Earlier this week, Mason Hawkins (Trades, Portfolio)’ Southeastern Asset Management disclosed that it reduced its stake in Enerpac Tool Group Corp. (EPAC, Financial) by 70.89% and established a new holding in Hyatt Hotels Corp. (H, Financial).
Founded by Mason Hawkins (Trades, Portfolio) in 1975, Southeastern manages the Longleaf Partners Funds. The firm employs a fundamental, bottom-up appraisal process based on in-house research to select a concentrated portfolio of quality investments that have strong balance sheets, good management teams and attractive valuations.
According to GuruFocus Real-Time Picks, a Premium feature, the firm sold 4,177,892 shares of Enerpac on May 11, bringing its stake in the company down to 1,715,234 shares and impacting the equity portfolio by -1.13%. Shares traded for an average price of $16.24 on the day of the sale.
On the same day, the guru established a holding of 4,023,041 shares in Hyatt. The trade had an impact of 3.44% on the equity portfolio. On the day of the buy, shares traded for an average price of $53.09.
Enerpac
Enerpac is a premier industrial tools and services company based in Menomonee Falls, Wisconsin. With a diverse range of customers in more than 25 countries, the company is a leader in high pressure hydraulics tools and controlled force products. In January of 2020, the group changed its name from Actuant Corp. to its current designation and began trading under the EPAC ticker.
GuruFocus gives the company a financial strength rating of 5 out of 10 and a profitability rating of 5 out of 10. The market cap is $835.29 million. According to the Peter Lynch chart, the stock is trading above its intrinsic value.
Though the company has rebranded, it has operated parts of its business under the Enerpac name since 1958. The decision to rebrand came after the company began looking into divesting its engineered components and systems segment to focus on tools products. All in all, the company is entering a phase of downsizing, divesting assets representing 6% of sales during its second quarter of fiscal 2020, which ended on Feb. 29.
Hyatt
Hyatt is a Chicago-based hospitality company that operates a chain of luxury and business hotels, resorts and vacation properties under 20 different brand names. At the end of 2019, the company’s portfolio consisted of more than 900 properties in 65 countries, primarily concentrated in the U.S. market.
GuruFocus gives the company a financial strength rating of 5 out of 10 and a profitability rating of 8 out of 10. The market cap is $4.75 billion. According to the Peter Lynch chart, the stock is trading at a discount to its intrinsic value.
Despite a 28% decline in revenue per available room in the first quarter of 2020, Hyatt grew its net number of rooms by 6%. The company’s sustainable liquidity position, represented by a cash-debt ratio of 0.47 and an Altman Z-Score of 2.29, has helped it continue to grow despite the impact of the pandemic on travel activities. President and CEO Mark S. Hoplamazian said on the first-quarter earnings report that “we believe our existing liquidity provides sufficient capacity to cover at least 30 months of operations under current conditions."
Portfolio composition
Southeastern manages an equity portfolio of 29 stocks valued at $6 billion as of May 13. The top holdings are CenturyLink Inc. (CTL) with 15.76% of the equity portfolio, General Electric Co. (GE) with 8.09% and CNX Resources Corp. (CNX) with 7.42%.
In terms of sector weighting, the firm is most invested in communication services and industrials.
Disclosure: Author owns no shares in any of the stocks mentioned. The mention of stocks in this article does not at any point constitute an investment recommendation. Investors should always conduct their own careful research or consult registered investment advisors before taking action in the stock market.
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