(GuruFocus, August 27, 2009) Following yesterdays review of David Dreman’s top holdings, which revealed he is hedging against the inflation by holding oil and tobacco companies. Today we returned to the theme of his investment strategy.
David Dreman’s central theme on stock investing is to buy low P/E stocks. Back in April this year, Author FLOYD NORRIS wrote an article in NY Times entitled “ David Dreman, Contrarian Fund Manager, Exits Unbowed” much to his defense after Deutsche Bank fire Dreman’s firm as the manager to one of the fund. David Dreman was quoted to defend his strategy “Low P/E has worked well over time, there will be years that we are very out of favor, but we make it up.”
Well, true to his words, here is a list of stocks that has the lowest P/E in David Dreman’s 2Q09 portfolio:
1. National Bank of Greece S.A. (NBG, Financial) -- P/E = 2.5
National Bank Of Greece S.a. has a market cap of $16.32 billion; its shares were traded at around $6.57 with a P/E ratio of 2.5 and P/S ratio of 1.4. National Bank Of Greece S.a. had an annual average earning growth of 32% over the past 5 years.
Dreman bought 10,462 shares of NBG in 2Q09.
2. Hospitality Properties Trust (HPT, Financial) -- P/E = 4.3
Hospitality Properties Trust is a real estate investment trust. The company owns and leases hotels to unaffiliated hotel operators. Hospitality Properties Trust has a market cap of $1.73 billion; its shares were traded at around $18.38 with a P/E ratio of 4.3 and P/S ratio of 1.3. Hospitality Properties Trust had an annual average earning growth of 3.5% over the past 10 years.
Dreman has owned HPT since 1Q07 and he increased his holdings in 2Q09 from 1.6 million shares to about 2 million shares.
3. Allied World Assurance Company Holdings (AWH, Financial) -- P/E = 4.6
Allied World Assurance Company Holdings Ltd is one of Bermuda's leading property and casualty insurers. Allied World Assurance Company Holdings has a market cap of $2.21 billion; its shares were traded at around $44.54 with a P/E ratio of 4.6 and P/S ratio of 1.9. The dividend yield of Allied World Assurance Company Holdings stocks is 1.7%.
Dreman has owned AWH since 4Q06 and in 2Q09 he increased his holdings from 391K to 477K shares.
4. ENSCO International Inc. (ESV, Financial) -- P/E = 5.2
ENSCO International Incorporated is an international offshore contract drilling company that also provides marine transportation services in the Gulf of Mexico. Ensco International Inc. has a market cap of $5.46 billion; its shares were traded at around $38.52 with a P/E ratio of 5.2 and P/S ratio of 2.3. The dividend yield of Ensco International Inc. stocks is 0.3%. Ensco International Inc. had an annual average earning growth of 12.8% over the past 10 years.
Dreman has owned this oil service company since 1Q1999 but he appears to be selling down the shares. In 2Q09, he owned only 6,752 shares.
5. Tidewater Inc. (TDW, Financial) -- P/E = 5.3
This is another oil service company he owns. Tidewater Inc. owns and operates one of the world's largest fleets serving the international offshore energy industry. Tidewater Inc. has a market cap of $2.23 billion; its shares were traded at around $43.19 with a P/E ratio of 5.3 and P/S ratio of 1.7. The dividend yield of Tidewater Inc. stocks is 2.4%. Tidewater Inc. had an annual average earning growth of 4.3% over the past 10 years.
Again, he has owned the company since 1999 but it appears he is selling down the stock. In2Q09, he has only 64,384 shares.
6. Supervalu Inc. (SVU, Financial) – P/E =5.4
SUPERVALU is one of the nation's largest supermarket retailer and largest food distributor. Supervalu Inc. has a market cap of $3.03 billion; its shares were traded at around $14.27 with a P/E ratio of 5.4 and P/S ratio of 0.1. The dividend yield of Supervalu Inc. stocks is 4.8%. Supervalu Inc. had an annual average earning growth of 5.8% over the past 10 years.
Dreman has owned the stock since 2Q07 and recently he increased slightly from 143,337 shares in 1Q09 to 151,965 shares in 2Q09.
Conclusion
The market has rallied more than 50% from its March 2009 low, so much so fast that caused some investment Gurus to concern the sustainability of the market rally. David Dreman is in the bullish camp. Even if you agree with him on the upcoming threat of high inflation and on the strategy of beating inflation with stocks and real estate, it is a good idea to be cautious. The stocks above are the lowest P/E stocks owned by a Guru who spent his life chasing low P/E stocks. Perhaps one can take a look at them?
