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James Li
James Li
Articles (1277)  | Author's Website |

Kahn Brothers Buys Buffett’s JPMorgan During the 1st Quarter

Firm of the late Irving Kahn establishes position in a Berkshire bank holding

Kahn Brothers (Trades, Portfolio), the firm founded by the late Irving Kahn and his two brothers Alan and Thomas, disclosed this week that its top four buys during the first quarter included a new position in JPMorgan Chase & Co. (NYSE:JPM) and boosts to Patterson-UTI Energy Inc. (NASDAQ:PTEN), ViewRay Inc. (NASDAQ:VRAY) and BP PLC (NYSE:BP).

According to the firm’s website, Kahn Brothers (Trades, Portfolio)’ investment philosophy has, over time, evolved from Benjamin Graham’s original “discount to net asset purchase” model to a contrarian value strategy focusing on margin of safety and long-term capital appreciation. The firm employs a bottom-up stock selection approach and invests in undervalued, out-of-favor companies.

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As of quarter-end, the firm’s $547 million equity portfolio contains 48 stocks, with 43.24% weight in health care and 31.30% weight in energy.

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New buy: JPMorgan

The firm purchased 3,935 shares of JPMorgan, giving the position 0.06% weight in the equity portfolio. Shares averaged $122.27 during the first quarter.

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The New York-based bank operates four business segments: consumer and community banking, corporate and investment banking, commercial banking and asset and wealth management. According to GuruFocus, JPMorgan’s equity-to-asset ratio of 0.08 and debt-to-equity ratio of 1.27 underperform 69.40% and 72.85% of global competitors, suggesting low financial strength.

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Warren Buffett (Trades, Portfolio)’s Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B) has not released its March-quarter portfolio as the deadline is 45 days until after the quarter ends. As of the December 2019 filing, Berkshire owns 59,514,932 shares of JPMorgan Chase.

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Other gurus with holdings in JPMorgan Chase include Dodge & Cox and PRIMECAP Management (Trades, Portfolio).

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Patterson-UTI Energy

The firm added 424,300 shares of Patterson-UTI Energy, increasing the stake 16.38% and the equity portfolio 0.18%. Shares averaged $6.60 during the first quarter.

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The Houston-based company operates a fleet of over 315 land rigs, which it markets to independent and small producers. GuruFocus ranks the company’s financial strength 4 out of 10: Although the equity-to-asset ratio outperforms over 72.45% of global competitors, Patterson-UTI has a low Piotroski F-score of 3 and a weak Altman Z-score of 0.41.

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ViewRay

The firm added 72,000 shares of ViewRay, increasing the holding 13.49% and the equity portfolio 0.03%

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The Oakwood Village, Ohio-based company designs, manufactures and markets radiation therapy systems that provide real-time imaging during radiation treatment, including MRI. According to GuruFocus, ViewRay’s equity-to-asset and debt-to-equity ratios are outperforming just over 42% of global competitors, suggesting moderately low financial strength.

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BP

The firm added 4,705 shares of BP, increasing the position 0.29% and the equity portfolio 0.02%. Shares averaged $32.57 during the first quarter.

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GuruFocus ranks the U.K.-based energy company’s financial strength 4 out of 10 on the heels of debt ratios underperforming over 60% of global competitors.

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Disclosure: No positions.

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About the author:

James Li
I am an editorial researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

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