million. Basic materials stocks as a portion of the portfolio had decreased to 7.9% from 12.2% one year ago. Health care stock representation also grew to 6.5% from 1.9%.

Many of Van Den Berg’s mining stocks, some of which he owned for three to four years, languished as the price of gold fell by more than a third over the past five years. This year turned more positive for the companies as uncertainty pushed the price for the metal up 25%. Many of Van Den Berg’s miners appreciated as a result, rising as much as 219% year to date.

Century Management advisers voiced their stance on oil prices in a January paper called Outlook for Oil. Based on their research, they concluded that oil prices were declining, global demand was rising and supply and demand would balance out by the second or third quarter. They set a year-end price target of $70 a barrel – nearly double.

Pricing has undoubtedly improved since the time of writing, though it has yet to meet their expectation. On Monday, the price of Brent crude futures was $44.78 a barrel.

That price also reflected a three-month low as higher prices have brought more rigs back in business and triggered market worries about a recurrence of oversupply.

Century had expected continued inventory build in the first quarter but that by the second quarter the excess would begin to fall as production further slowed and demand increased.

“By year’s end and into 2017,” Van Den Berg wrote in Outlook for Oil, “we expect the world will face an undersupply of oil and tighter inventory with little to no spare capacity. This in turn should drive oil prices higher.”

Though Van Den Berg remained confident in his thesis based on his increase in energy stocks from 9.1% to 15.2% of his portfolio from the first to second quarter, his bullishness was not across the board. The manager sold his shares of eight energy companies, including integrated giants Exxon Mobil (XOM, Financial) and Total SA (TOT, Financial).

Of all his activity during the second quarter, these are his six new positions: Liberty Media Corp. (LSXMK, Financial), Express Scripts Holding Co. (ESRX, Financial), Schlumberger Ltd. (SLB, Financial), AmerisourceBergen Corp. (ABC, Financial), Cardinal Health Inc. (CAH, Financial) and Liberty Media Corp. (BATRK, Financial).

Liberty Media Corp. (LSXMK, Financial)

Van Den Berg’s Century bought 323,733 shares of Liberty Media Corp. , for 1.67% of his portfolio. Its stock had an average share price of $31 for the quarter.

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Liberty Media Corp. has a market cap of $11.19 billion; its shares were traded around $33.40 with a P/E ratio of 22.27 and P/S ratio of 2.05.

Express Scripts Holding Co. (ESRX, Financial)

Century purchased 97,615 shares of Express Scripts Holding, reflecting 1.24% of the portfolio. Its average price for the quarter was $74 per share.

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Express Scripts Holding Co. has a market cap of $48.95 billion; its shares were traded around $77.39 with a P/E ratio of 20.41 and P/S ratio of 0.52. Express Scripts Holding Co. had an annual average earnings growth of 24.2% over the past 10 years. GuruFocus rated Express Scripts Holding Co. the business predictability rank of 4.5-star.

Schlumberger Ltd. (SLB, Financial)

Century purchased 85,223 shares of Schlumberger Ltd., reflecting 1.13% of the portfolio. Its average price for the quarter was $77 per share.

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Schlumberger Ltd. has a market cap of $101.08 billion; its shares were traded around $80.71 with and P/S ratio of 3.22. The trailing 12-month dividend yield of Schlumberger Ltd. stocks is 2.49%. The forward dividend yield of Schlumberger Ltd. stocks is 2.45%. Schlumberger Ltd. had an annual average earnings growth of 11.30% over the past 10 years. GuruFocus rated Schlumberger Ltd. the business predictability rank of 4-star.

AmerisourceBergen Corp. (ABC, Financial)

Century purchased 82,350 shares of AmerisourceBergen Corp., reflecting 1.09% of the portfolio. Its average price for the quarter was $80 per share.

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AmerisourceBergen Corp. has a market cap of $18.44 billion; its shares were traded around $85.41 with a P/E ratio of 12.66 and P/S ratio of 0.14. The trailing 12-month dividend yield of AmerisourceBergen Corp. stocks is 1.54%. The forward dividend yield of AmerisourceBergen Corp. stocks is 1.58%. AmerisourceBergen Corp. had an annual average earnings growth of 9.3% over the past 10 years.

Cardinal Health Inc. (CAH, Financial)

Century purchased 77,330 shares of Cardinal Health Inc., reflecting 1.01% of the portfolio. Its average price for the quarter was $80 per share.

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Cardinal Health Inc. has a market cap of $27 billion; its shares were traded around $82.86 with a P/E ratio of 19.72 and P/S ratio of 0.23. The trailing 12-month dividend yield of Cardinal Health Inc. stocks is 1.95%. The forward dividend yield of Cardinal Health Inc. stocks is 2.16%. Cardinal Health Inc. had an annual average earnings growth of 2.4% over the past 10 years.

Liberty Media Corp. (BATRK, Financial)

Century purchased 260,145 shares of Liberty Media Corp., reflecting 0.64% of the portfolio. Its average price for the quarter was $15 per share.

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Liberty Media Corp. has a market cap of $5.26 billion; its shares were traded around $15.71 with a P/E ratio of 22.82 and P/S ratio of 2.09.

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