Francisco Garcia Parames (Trades, Portfolio), manager of Cobas Asset Management, disclosed this week that his firm established six new holdings for fourth-quarter 2019: Diamond S Shipping Inc. (DSSI, Financial), Israel Chemicals Ltd. (XTAE:ICL, Financial), International Petroleum Corp. (OSTO:IPCO, Financial), TI Fluid Systems PLC (LSE:TIFS, Financial), Kongsberg Gruppen ASA (OSL:KOG, Financial) and AmoreG (XKRX:002790).
Parames managed Bestinver’s Bestinfond (Trades, Portfolio) until September 2014, where his 25-year track record near the top of performance rankings make him one of the prolific European asset managers in the value school. The fund manager said in his quarterly shareholder letter that Cobas, which has completed its third year, maintains its long-term stance in value investing through both the firm and its stakeholders. Parames applies key value investing principles from Benjamin Graham, Peter Lynch and Berkshire Hathaway Inc. (BRK.A)(BRK.B) co-managers Warren Buffett (Trades, Portfolio) and Charlie Munger (Trades, Portfolio) within the framework of the Austrian business cycle theory.
The author of “Invirtiendo a largo plazo,” Spanish for “investing for the long-term,” said in his letter that value investing means “buying low and ignoring the latest fads,” i.e., buying stocks growing at reasonable rates and trading at low multiples.
As of quarter-end, the fund’s $745 million equity portfolio contains 67 stocks with 10% turnover. The fund’s top three sectors in terms of weight are energy, consumer cyclical and industrials.
Diamond S Shipping
Cobas purchased 501,029 shares of Diamond S Shipping, giving the position 1.02% weight in the equity portfolio. Shares averaged $14.99 during the quarter.
According to its website, the Greenwich, Connecticut-based company provides seaborne transportation of crude oil, refined petroleum and other products in international shipping markets. GuruFocus data shows that while the company’s equity-to-asset ratio of 0.54 outperforms 62.36% of global competitors, Diamond S Shipping’s debt-to-equity ratio of 0.77 underperforms 65.89% of global oil and gas companies.
Israel Chemicals
Cobas purchased 1,633,171 shares of Israel Chemicals, giving the stake 0.94% weight in the equity portfolio. Shares averaged 16.09 shekels ($4.68) during the quarter.
The Israeli agricultural inputs company extracts raw materials in three operating segments: fertilizers, industrial products and performance products. GuruFocus ranks Israel Chemicals’ profitability 7 out of 10 on several positive investing signs, which include expanding profit margins and a return on equity that outperforms 71.10% of global competitors.
Israel Chemicals’ valuation ranks 10 out of 10 on several signs of undervaluation, which include a share price, price-book ratio and price-sales ratio near a 10-year low. Additionally, the company’s EV-to-Ebitda ratio of 5.71 outperforms 81.11% of global competitors.
International Petroleum
Cobas purchased 1,742,871 shares of International Petroleum, giving the holding 0.93% weight in the equity portfolio. Shares averaged 38.47 Swedish kroner ($4.01) during the quarter.
The Vancouver, British Columbia-based company explores for, develops and produces oil and natural gas through development projects in Canada, Malaysia, France and the Netherlands. According to GuruFocus, the company’s net margin and return on equity are outperforming over 80% of global competitors, suggesting good profitability.
TI Fluid Systems
Cobas purchased 1,165,234 shares of TI Fluid Systems, giving the stake 0.49% weight in the equity portfolio. Shares averaged 2.14 pounds ($2.78) during the quarter.
The U.K.-based company manufactures automotive fluid storage, carrying and delivery systems, primarily providing products for light vehicles. According to GuruFocus, the company’s debt-to-equity ratio underperforms 77.12% of global competitors despite having a solid Piotroski F-score of 6.
Kongsberg Gruppen
Cobas purchased 262,070 shares of Kongsberg Gruppen, giving the position 0.48% weight in the equity portfolio. Shares averaged 135.19 Norwegian kroner ($14.67) during the quarter.
The Norwegian industrial company supplies products and services to the defense, maritime, oil, gas and aerospace industries. GuruFocus ranks the company’s financial strength 5 out of 10: Although the company has a solid Piotroski F-score of 5, Kongsberg’s debt ratios are underperforming over 51% of global competitors.
AmoreG
Cobas purchased 10,566 shares of AmoreG, giving the position 0.09% weight in the equity portfolio. Shares averaged 77,790.1563 won ($65.68) during the quarter.
The South Korean personal care company manufactures and markets cosmetics, personal care products and other related products. GuruFocus ranks the company’s profitability 9 out of 10 on the back of strong revenue and earnings growth over the past 10 years, as suggested by its 4.5-star business predictability rank.
Disclosure: No positions.
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