First Eagle, an investment firm managing around $100 billion, announced on Monday that its third-quarter trading activity included buying 26 new stocks.
Founded in 1864, First Eagle Investment (Trades, Portfolio) Management is home to investing legend Jean-Marie Eveillard, who worked in portfolio management from 1993 to 2008 and continues to act as board trustee. The firm does not commit to one approach to investing but does prioritize fundamental analysis and downside protection.
In its third-quarter commentary, the First Eagle Fund of America gave the following outlook on the investing environment:
Notwithstanding the ubiquitous political agita—a symptom of the season—we are of the view that the economy and market could well continue to muddle through. We believe that we do not currently have problematic inflation and that employment is growing. With a price/earnings ratio of roughly 17x for the market,2 valuations are reasonable for this kind of low-interest-rate environment, in our view. Even with modestly higher short-term rates, longer-term rates could remain favorable. Importantly, we believe the Fed governors’ desire to raise rates stems from their wish to normalize interest rates so that they have some ammunition to combat future declines in the economy, rather than from an intention to slow down the economy. Lastly, we see little-to-no evidence of investor exuberance in the equity markets. Overall, we see a scenario where, beyond the elections and a likely December rate rise, the market and the economy could both grind forward in a slow, unsteady trajectory.
Managers also attributed their confidence in the portfolio’s stability regardless of outcomes to their holdings’ strong free cash flow generation.
The largest new third-quarter positions started at the firm were: Canadian Pacific Railway Ltd. (CP, Financial), Williams Companies Inc. (WMB, Financial), Enbridge Inc. (ENB, Financial), St. Jude Medical Inc. (STJ, Financial) and Eagle Pharmaceuticals Inc. (EGRX, Financial).
Canadian Pacific Railway Ltd. (CP, Financial)
First Eagle bought 858,923 shares of Canadian Pacific Railway, a 0.33% portfolio weighting. The stock’s price averaged $147 per share in the third quarter.
Canadian Pacific Railway Ltd has a market cap of $21.37 billion; its shares were traded around $143.50 with a P/E ratio of 19.10 and P/S ratio of 4.72. The trailing 12-month dividend yield of Canadian Pacific Railway stocks is 0.89%. The forward dividend yield of Canadian Pacific Railway stocks is 1.07%. Canadian Pacific Railway had an annual average earnings growth of 6.0% over the past 10 years.
Williams Companies Inc. (WMB, Financial)
First Eagle bought 2,021,810 shares of Williams Companies, a 0.16% portfolio weight. The stock’s price averaged $27 per share in the third quarter.
Williams Companies Inc. has a market cap of $22.42 billion; its shares were traded around $29.25 with and P/S ratio of 3.03. The trailing 12-month dividend yield of Williams Companies Inc. stocks is 7.26%. The forward dividend yield of Williams Companies Inc. stocks is 2.8%.
Enbridge Inc. (ENB, Financial)
First Eagle bought 1,373,251 shares of Enbridge Inc., a 0.15% portfolio weight. The stock’s price averaged $42 per share in the third quarter.
Enbridge Inc. has a market cap of $41.78 billion; its shares were traded around $42.66 with a P/E ratio of 39.75 and P/S ratio of 1.45. The trailing 12-month dividend yield of Enbridge Inc. stocks is 3.63%. The forward dividend yield of Enbridge Inc. stocks is 3.84%. Enbridge Inc. had an annual average earnings growth of 5.2% over the past 10 years. GuruFocus rated Enbridge Inc. the business predictability rank of 3-star.
St. Jude Medical Inc. (STJ, Financial)
First Eagle bought 545,389 shares of St. Jude Medical, a 0.11% portfolio weight. The stock’s price averaged $81 in the third quarter.
St. Jude Medical Inc. has a market cap of $22.46 billion; its shares were traded around $78.96 with a P/E ratio of 34.64 and P/S ratio of 3.91. The trailing 12-month dividend yield of St. Jude Medical Inc. stocks is 1.54%. The forward dividend yield of St. Jude Medical Inc. stocks is 1.59%. St. Jude Medical Inc. had an annual average earnings growth of 9.2% over the past 10 years. GuruFocus rated St. Jude Medical Inc. the business predictability rank of 2-star.
Eagle Pharmaceuticals Inc. (EGRX, Financial)
First Eagle bought 568,205 shares of Eagle Pharmaceuticals Inc., a 0.1% portfolio weight. The stock’s price averaged $55 in the third quarter.
Eagle Pharmaceuticals Inc. has a market cap of $869.440 million; its shares were traded around $74.59 with a P/E ratio of 438.74 and P/S ratio of 12.71.
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