Southeastern Asset Management’s Mason Hawkins (Trades, Portfolio) acquired three new holdings and sold out of three others in the third quarter.
Hawkins founded Southeastern in 1975 in Memphis where he currently serves as chairman and CEO. He and his partners manage the Longleaf Partners Fund. The firm follows an investment process that relies on in-depth, fundamental research. It believes the key to success is high-conviction investing for the long term in businesses that are strong, deeply discounted and have good management.
The guru purchased 3,823,746 shares of Sonic Corp. (SONC, Financial) for an average price of $27.53 per share. The transaction had an impact of 0.9% on the portfolio.
Sonic operates and franchises a chain of quick-service drive-in restaurants. The Oklahoma-based company has a market cap of $1.24 billion and an enterprise value of $1.7 billion. It has a price-earnings (P/E) ratio of 20.9, a forward P/E of 21.5 and a price-sales (P/S) ratio of 2.24.
GuruFocus ranked the company’s financial strength 5 of 10. The Piotroski F-Score and Altman Z-Score are both high, suggesting the company is financially healthy. The company is creating value as it grows because its return on invested capital (ROIC) outperforms its weighted average cost of capital (WACC). The cash to debt and interest coverage ratios, however, are far below the industry median and underperform 79% and 78% of other companies.
GuruFocus ranked Sonic’s profitability and growth 8 of 10. It has an operating margin of 21.02% and a net margin of 10.6%. The return on assets (ROA) outperforms 81% of other companies in the global restaurants industry. Similarly, its return on capital (ROC) outperforms 66% of competitors.
Since his initial purchase, Hawkins expanded his holding by 21.6% on Oct. 31. He now holds 10.2% of Sonic’s outstanding shares. RS Investment Management (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), Jim Simons (Trades, Portfolio), Lee Ainslie (Trades, Portfolio) and Ron Baron (Trades, Portfolio) also hold positions.
The DCF Calculator gives the stock a fair value of $13.81; it was trading at $26.96 on Wednesday.
Hawkins purchased 441,590 shares of Intrawest Resorts Holdings Inc. (SNOW, Financial) for an average price of $15.24 per share. The transaction impacted the portfolio by 0.07%.
Intrawest is a mountain resort, adventure and real estate company that offers vacation and travel experiences. The company has a market cap of $692.8 million and an enterprise value of $1.2 billion. It has a P/E of 16.6, a forward P/E of 23.8, a price-book (P/B) ratio of 3.3 and a P/S of 1.3.
GuruFocus ranked the company’s financial strength 3 of 10. While the Piotroski F-Score of 8 suggests the company is financially healthy, the Altman Z-Score of -2.5 suggests the company is under some sort of pecuniary stress. The cash-debt and interest coverage ratios are significantly below the industry median and underperform 74% and 83% of other companies.
GuruFocus ranked Intrawest’s profitability and growth 7 of 10. It has an operating margin of 13.7% and a net margin of 7.7%. The return on equity (ROE) outperforms 84% of other companies in the global leisure industry. Similarly, the ROA and ROC outperform 61% and 63% of competitors.
Simons has the largest holding among the gurus. He holds 3.4% of Intrawest’s outstanding shares, which represents 0.04% of his total assets managed. Greenblatt also holds a position.
The DCF Calculator gives the stock a fair value of $11.24; it was trading at $17.58 on Wednesday.
Hawkins purchased 425,000 shares of Eastman Kodak (KODK, Financial) for an average price of $15.85 per share. The transaction had an impact of 0.06% on the portfolio.
Eastman Kodak is a well-known technology company that specializes in imaging products, specifically photography. The company is based in Rochester, New York. It has a market cap of $635.4 million and an enterprise value of $845.4 million. It has a P/E of 22.4 and a P/S of 0.4.
GuruFocus ranked the company’s financial strength 4 of 10. It has a moderate Piotroski F-Score of 6, which indicates a stable financial condition. However, the Altman Z-Score of 1.5 suggests the company has faced financial stress and could face bankruptcy in the near future. Eastman Kodak is creating value as it grows because its ROIC outperforms its WACC. The cash-debt and interest coverage ratios are below the industry medians and underperform 66% and 93% of other companies.
GuruFocus ranked Eastman Kodak’s profitability and growth 4 of 10. It has an operating margin of 7.2% and a net margin of 1.7%. The ROE and ROC outperform 100% and 62% of other companies in the global consumer electronics industry. In contrast, the ROA underperforms 59% of competitors.
Hawkins is the company’s largest shareholder among the gurus with 1% of outstanding shares, which represents 0.06% of his total assets managed. Simons, George Soros (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio) also hold positions.
The DCF Calculator gives the stock a fair value of $6.31; it was trading at $15.03 on Wednesday.
The guru sold out of Royal Philips NV (PHG, Financial). The stock sold for an average price of $27.65 per share, and he sold 9,054,394 shares. He had been reducing his position since the fourth quarter of 2014.
Hawkins sold his remaining 1,073,700 shares of Vail Resorts Inc. (MTN, Financial) for an average price of $152.4 per share. He has been reducing his stake since the fourth quarter of 2012.
He sold his remaining 4,286,930 shares of Chemtura Corp. (CHMT, Financial) for an average price of $28.87 per share. He first acquired the holding in the fourth quarter of 2014 and began reducing his position in the fourth quarter of 2015.
For all of Hawkins’ current holdings, visit his portfolio.
Disclosure: I do not own stock in any companies mentioned in the article.
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