To achieve long-term capital appreciation, the fund, which is managed by Beltran de la Lastra, applies key value investing principles that were introduced and used by legends like Benjamin Graham, Peter Lynch and Berkshire Hathaway (BRK.A, Financial)(BRK.B, Financial) CEO Warren Buffett (Trades, Portfolio). At the beginning of March, the firm announced de la Lastra will be leaving Bestinver next October.
With the investment criteria in mind, the fund established holdings in Just Eat Takeaway.com NV (LSE:JET, Financial), BP PLC (LSE:BP., Financial) and adidas AG (XTER:ADS, Financial) during the quarter.
Just Eat Takeaway.com
The fund invested in 574,502 shares of Just Eat Takeaway, allocating 3.37% of the equity portfolio to the position. The stock traded for an average price of 74.97 pounds ($92.50) per share during the quarter.
The Dutch company, which operates an online platform for ordering takeout from restaurants, has a market cap of 5 billion pounds; its shares closed at 82.18 on Wednesday with a forward price-earnings ratio of 2,000, a price-book ratio of 4.97 and a price-sales ratio of 12.81.
The price chart shows the stock is trading above its price-book ratio but below its sales multiple.
GuruFocus rated Just Eat’s financial strength 5 out of 10. Since the company has issued approximately 247.52 million in new long-term debt over the past three years, it has low interest coverage. The Altman Z-Score of 6.2, however, indicates to company is in good standing even though its Sloan ration implies it has poor earnings quality. Assets are also building up at a faster rate than revenue is growing, suggesting Just Eat is becoming less efficient.
The company’s profitability fared even worse with a 3 out of 10 rating. Although the operating margin is expanding, Just Eat is being weighed down by negative returns that underperform a majority of competitors. It also has a low Piotroski F-Score of 2, which implies operations are in poor shape.
Having exited a position in BP in the first quarter of 2019, the Spanish fund entered a new 4.9 billion-share stake. The holding was given 1.64% space in the equity portfolio. During the quarter, shares traded for an average price of 4.21 pounds each.
The British oil and gas giant has a market cap of 63.55 billion pounds; its shares closed at 3.14 pounds on Wednesday with a forward price-earnings ratio of 86.96, a price-book ratio of 0.84 and a price-sales ratio of 0.28.
According to the price chart, the stock is trading below its price-book ratio and above the sales multiple. The GuruFocus valuation rank of 7 out of 10 indicates the stock is undervalued.
As a result of issuing approximately $4.3 billion in new long-term debt over the past three years and low interest coverage, BP’s financial strength was rated 4 out of 10 by GuruFocus. The Altman Z-Score of 1.25 also warns that the company could be at risk of going bankrupt since it has recorded an operating income loss over the past several years.
The company’s profitability scored a 6 out of 10 rating despite having margins and returns that underperform over half of its industry peers and a low Piotroski F-Score of 3. BP’s business predictability rank of one out of five stars is on watch as a result of a decline in revenue per share over the past 12 months. GuruFocus says companies with this rank typically return an average of 1.1% per annum over a 10-year period.
Bestinver picked up 81,802 shares of adidas, dedicating 1.43% of the equity portfolio to the position. The stock traded for an average per-share price of 263.78 euros ($284.77) during the quarter.
The German designer and manufacturer of sports apparel, shoes and accessories has a market cap of 39.19 billion euros; its shares closed at 200 euros on Wednesday with a price-earnings ratio of 28.65, a price-book ratio of 5.82 and a price-sales ratio of 1.74.
Based on the Peter Lynch chart, the stock appears to be overvalued. The GuruFocus valuation rank of 1 out of 10 also supports this assessment.
GuruFocus rated adidas’ financial strength 6 out of 10 on the back of adequate interest coverage and a solid Altman Z-Score of 3.58, which indicates it is in good standing.
The company’s profitability fared even better, scoring a 9 out of 10 rating. In addition to an expanding operating margin, adidas is being supported by strong returns that outperform a majority of competitors. It has a low Piotroski F-Score of 3, however, and the 3.5-star business predictability rank is on watch as a result of slowing revenue per share growth over the past year. According to GuruFocus, companies with this rank typically return an average of 9.3% per year.
Additional trades and portfolio performance
During the quarter, the Spanish fund also added to many other positions, including Rio Tinto PLC (LSE:RIO, Financial), Informa PLC (LSE:INF), SAP SE (XTER:SAP), CIR SpA (MIL:CIR), Societe Generale SA (XPAR:GLE), ABB Ltd. (XSWX:ABBN) and BNP Paribas (XPAR:BNP).
Over 40% of Bestinfond (Trades, Portfolio)’s $1.18 billion equity portfolio, which is composed of 83 stocks, is invested in the communication services and industrials sectors, followed by smaller holdings in the financial services (15.82%) and consumer cyclical (15.71%) spaces.
The fund returned 20.8% in 2019.
Disclosure: No positions.
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