Lou Simpson (Trades, Portfolio), who formerly managed investments for Berkshire Hathaway’s subsidiary, Geico, reported two new buys at his current firm, SQ Advisors.
Simpson expanded his favored sector, communications services, in the fourth quarter, purchasing Charter Communications (CHTR, Financial) and Liberty Broadband (LBRDK, Financial). Communications services totaled 33% of the portfolio at fourth-quarter end as the largest sector represented. The value of the 14 positions in SQ Advisors’ portfolio totaled $3.08 billion. Simpson founded the firm in 2010.
Simpson described his portfolio and approach in a November interview with Northwestern’s Kellogg School of Management:
“What we do is run a long-time-horizon portfolio comprised of ten to fifteen stocks,” he said. “Most of them are U.S.-based, and they all have similar characteristics. Basically, they’re good businesses. They have a high return on capital, consistently good returns, and they’re run by leaders who want to create long-term value for shareholders while also treating their stakeholders right.”
Though he founded SQ Advisors in 2010, Simpson earned recognition from Warren Buffett (Trades, Portfolio) who wrote in a 2004 shareholder letter that Simpson’s stock picks for Geico had produced a 20% average annual return since 1980, beating the 14% return in the S&P 500 index.
The new buys
Charter Communications (CHTR, Financial)
Simpson purchased 640,658 shares of Charter Communications, which had a fourth-quarter average price of $340. The holding represented 7% of the portfolio.
Charter Communications Inc. has a market cap of $85.15 billion; its shares were traded around $357.00 Wednesday with a P/E ratio of 10.47 and P/S ratio of 2.48. Charter Communications Inc. had an annual average earnings growth of 10.60% over the past five years.
Liberty Broadband (LBRDK, Financial)
Simpson purchased 388,520 shares of Liberty Broadband, which had a fourth-quarter average price of $89. The holding represented 1.08% of the portfolio.
Liberty Broadband Corp. has a market cap of $16.31 billion; its shares were traded around $89.90 Wednesday with a P/E ratio of 8.05 and P/S ratio of 1,244.83.
Add
Cable One Inc. (CABO, Financial)
Simpson purchased 358,409 shares of Cable One, which increased the position 53.6% to 358,409 shares. The fourth-quarter price averaged $704 per share.
Cable One Inc. has a market cap of $3.96 billion; its shares were traded around $691.01 Wednesday with a P/E ratio of 33.75 and P/S ratio of 4.37. The trailing 12-month dividend yield of Cable One Inc. stocks is 0.93%. The forward dividend yield of Cable One Inc. stocks is 1.03%.
Sales
Simpson eliminated 2,527,700 shares of AMETEK Inc., which had a fourth-quarter average price of $70 per share.
Ametek Inc. has a market cap of $17.26 billion; its shares were traded around $74.67 with a P/E ratio of 25.40 and P/S ratio of 4.18. The trailing 12-month dividend yield of Ametek Inc. stocks is 0.48%. The forward dividend yield of Ametek Inc. stocks is 0.75%. Ametek Inc. had an annual average earnings growth of 12.30% over the past 10 years. GuruFocus rated Ametek Inc. the business predictability rank of 4.5-star.
See Lou Simpson (Trades, Portfolio)’s portfolio here.
