Primecap Management, a firm whose three primary Odyssey Funds have each beaten the market since inception, disclosed Thursday that it increased its ownership of one of his holdings, Albemarle Corp. (ALB, Financial), the world’s leading supplier of lithium used in electric vehicle batteries.
Primecap purchased 1,255,400 shares of the company, boosting the position by 28.43% to 5,671,280 shares. The stake represented 5.35% of shares outstanding. As of Oct. 31, Primecap owned shares of Abemarle at less than 1% of each of its three funds.
The date of Primecap’s increase was May 31, when the price closed at $63.30 after a nearly 19% decline since the start of the year. Since then, it has bounced 8.15% to close at $69.08 Friday.
Managers at Primecap began buying shares of Albemarle, a Charlotte, North Carolina-based global specialty chemicals company, in the third quarter of 2018 when the price averaged $96.75. Since then, it has increased its stake as the price dropped. It added to the position in the fourth quarter when the price averaged $94, and again in the first quarter of 2019 when the price averaged $82.
For the first quarter, Albemarle reported a 1.27% year-over-year increase in revenue to $832.06 million. Earnings per share also rose 4% to $1.26, in-line with its expectations. Earnings growth resulted primarily from its Bromine Specialties segment, and legal and environmental accruals affecting the previous year. Across segments, Lithium sales declined 2.1%, Bromine Specialties rose 10.4%, Catalysts fell 3.5% and All Other grew 6.2%.
During the quarter, it also broke ground on a lithium hydroxide conversion plant in Western Australia. The mine, called Kemerton, is scheduled to begin commissioning sometime in 2021.
Primecap, whose managers rarely give interviews, describes the four key principles of its investing approach on its website as: fundamental research, long-term investment horizon, emphasis on individual decision-making and focus on value. Founded in 1983, Primecap Management Company is based in Pasadena, California.
As of Oct. 31, its Primecap Odyssey Aggressive Growth Fund had generated an annualized return of 13.59% since inception in 2004, compared to 8.69% in the S&P 500 index.
The firm’s entire portfolio contains 293 stocks, with the largest weighting in technology at 34.16%, followed by health care at 26.04%. Its largest positions are Eli Lilly and Co. (LLY, Financial), Adobe Inc. (ADBE, Financial) and Microsoft Corp. (MSFT, Financial).
See Primecap Management’s portfolio here.
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