Hotchkis & Wiley Sells JPMorgan, Boosts Wells Fargo

The guru's largest buys and sells during the 2nd quarter

Author's Avatar
Aug 22, 2016
Article's Main Image

HOTCHKIS & WILEY was formed in Los Angeles in 1980 and has focused exclusively on finding and owning undervalued companies that have a significant potential for appreciation. During the second quarter the company traded the following stocks.

The company reduced its stake in Great Plains Energy Inc. (GXP) by 76.09% with an impact of -0.77% on the portfolio.

The company operates in only one segment, known as electric utility segment. It provides electricity to customers in Missouri and Kansas.

During the second quarter earnings were $31.6 million or 20 cents per share of average common stock outstanding, compared with second quarter 2015 earnings of $44.0 million or 28 cents per share.

GuruFocus gives the stock a profitability and growth rating of 6 out of 10 with return on equity (ROE) of 5.67% and return on assets (ROA) of 1.92% that are underperforming 66% of the companies in the Global Utilities - Regulated Electric industry. Financial strength has a rating of 4 out of 10 with cash to debt of 0.33 that is a few below the industry median of 0.35.

The second-largest shareholder among the gurus is Jim Simons (Trades, Portfolio) with 0.86% of outstanding shares followed by Mario Gabelli (Trades, Portfolio) with 0.39% and Paul Tudor Jones (Trades, Portfolio) with 0.03%.

The company reduced its stake in JPMorgan Chase & Co. (JPM) by 29.57% with an impact of -0.67% on the portfolio.

It is a financial services firm and a banking institution. Its segments are Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking and Asset Management.

The company reported credit costs of $1.2 billion, up $499 million year over year, reflecting a net reserve build compared with a release in the prior year.

GuruFocus gives the stock a profitability and growth rating of 6 out of 10 with ROE of 8.83% and ROA of 0.99% that are outperforming 54% of the companies in the Global Banks - Global industry. Financial strength has a rating of 6 out of 10 with cash to debt of 1.10 that is a few below the industry median of 2.48.

Barrow, Hanley, Mewhinney & Strauss is the largest shareholder among the gurus with 0.83% of outstanding shares followed Dodge & Cox with 0.77%, PRIMECAP Management (Trades, Portfolio) with 0.6%, Chris Davis (Trades, Portfolio) with 0.49% and Ken Fisher (Trades, Portfolio) with 0.39%.

The company raised its stake in Wells Fargo & Co. (WFC) by 76.95% with an impact of 0.6% on the portfolio.

It is a diversified financial services company. It provides retail, corporate and commercial banking services through banking stores and offices, the Internet and other distribution channels to individuals, businesses and institutions.

Second quarter net income was $5.6 billion, compared with $5.7 billion in second quarter 2015 and diluted earnings per share (EPS) was $1.01 compared with $1.03. The company reported 4% growth for revenue.

GuruFocus gives the stock a profitability and growth rating of 6 out of 10 with ROE of 10.72% and ROA of 1.24% that are outperforming 67% of the companies in the Global Banks - Global industry. Financial strength has a rating of 5 out of 10 with cash to debt of 0.06 that is below the industry median of 2.48.

The largest shareholder among the gurus is Warren Buffett (Trades, Portfolio) with 9.51% of outstanding shares followed by Dodge & Cox with 1.34%, Barrow, Hanley, Mewhinney & Strauss with 0.75%, Davis with 0.48% and Fisher with 0.38%.

The company reduced its stake in Marathon Oil Corp. (MRO) by 18.15% with an impact of -0.47% on the portfolio.

The company is an energy company engaged in the exploration, production and marketing of liquid hydrocarbons and natural gas, production and marketing of products manufactured from natural gas and oil sands mining.

GuruFocus gives the stock a profitability and growth rating of 4 out of 10 with ROA of -10.97% and ROC of -6.30% that are outperforming 63% of the companies in the Global Oil & Gas E&P industry. Financial strength has a rating of 4 out of 10 with cash to debt of 0.36 that is below the industry median of 0.45.

HOTCHKIS & WILEY is the largest shareholder among the gurus with 5.37% followed by Daniel Loeb (Trades, Portfolio) with 0.47%, Jeremy Grantham (Trades, Portfolio) with 0.27%, Simons with 0.25% and Steven Cohen (Trades, Portfolio) with 0.12%.

The company increased its stake in Office Depot Inc. (ODP) by 77.13% with an impact of 0.29% on the portfolio.

The company is a supplier of office products and services. It offers products including office supplies, paper, ink and tone, cleaning chemical and equipment, monitors and equipment, computers and tablets, office appliances and school supplies.

Adjusted operating income for the second quarter was $67 million compared to an adjusted operating income of $73 million in the second quarter of 2015 and total reported sales had a decrease of 6%.

GuruFocus gives the stock a profitability and growth rating of 4 out of 10 with ROE of 16.71% and ROA of 4.40% that are outperforming 62% of the companies in the Global Specialty Retail industry. Financial strength has a rating of 6 out of 10 with cash to debt of 0.77 that is below the industry median of 0.99.

The second-largest shareholder among the gurus is John Paulson (Trades, Portfolio) with 2.89% of outstanding shares followed by Grantham with 1.18%, Simons with 0.66%, Eric Mindich (Trades, Portfolio) with 0.29% and Joel Greenblatt (Trades, Portfolio) with 0.04%.

The company reduced its stake in Corning Inc. (GLW) by 6.54% with an impact of -0.28% on the portfolio.

The company is engaged in manufacturing of specialty glass and ceramics. Its segments are Display Technologies, Optical Communications, Environmental Technologies, Specialty Materials and Life Sciences.

Optical Communications sales increased 28% sequentially and GAAP EPS was up $2.23 sequentially to $1.87, reflecting a one-time $2.7 billion nontaxable gain on strategic realignment of Dow Corning.

GuruFocus gives the stock a profitability and growth rating of 6 out of 10 with ROE of 10.94% and ROA of 7.79% that are outperforming 71% of the companies in the Global Electronic Components industry. Financial strength has a rating of 6 out of 10 with cash to debt of 1.70 that is above the industry median of 1.44.

Dodge & Cox is the largest shareholder among the gurus with 5.12% of outstanding shares followed by PRIMECAP Management (Trades, Portfolio) with 1.85%, Charles Brandes (Trades, Portfolio) with 0.65% and Cohen with 0.56%.

The company raised its stake in Microsoft Corp. (MSFT) by 8.46% with an impact of 0.26% on the portfolio.

Microsoft is engaged in designing, manufacturing, selling devices and online advertising. Its products include operating systems for computing devices, servers, phones and other devices.

In the fourth quarter, Microsoft returned $6.4 billion to shareholders in the form of share repurchases and dividends, revenue was $20.6 billion GAAP and $22.6 billion non-GAAP.

GuruFocus gives the stock a profitability and growth rating of 7 out of 10 with ROE of 21.64% and ROA of 9.13% that are outperforming 79% of the companies in the Global Software - Infrastructure industry. Financial strength has a rating of 6 out of 10 with cash to debt of 2.11 that is below the industry median of 10.15.

The largest shareholder among the gurus is PRIMECAP Management (Trades, Portfolio) with 0.75% of outstanding shares followed by Jeff Ubben (Trades, Portfolio) with 0.73%, Dodge & Cox with 0.66%, Steve Mandel (Trades, Portfolio) with 0.33% and Barrow, Hanley, Mewhinney & Strauss with 0.32%.

Disclosure: I do not own any shares of any stocks mentioned in this article.

Start a free seven-day trial of Premium Membership to GuruFocus.