Morocco native Charles de Vaulx (Trades, Portfolio) more than tripled his stake in Hyundai Motor Co. (XKRX:005380) during the second quarter.
De Vaulx is the portfolio manager of the IVA Worldwide Fund, which focuses on long-term growth of capital through investing in a range of securities and asset classes from markets around the world. In the second quarter de Vaulx added 283,248 shares of Hyundai at an average price of 141,280 South Korean won ($126.16) per share.
Hyundai Motor has a market cap of 35.6 trillion won, an enterprise value of 79.08 trillion won, a price-earnings (P/E) ratio of 5.09 and a price-book (P/B) ratio of 0.54.
Hyundai is a multinational automotive manufacturer that was founded on Dec. 29, 1967, and is headquartered in Seoul, South Korea. The company produces and manufactures various automobiles including the Accent, Elantra, Veloster, Elantra GT, Sonata, Santa Fe Sport and Sonata Hybrid as well as its Grandeur model.
According to GuruFocus Hyundai has a 6 of 10 financial strength rating with an Altman Z-Score of 1.65 indicating that the company is in danger of filing for bankruptcy within the next two years.
GuruFocus has also detected a few severe warning signs of which investors should be aware.
- The company’s gross margin has been in long-term decline. The average rate of decline per year is -3.5%.
- The company’s operating margin has been in five-year decline. The average rate of decline is -5.2%.
- The company’s asset growth is currently faster than its revenue growth. If a company builds assets at 11% a year, faster than its revenue growth rate of 6.2% over the past five years, it means that the company may be getting less efficient.
- The company’s days inventory is building up, which means that it may be having difficulty selling its products.
Despite the high variance, high risk, warning signs associated with Hyundai, de Vaulx may have decided to look past them and added to his position because Hyundai is an internationally established global brand with a broad portfolio of automobiles in its product line.
- Hyundai is trading below its intrinsic value. According to the DCF calculator (which is earnings based) Hyundai is worth 679,225.17 won. Hyundai is trading at 133,000 won. This provides de Vaulx with an 80.42% margin of safety.
- Hyundai is paying a dividend yield of 3.02 which is higher than 87% of the companies in the global auto manufacturers industry.
- Hyundai is close to its five-year low in price.
Below is a Peter Lynch chart that shows Hyundai is trading below its intrinsic value
Disclosure:Â Author does not own any shares of this company.
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