Guru investor Charles de Vaulx (Trades, Portfolio), who manages the IVA Worldwide Fund and IVA International Fund (Trades, Portfolio) alongside Charles de Lardemelle, disclosed in his third-quarter portfolio that he established one new position and exited four others.
The New York-based firm invests in a number of diverse securities and asset classes around the world in order to achieve long-term capital growth.
During the quarter, de Vaulx started a position in Arcos Dorados Holdings Inc. (ARCO, Financial) and divested of his Flowserve Corp. (FLS, Financial), Teradata Corp. (TDC, Financial), Thales (XPAR:HO, Financial) and Siemens AG (XTER:SIE, Financial) holdings.
Arcos Dorados
The guru invested in 4.18 million shares of Arcos Dorados for an average price of $6.80 per share, allocating 0.58% of the equity portfolio to the stake.
The Uruguayan company, which is the largest franchisee of McDonald’s (MCD, Financial) restaurants in the world in terms of sales and number of restaurants, has a $1.56 billion market cap; its shares were trading around $7.50 on Wednesday with a price-earnings ratio of 16.28, a price-book ratio of 3.80 and a price-sales ratio of 0.50.
The Peter Lynch shows the stock is trading near its fair value.
GuruFocus rated Arcos Dorados’ financial strength 6 out of 10. Despite having insufficient interest coverage and declining revenue per share, the Altman Z-Score of 3.79 indicates the company is in good financial standing. The company’s profitability and growth scored a 5 out of 10 ratings, supported by an expanding operating margin, good returns and a high Piotroski F-Score of 7, which suggests business conditions are healthy.
With his purchase of 2.02% of the company’s outstanding shares, de Vaulx became the company’s largest guru shareholder. The IVA International Fund (Trades, Portfolio), Bill Gates (Trades, Portfolio)’ foundation, Barrow, Hanley, Mewhinney & Strauss, Jeff Auxier (Trades, Portfolio), Chuck Royce (Trades, Portfolio) and Ken Fisher (Trades, Portfolio) also hold the stock.
Flowserve
De Vaulx sold his 450,456 remaining shares of Flowserve for an average price of $48.42 per share, impacting the equity portfolio by -0.41%. GuruFocus estimates he has gained 2% on the investment since the third quarter of 2015.
The Irving, Texas-based company, which manufactures and services comprehensive flow control systems, has a $6.05 billion market cap; its shares were trading around $46.20 on Wednesday with a forward price-earnings ratio of 21.46, a price-book ratio of 3.73 and a price-sales ratio of 1.57.
According to the Peter Lynch chart, the stock is overpriced since it is trading above its fair value.
Flowserve’s financial strength was rated 6 out of 10 by GuruFocus. Although the company has inadequate interest coverage, the Altman Z-Score of 3.62 suggests it is financially sound. Weighed down by declining margins and poor returns, the company’s profitability and growth scored a 5 out of 10 rating. The company also has a Piotroski F-Score of 6, which suggests operations are stable, and a business predictability rank of one out of five stars, which is on watch as a result of declining revenue per share. GuruFocus says companies with this rank typically see their stock prices gain an average of 1.1% per year.
Of the gurus invested in Flowserve, First Eagle Investment (Trades, Portfolio) has the largest position with 9.84% of outstanding shares. Sarah Ketterer (Trades, Portfolio), Mario Gabelli (Trades, Portfolio), the T Rowe Price Equity Income Fund (Trades, Portfolio), Pioneer Investments (Trades, Portfolio) and Barrow, Hanley, Mewhinney & Strauss are also shareholders.
Teradata
The investor divested of his 351,539 remaining shares of Teradata for an average price of $40.34 per share, impacting the equity portfolio by -0.32%. According to GuruFocus, de Vaulx has lost an estimated 18% on the investment since the fourth quarter of 2013.
The database and analytics company, which is headquartered in San Diego, has a $4.37 billion market cap; its shares were trading around $36.95 on Wednesday with forward price-earnings ratio of 23.47, a price-book ratio of 7.83 and a price-sales ratio of 2.03.
Based on the median price-sales chart, the stock appears to be trading below its historical value.
GuruFocus rated Teradata’s financial strength 6 out of 10. As a result of insufficient interest coverage, the Altman Z-Score of 2.62 suggests the company is under some fiscal pressure. The company’s profitability and growth scored a 7 out of 10 rating despite having declining margins and poor returns. The company also has a moderate Piotroski F-Score of 5, which indicates operations are stable, and a one-star business predictability rank that is on watch.
First Eagle is the company’s largest guru shareholder with 14.31% of outstanding shares. Other guru investors are Hotchkis & Wiley, Jim Simons (Trades, Portfolio)’ Renaissance Technologies, Jeremy Grantham (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio) and Barrow, Hanley, Mewhinney & Strauss.
Thales
De Vaulx sold his remaining 95,137 shares of Thales for an average price of 116.42 euros ($131.33) per share, impacting the equity portfolio by -0.28%. GuruFocus estimates he has gained 76% on the investment since the second quarter of 2011.
The French aerospace and defense company has a market cap of 23.28 billion euros; its shares closed at 108.30 euros on Tuesday with a price-earnings ratio of 23.68, a price-book ratio of 4.46 and a price-sales ratio of 1.47.
The Peter Lynch chart shows the stock is trading higher than its fair value, suggesting it is overpriced.
Thales’ financial strength was rated 6 out of 10 by GuruFocus. Although the company has issued approximately 109.4 million euros in new long-term debt over the last three years, it is at a manageable level due to sufficient interest coverage. The Altman Z-Score of 1.72, however, indicates the company is at risk of going bankrupt. Supported by an expanding operating margin and high Piotroski F-Score of 8, the company’s profitability and growth was rated 7 out of 10. The company also has a one-star business predictability rank.
No gurus are currently invested in the company.
Siemens
The guru divested of his 87,737 remaining shares of Siemens for an average price of 113.05 euros per share, impacting the equity portfolio by -0.26%. GuruFocus says he has gained an estimated 31% on the investment since the second quarter of 2012.
The German industrial manufacturer, which focuses on electrification, automation and digitization, has a market cap of 83.56 billion euros; its shares closed at 102.6 euros on Wednesday with a price-earnings ratio of 13.01, a price-book ratio of 1.86 and a price-sales ratio of 1.03.
According to the Peter Lynch chart, the stock is undervalued.
GuruFocus rated Siemens’ financial strength 5 out of 10. Despite having sufficient interest coverage, however, the Altman Z-Score of 1.99 indicates the company is under some fiscal stress. The company’s profitability and growth fared better, scoring a 7 out of 10 rating as a result of an expanding operating margin, solid returns and a moderate Piotroski F-Score of 6. The company also has a three-star business predictability rank despite seeing a slowdown in revenue per share growth over the last 12 months. According to GuruFocus, companies with this rank typically see their stock prices gain an average of 8.2% per year.
PRIMECAP Management (Trades, Portfolio) and the Signature Select Canadian Fund (Trades, Portfolio) are both invested in the stock.
Portfolio performance
De Vaulx’s $4.51 billion equity portfolio, which is composed of 78 stocks, is largely invested in the industrials, financial services, consumer cyclical and technology sectors.
According to its fact sheet, the IVA Worldwide Fund posted a 1.93% return for the three months ended Sept. 30. The MSCI All Country World Index posted a return of 4.28%.
Disclosure: No positions.
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