SQ Advisors LLC manager Lou Simpson (Trades, Portfolio) increased his position in five companies during the third quarter despite making no new buys.
The former Geico chief investment officer, who was endorsed by Warren Buffett (Trades, Portfolio), added to his positions in Allison Transmission Holdings Inc. (ALSN, Financial), Axalta Coating Systems Ltd. (AXTA, Financial), Sensata Technologies Holding N.V. (ST, Financial), Cabo One Inc. (CABO, Financial) and SBA Communications Corp. (SBA).
Allison Transmission Holdings
Simpson added 2,261,898 shares to his Allison Transmission Holdings position for an average price of $36.42 per share. With this transaction, the fund manager increased his portfolio 2.99%.
The company manufactures transmissions for medium and heavy-duty commercial vehicles. The company’s profitability ranks a satisfactory 6: although the company has strong profit margins and returns, Allison Transmission’s three-year revenue growth rate of 2.10% underperforms 53% of global auto parts companies.
Axalta Coating Systems
Simpson added 836,273 shares of Axalta Coating Systems for an average price of $30.28 per share. The fund manager boosted his portfolio 0.85% with this transaction.
Axalta has a profitability rank of 5, suggesting modest growth potential. The company’s operating margin underperforms 52% of global competitors despite increasing approximately 13.9% per year over the past five years.
Sensata Technologies
Simpson added 268,025 shares of Sensata Technologies for an average price of $45.10 per share. With this transaction, the fund manager increased his portfolio 0.45%.
Sensata manufactures automotive-related sensors and controls. The company’s profitability ranks 8 out of 10, suggesting good growth potential.
Sensata CEO Martha Sullivan said the company “delivered a strong combination of organic revenue growth and adjusted EBIT margin expansion” during the quarter. The company’s operating margin and three-year revenue growth rate are near a 10-year high and outperform 88% of global competitors. Based on these metrics, GuruFocus ranked Sensata’s profitability 8 out of 10.
Cabo One
Simpson added 17,299 shares of Cabo One for an average price of $739.03 per share. The fund manager expanded his portfolio 0.44% with this transaction.
Cabo One’s profitability ranks 6 out of 10, driven by a strong Piotroski F-score of 7 and operating margins outperforming 90% of global telecom companies.
SBA Communications
Simpson added 59,256 shares of SBA Communications for an average price of $142.22 per share. The fund manager increased his portfolio 0.3% with this transaction.
SBA Communications has a profitability rank of 9, suggesting strong growth potential. The company’s operating margin is near a 10-year high of 26.27% and outperforms 91% of global competitors.
GuruFocus ranks SBA’s predictability a perfect five stars as the company has shown consistent revenue and earnings growth over the past 10 years.
See also
Our Forum has a post discussing a recent Q&A session with Simpson and Kellogg School of Business professor Robert Korajczyk. GuruFocus recently announced the Forum winner from October. You can help contribute to our Forum by clicking on the “Forum” tab.
Disclosure: The author has no positions in the stocks mentioned.
