“Part of the reason why I’m supporting Trump is that I think we need a more radical, new approach to government, at least in the U.S., from what we’ve had before.” – Wilbur Ross, June 2016
When a new administration is about to take over, it is only natural for people to be curious about those who will be responsible for carrying out the new president’s policies. Such is the case with the post-election nominations made by President-elect Donald Trump in the three weeks that have passed since the election.
The Wall Street Journal has called the president-elect’s choices for administration posts his “A team.” Others have called it a “team of rivals,” echoing the phrase historian Doris Kearns Goodwin used to describe the group with whom Abraham Lincoln surrounded himself at the dawn of his presidency more than a century and a half ago.
Trump’s earliest appointments have tended to be in the area of economic policy, reflecting a decidedly pro-business stance. He chose his former campaign finance chief, banker Steven Mnuchin, formerly of Goldman Sachs, to head the Treasury Department; another choice was Wilbur Ross (Trades, Portfolio), founder of private equity firm WL Ross & Co., as Commerce secretary.
Ross, who is on the record as saying the U.S. needs “a more radical, new approach to government,” built his reputation and his fortune (estimated to be $2.9 billion) by acquiring failed companies for low prices, restructuring them and selling them for huge profits. Observers who seek clues to Ross’ intentions at Commerce probably will find more in those events and the guru's previous statements; few clues are to be found in Ross’ third-quarter portfolio transactions.
In the third quarter he sold out two holdings and trimmed a third.
Ross’ largest transaction of the quarter was his divestiture of a 98,693-share holding in Fitbit Inc. (FIT, Financial), a San Francisco-based consumer electronics company known for its personal fitness metrics measurement products, for an average price of $14.58 per share. The deal had a -0.25% impact on the portfolio.
Jim Simons (Trades, Portfolio) is Fitbit’s leading shareholder among the gurus with a stake of 2,013,820 shares. The stake is 0.9% of Fitbit’s outstanding shares.
Fitbit has a price-earnings (P/E) ratio of 18.55, a forward P/E ratio of 14.53, a price-book (P/B) ratio of 1.67 and a price-sales (P/S) ratio of 0.78. GuruFocus gives Fitbit a Financial Strength rating of 9/10 with no debt and a Profitability and Growth rating of 4/10 with return on equity (ROE) of 9.96% that is higher than 68% of the companies in the Global Scientific & Technical Instruments industry and return on assets (ROA) of 7.02% that is higher than 77% of the companies in that industry.
Fitbit sold for $8.44 per share Thursday. The DCF Calculator gives Fitbit a fair value of $4.92.
The guru also sold out his 18,705-share holding in Zayo Group Holdings Inc. (ZAYO, Financial), a Colorado-based communications infrastructure company serving data centers, wireless carriers, Internet service providers and government agencies, for an average price of $28.92 per share. The divestiture had a -0.11% impact on the portfolio.
Manning & Napier Advisors Inc. is Zayo Group’s leading shareholder among the gurus with a stake of 1,884,970 shares. The stake is 0.78% of Zayo Group’s outstanding shares.
Zayo Group has a forward P/E ratio of 29.50, a P/B ratio of 6.49 and a P/S ratio of 4.40. GuruFocus gives Zayo Group a Financial Strength rating of 4/10 and a Profitability and Growth rating of 5/10 with ROE of -3.66% that is lower than 70% of the companies in the Global Communication Equipment industry and ROA of -0.69% that is lower than 64% of the companies in that industry.
Zayo Group sold for $33.08 per share Thursday. The DCF Calculator gives Zayo Group a fair value of $-1.93.
The guru trimmed his position in Xenon Pharmaceuticals Inc. (XENE, Financial), a clinical-stage biopharmaceutical company based in Canada, by more than 5% with the sale of 23,905 shares for an average price of $7.72 per share. The transaction had a -0.03% impact on the portfolio.
Ross remained Xenon’s leading shareholder among the gurus with 412,479 shares of the company. That represents 2.31% of Xenon’s outstanding shares.
Xenon has a P/B ratio of 2.09 and a P/S ratio of 24.68. GuruFocus gives Xenon a Financial Strength rating of 10/10 with no debt and a Profitability and Growth rating of 3/10 with ROE of -34.24% that is lower than 51% of the companies in the Global Biotechnology industry and ROA of -32.29% that is lower than 53% of the companies in that industry.
Xenon sold for $7.9 per share Thursday. The DCF Calculator gives Xenon a fair value of $-15.3.
Fitbit reportedly is nearing completion of a deal to acquire smartwatch maker Pebble.
Disclosure: I do not own any stocks mentioned in this article.
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