GuruFocus provides real time information and insights of Investment Gurus such as Warren Buffett and David Dreman for Premium Member. If you are not a premium member, click here to sign up or upgrade. 7-Day Free Trial is available .
David Dreman’s central theme on stock investing is to buy low P/E stocks. Back in April this year, Author FLOYD NORRIS wrote an article in NY Times entitled “ David Dreman, Contrarian Fund Manager, Exits Unbowed” much to his defense after Deutsche Bank fire Dreman’s firm as the manager to one of the fund. David Dreman was quoted to defend his strategy “Low P/E has worked well over time, there will be years that we are very out of favor, but we make it up.”
Well, true to his words, here is a list of stocks that has the lowest P/E in David Dreman’s 2Q09 portfolio:
1. National Bank of Greece S.A. (NBG, Financial) -- P/E = 2.5
National Bank Of Greece S.a. has a market cap of $16.32 billion; its shares were traded at around $6.57 with a P/E ratio of 2.5 and P/S ratio of 1.4. National Bank Of Greece S.a. had an annual average earning growth of 32% over the past 5 years.
Dreman bought 10,462 shares of NBG in 2Q09.
2. Hospitality Properties Trust (HPT, Financial) -- P/E = 4.3
Hospitality Properties Trust is a real estate investment trust. The company owns and leases hotels to unaffiliated hotel operators. Hospitality Properties Trust has a market cap of $1.73 billion; its shares were traded at around $18.38 with a P/E ratio of 4.3 and P/S ratio of 1.3. Hospitality Properties Trust had an annual average earning growth of 3.5% over the past 10 years.
Dreman has owned HPT since 1Q07 and he increased his holdings in 2Q09 from 1.6 million shares to about 2 million shares.
3. Allied World Assurance Company Holdings (AWH, Financial) -- P/E = 4.6
Allied World Assurance Company Holdings Ltd is one of Bermuda's leading property and casualty insurers. Allied World Assurance Company Holdings has a market cap of $2.21 billion; its shares were traded at around $44.54 with a P/E ratio of 4.6 and P/S ratio of 1.9. The dividend yield of Allied World Assurance Company Holdings stocks is 1.7%.
Dreman has owned AWH since 4Q06 and in 2Q09 he increased his holdings from 391K to 477K shares.
4. ENSCO International Inc. (ESV, Financial) -- P/E = 5.2
ENSCO International Incorporated is an international offshore contract drilling company that also provides marine transportation services in the Gulf of Mexico. Ensco International Inc. has a market cap of $5.46 billion; its shares were traded at around $38.52 with a P/E ratio of 5.2 and P/S ratio of 2.3. The dividend yield of Ensco International Inc. stocks is 0.3%. Ensco International Inc. had an annual average earning growth of 12.8% over the past 10 years.
Dreman has owned this oil service company since 1Q1999 but he appears to be selling down the shares. In 2Q09, he owned only 6,752 shares.
5. Tidewater Inc. (TDW, Financial) -- P/E = 5.3
This is another oil service company he owns. Tidewater Inc. owns and operates one of the world's largest fleets serving the international offshore energy industry. Tidewater Inc. has a market cap of $2.23 billion; its shares were traded at around $43.19 with a P/E ratio of 5.3 and P/S ratio of 1.7. The dividend yield of Tidewater Inc. stocks is 2.4%. Tidewater Inc. had an annual average earning growth of 4.3% over the past 10 years.
Again, he has owned the company since 1999 but it appears he is selling down the stock. In2Q09, he has only 64,384 shares.
6. Supervalu Inc. (SVU, Financial) – P/E =5.4
SUPERVALU is one of the nation's largest supermarket retailer and largest food distributor. Supervalu Inc. has a market cap of $3.03 billion; its shares were traded at around $14.27 with a P/E ratio of 5.4 and P/S ratio of 0.1. The dividend yield of Supervalu Inc. stocks is 4.8%. Supervalu Inc. had an annual average earning growth of 5.8% over the past 10 years.
Dreman has owned the stock since 2Q07 and recently he increased slightly from 143,337 shares in 1Q09 to 151,965 shares in 2Q09.
Conclusion
The market has rallied more than 50% from its March 2009 low, so much so fast that caused some investment Gurus to concern the sustainability of the market rally. David Dreman is in the bullish camp. Even if you agree with him on the upcoming threat of high inflation and on the strategy of beating inflation with stocks and real estate, it is a good idea to be cautious. The stocks above are the lowest P/E stocks owned by a Guru who spent his life chasing low P/E stocks. Perhaps one can take a look at them?
GuruFocus provides real time information and insights of Investment Gurus such as Warren Buffett and David Dreman for Premium Member. If you are not a premium member, click here to sign up or upgrade. 7-Day Free Trial is available .
