Steven Romick (Trades, Portfolio), portfolio manager of the FPA Crescent Fund, disclosed on Thursday that his top four new buys are Jefferies Financial Group Inc. (JEF, Financial), Comcast Corp. (CMCSA, Financial), Charter Communications Inc. (CHTR, Financial) and Wells Fargo & Co. (WFC, Financial). Romick also initiated a stake in Bill Ackman (Trades, Portfolio)’s Mondelez International Inc. (MDLZ, Financial).
Jefferies Financial Group
Romick invested in 15,780,733 shares of Jefferies for an average price of $23.42 per share. The manager dedicated 3.38% of his portfolio to the position.
New York-based Jefferies said on June 19 that revenues for the three months ending May 31 increased 20% year over year, driven by “continued strong performance in Investment Banking,” according to CEO Rich Handler.
Handler said investment banking revenues of $2 million from May 2017-18 represent the company’s “best 12-month period” for Investment Banking and reflect continued efforts to broaden client coverage and product capabilities. The CEO said the company expanded its services to global markets in Australia and the Netherlands over the past year.
GuruFocus lists several positive investing signs for Jefferies, including a dividend yield near a 10-year high and a price-book ratio near a 52-week low. Despite this, the website also warns that Jefferies’ operating margins have declined and that the company’s Altman Z-score of 0.64 implies financial distress.
Comcast
Romick invested in 8,058,385 shares of Comcast for an average price of $32.61 per share. The manager dedicated 2.49% of his portfolio to the position.
The Philadelphia-based telecommunication services company announced on Wednesday a superior offer for U.K.-based Sky PLC (LSE:SKY). According to the terms, shareholders of Sky will receive 14.75 pounds ($19.49) per share, representing a premium of approximately 5.4% to the offer from Twenty-First Century Fox Inc. (FOXA, Financial)(FOX, Financial). Comcast CEO Brian Roberts said the company long admired Sky, “an outstanding company and a great fit for Comcast.”
GuruFocus ranks Comcast’s profitability 8 out of 10 as the company has expanding operating margins, consistent revenue growth and returns on equity that are outperforming 94% of global competitors. The company’s business predictability ranks a solid 3.5 stars out of five.
Other gurus that own Comcast include Bill Nygren (Trades, Portfolio) and Mason Hawkins (Trades, Portfolio)’ Southeastern Asset Management.
Charter Communications
Romick invested in 779,191 shares of Charter Communications for an average price of $287.77 per share. With this transaction, the manager increased his portfolio 2.15%.
The Stamford, Connecticut-based company provides entertainment, information and communication solutions to residential and commercial customers. GuruFocus ranks Charter’s profitability 7 out of 10: although the company’s net margin and return on equity outperform over 89% of global competitors, Charter’s operating margin is near a 10-year low of 10.71% and ranks higher than just 54% of global pay TV companies.
Wells Fargo
Romick invested in 3,982,984 shares of Wells Fargo for an average price of $53.57 per share. The manager dedicated 2.08% of the portfolio with this transaction.
The San Francisco-based bank’s net margin of 25.22% is near a 10-year high of 28.13% and outperforms 59% of global competitors. GuruFocus lists a few positive investing signs for Wells Fargo, including a dividend yield near a 52-week high.
Among gurus that own Wells Fargo, Berkshire Hathaway Inc. (BRK.A)(BRK.B) CEO Warren Buffett (Trades, Portfolio) has the largest stake with 679 million shares. Dodge & Cox has the second-largest stake with 135,534,435 shares.
See also
Romick disclosed nine buys for the quarter. His remaining buys are LafargeHolcim Ltd. (XSWX:LHN), Broadcom Inc. (AVGO, Financial), HeidelbergCement AG (XTER:HEI, Financial) and JD.com Inc. (JD, Financial).
According to the aggregated portfolio of gurus, Romick, Buffett and Ackman share one common holding among the three: Mondelez. The combined weighting for the three gurus is 15.62%. During the quarter, Romick invested in 4,290,352 shares of the Deerfield, Illinois-based confectioner for an average price of $40.20 per share.
Disclosure: No positions.
