Guru investor Robert Olstein (Trades, Portfolio) opened seven new positions as part of a portfolio valued at $786 million in the early months of the year.
The chairman chief investment officer of the Olstein Financial Alert Fund (OFALX) is best known for his expertise in financial disclosures and reporting practices..
In the first quarter, Olstein’s largest new position was in multinational network infrastructure provider CommScope Holding Co Inc (COMM, Financial). The guru purchased 138,000 shares for an average price of about $39 a share. The investment sits in .69% of the portfolio.
His second-largest position was in the fledgling Gardner Denver Holdings Inc. (GDI, Financial) a manufacturer of compression equipment, such as pumps, vacuums and blower products. The Milwaukee-based company went public in 2017 for $20 a share. It is now selling for $32 a share, and has seen strong growth in revenues. About 113,000 shares were purchased at about $33 a share. It sits in 0.44% of the portfolio.
South Carolina-based Denny’s Corp. (DENN, Financial) is the guru’s third-top pick. He bought 96,600 shares of the restaurant chain for an average price of $15 a share. It sits in 0.19% of the portfolio. Denny’s, better known as “America’s Diner,” is the largest franchiser and operator of full-service restaurant chains in the U.S.
A closer look at guru’s holdings shows another interesting fundamental: Its largest position is in in the favored stock of the day made ever-more popular by Warren Buffett (Trades, Portfolio).
Olstein’s high-conviction stocks include Apple (AAPL, Financial) and Alphabet Inc. (GOOGL, Financial). He holds 2.41% ownership in Apple and 2.39% in Alphabet Inc.
The guru's portfolio has underperformed in the last few years. In fact, his last gains were 2014 when he beat the market by 1.3%. That was in sharp contrast to the impressive years of 2000 and 2001 when he beat the market by more than 29 points. In 2017, the portfolio reported a rate of return of 14.29% compared to the S&P 500’s 21.71%. In 2016, Olstein’s fund returned 11.53% to the S&P’s 11.99% and in 2015, it returned -9.51 to the S&P’s 1.24%.
Even so, Olstein still draws admirers and customers who seek out his accounting-driven and value-oriented approach to investing. He’s widely known for creating The Quality of Earnings Report, which uses forensic accounting techniques to identify issues affecting the future earnings power of a company.
About 60% of the guru’s portfolio is equally divided between technology, industrials and consumer cyclical stocks. About 16% is in financial services, while 12.3% is in healthcare and almost 8% is in consumer defensive. The rest of the portfolio has stocks in the sectors of basic materials, communication services and energy.
Remaining top buys
The remaining four buys include positions in Casey’s General Stores Inc. (CASY, Financial), an Iowa-based company with more than 2,000 convenience stores in 16 states in the Midwest; Sealed Air Corp. (SEE, Financial), which provides cleaning, sanitation and housekeeping products to the food service industry; Eaton Corp. (ETN, Financial), which makes cylinders, circuit breakers and other systems to effectively manage electrical, hydraulic and mechanical power; The Hain Celestial Group Inc. (HAIN, Financial), which sells organic and plant-based beverages, such as Earth’s Best teas; and Parker Hannifin Corp. (PH, Financial), an industrial manufacturing firm that provides motion and control components and systems.
CommScope Holding
Just days ago, shares of the company fell up to 29% after ITS quarterly earnings report beat analysts’ estimates. The drop in shares could have been the result of revised guidance. The company is cutting costs to offset price reductions at some of its North America manufacturing locations as a result of higher input costs. It reduced its non-GAAP guidance in earnings to a range of $2.33 to $2.48 a share, down from the previous range of $2.56 to $2.71 a share.
The North Carolina-based company with a market cap of $5.38 billion, a significant drop from $7 billion in December 2017, has a price-earnings ratio of 28.56 and a price-sales ratio of 1.21 and a price-book ratio of 3.24. Its PE ratio is lower than 73% of its competitors in the global communications equipment business.
Its 42-week range is $26.29 to $41.87 a share. It was trading at $28 a share, down 1.15% on Friday. Year to date, the stock reported a loss of 27% compared to a loss of 3% over the same period for the S&P 500.
The company’s revenue growth per share has been negative over the last 12 months. It showed a revenue growth rate per share of -7.5%. That compares to an increase of 2.6% over the last five years.
It has revenue of about $4.56 billion, down from the prior year of $4.9 billion. GuruFocus found that its asset growth is greater than its revenue growth.
Net income is at $194 million compared to $223 million in the prior year. It has more than $518 million in free cash flow. Long-term debt stands at $4.4 billion.
It reduced its workforce to 20,000 employees from 25,000 in 2016.
GuruFocus has rated it 4 in 10 in financial strength and 6 in 10 in profitability and growth.
Guru investors have included Joel Greenblatt (Trades, Portfolio) and First Eagle Investment (Trades, Portfolio), both gurus who sold out in the last months of the year. George Soros (Trades, Portfolio) also held shares but sold out in the third quarter. David Dreman (Trades, Portfolio) holds a small stake in the company.
Gardner Delivery Holdings
The Milwaukee entity went public in 2017 at $20 a share. A total of 41 million shares were sold. The offer amount was $826 billion. Total expenses were $7 billion.
It has revenue of $2.5 billion and 12-months trailing earnings of 31 cents a share. Its 52-week range is $19.91 to $38 a share.
The company beat first-quarter estimates by 9 cents on earnings and 28.6% on revenue. It reported diluted earnings of 38 cents per share on revenue of $620 million.
Gardner has a market cap of $6.38 billion. And its stock was up on Friday, at $32.25 a share, an increase of almost 2%.
Year to date, the stock reported a loss of 4% compared to a loss of 3% over the same period for the S&P 500.
GuruFocus noticed a warning sign in its metrics showing that it had built up too much inventory. If a company builds up inventory, it may mean it Is having difficulty selling its product.
GuruFocus shows it has rating of 5 in 10 in financial strength, 7 in 10 profitability and growth.
Guru investors include Joel Greenblatt (Trades, Portfolio), Jim Simons (Trades, Portfolio), Steven Cohen (Trades, Portfolio) and Pioneer Investments (Trades, Portfolio).
Denny’s
Denny’s operates a full-service restaurant chain in more than 1,000 restaurants in the U.S. and more than 100 locales internationally.
The restaurant operator has a market cap of $1 billion. It is selling for nearly $16 a share in trading, up 0.51%. Its 52-week range is $10.37 to $17.75 a share.
It has a price-earnings ratio of 26.80, lower than 58% of its peers and a price-sales ratio of 2.09, lower than more than 70% of its peers.
Revenues stand at $556 million. Its revenue growth per share is 14.5% in the last 12 months, and 8.7% in the last five years. In net income, the company has seen $39 million in 2017 compared to $19 million in 2016.
The company is still struggling to whittle down debt. After it was founded in 1980, its parent company filed for bankruptcy around 1997. It has been battling the issue ever since. One of the ways the company has been able to survive is by selling company-owned units to franchisees. Its long-term debt stands at $282 million. The debt had reached over $509 million 15 years ago.
GurFocus rates it 4 in 10 in financial strength and 8 in 10 in profitability and growth
Guru investors have included Paul Tudor Jones (Trades, Portfolio), Mario Gabelli (Trades, Portfolio) and Jim Simons (Trades, Portfolio).
