Spiros Segalas (Trades, Portfolio) of Jennison Associates and the Harbor Capital Appreciation Fund acquired four new holdings in the fourth quarter. Among his new holdings for the final quarter of 2016 are FedEx Corp. (FDX, Financial), Charter Communications Inc. (CHTR, Financial), Ulta Salon Cosmetics & Fragrance Inc. (ULTA, Financial) and Expedia Inc. (EXPE, Financial).
Segalas is director, chief investment officer, president and founding member of Jennison Associates. The Harbor fund is subadvised by Jennison. Segalas, who has managed the fund since 1990, seeks long-term growth of capital. According to the fund's prospectus, it invests in midcap to large-cap growth stocks. Segalas looks for companies that have high revenue and earnings growth, improving profitability and strong balance sheets.
The guru purchased 1,430,975 shares of FedEx for an average price of $183.52 per share. The trade had an impact of 1.01% on the portfolio.
FedEx is an American courier delivery service that operates internationally. The Memphis-based company has a market cap of $50.55 billion and an enterprise value of $60.01 billion. Its shares were trading around $188.48 Wednesday with a price-earnings (P/E) ratio of 27.6, a forward P/E of 15.8, a price-book (P/B) ratio of 3.5 and a price-sales (P/S) ratio of 0.9.
According to the Peter Lynch chart below, the stock is trading above its intrinsic value.
GuruFocus ranked FedEx’s financial strength 6 of 10. The Piotroski F-Score of 5 and Altman Z-Score of 3.02 suggest the company is in stable financial condition. However, since the company’s return on invested capital (ROIC) underperforms the weighted average cost of capital (WACC), the company is destroying value as it grows.
The company’s profitability and growth was ranked 6 of 10 by GuruFocus. It has an operating margin of 5.8% and a net margin of 3.4%. The return on equity (ROE) and return on assets (ROA) outperform 76% and 64% of other companies in the global shipping and logistics industry. Similarly, the return on capital (ROC) outperforms 62% of competitors.
PRIMECAP Management (Trades, Portfolio) holds the largest position in FedEx among the gurus. It holds 5.9% of shares outstanding, which represents 2.7% of its total assets managed. In total, 24 gurus hold positions.
Segalas bought 570,625 shares of Charter Communications for an average price of $269.26 per share. The transaction impacted the portfolio by 0.58%.
Charter Communications is a cable telecommunications company. The Connecticut-based company has a market cap of $79.3 billion and an enterprise value of $148.2 billion. Its shares were trading around $297.1 on Wednesday with a P/E ratio of 23.03, a forward P/E ratio of 49.5, a P/B ratio of 1.97 and a P/S ratio of 2.55.
The Peter Lynch chart below indicates the stock is trading above its intrinsic value.
GuruFocus ranked Charter’s financial strength 4 of 10. The Piotroski F-Score of 7 and Altman Z-Score of 0.53 suggest the company is in a healthy business condition with some financial stress. The cash-debt ratio of 0.02 and interest coverage ratio of 1.01 are far below the industry medians of 0.4 and 7.27.
The company’s profitability and growth was ranked 7 of 10 by GuruFocus. It has an operating margin of 10.5% and a net margin of 13.8%. The ROE and ROA outperform 80% and 58% of other companies in the global pay TV industry. In contrast, the ROC underperforms 51% of competitors.
Dodge & Cox is the company’s largest shareholder among the gurus with 4.1% of shares outstanding. This represents 2.7% of its total assets managed. In total, 21 gurus hold positions.
The investor bought 565,525 shares of Ulta for an average price of $249.77 per share. The trade had an impact of 0.56%.
Ulta operates a chain of cosmetic retail stores. It is the largest beauty retailer in the U.S. offering over 20,000 products from over 500 brands. The Illinois-based company has a market cap of $16.34 billion and an enterprise value of $16.09 billion. Its shares were trading around $263.81 on Wednesday with a P/E of 44.04, a forward P/E of 32.5, a P/B of 11.3 and a P/S of 3.6.
The Peter Lynch chart below shows the stock is trading above its intrinsic value.
GuruFocus ranked Ulta’s financial strength 9 of 10. The high Piotroski F-Score of 8 and Altman Z-Score of 12.34 suggest the company is financially stable and has excellent business conditions. The company also has no debt.
Ulta’s profitability and growth was ranked 9 of 10 by GuruFocus. It has an operating margin of 13.2% and a net margin of 8.3%. The ROE and ROA are outperforming 91% and 94% of other companies in the global specialty retail industry. Similarly, the ROC outperforms 82% of competitors.
Steve Mandel (Trades, Portfolio) holds the largest position in Ulta among the gurus. He holds 4.7% of shares outstanding, which represents 3.14% of his total assets managed. In total, 15 gurus hold positions.
Segalas purchased 455,357 shares of Expedia for an average price of $121.97 per share. The transaction impacted the portfolio by 0.24%.
Expedia is an online travel company that offers a variety of services. The Washington-based company has a market cap of $17.5 billion and an enterprise value of $18.8 billion. Its shares were trading around $116.35 Wednesday with a P/E ratio of 110.8, a forward P/E ratio of 18.4, a P/B ratio of 4.5 and a P/S ratio of 2.1.
The Peter Lynch chart below indicates the stock is trading above its intrinsic value.
GuruFocus ranked the company’s financial strength 5 of 10. While the Piotroski F-Score of 7 suggests the company has a healthy business condition, the Altman Z-Score of 1.23 suggests the company does have some financial stress. Since its ROIC underperforms its WACC, the company is destroying value as it grows.
Expedia’s profitability and growth was ranked 8 of 10 by GuruFocus. It has an operating margin of 4.04% and a net margin of 2.11%. The ROE and ROA underperform 55% and 60% of other companies in the global leisure industry. In contrast, the ROC outperforms 75% of its competitors. The company also has excellent growth numbers. Three-year revenue growth of 20% outperforms 90% of competitors while its three-year EBITDA and EPS growth outperform 87% and 83% of competitors.
Mandel holds the largest position in Expedia among the gurus with 4.7% of shares outstanding. This represents 3.7% of his total assets managed. In total, eight gurus hold positions.
Disclosure: I do not own any stocks mentioned in the article.
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