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James Li
James Li
Articles (1326)  | Author's Website |

Diamond Hill Capital's Top 5 Buys in the 2nd Quarter

Ohio-based firm's top buys include United Technologies spinoff

Diamond Hill Capital (Trades, Portfolio) disclosed this week that its top five buys for the second quarter were VF Corp. (NYSE:VFC), Carrier Global Corp. (NYSE:CARR), Mondelez International Inc. (NASDAQ:MDLZ), Public Storage (NYSE:PSA) and Proctor & Gamble Co. (NYSE:PG).

Established in 2000, the Columbus, Ohio-based firm invests in stocks based on fundamental analyses of companies' profitability and market position, financial and competitive position, management quality, valuation and growth components of valuation.

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As of the quarter's end, Diamond Hill's (NASDAQ:DHIL) $16.96 billion equity portfolio contains 149 stocks, with 10 new positions and a turnover ratio of 8%. The top four sectors in terms of weight are financial services, consumer cyclical, consumer defensive and health care, representing 26.75%, 14.05%, 12.30% and 11.90% of the equity portfolio.

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VF

Diamond Hill purchased 3,052,793 shares of VF, expanding the position 261.67% and the equity portfolio 1.10%. Shares averaged $58.15 during the second quarter.

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The Greensboro, North Carolina-based company designs and manufactures branded apparel and accessories through brands like Vans, The North Face and Columbia. GuruFocus ranks the company's profitability 6 out of 10: Profit margins and returns are outperforming over 70% of global competitors despite languishing near 10-year lows. The website also warns that VF's days inventory increased over the trailing 12 months, suggesting deceleration in sales.

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Other gurus with holdings in VF include Pioneer Investments (Trades, Portfolio) and Jerome Dodson (Trades, Portfolio)'s Parnassus Endeavor Fund (Trades, Portfolio).

Carrier

Diamond Hill disclosed a stake of 7,236,571 shares in Carrier, dedicating 0.95% of its equity portfolio to the stake. Shares averaged $18.38 during the second quarter.

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Along with Otis Worldwide Corp. (NYSE:OTIS), Carrier separated on April 3 from United Technologies while the Farmington, Connecticut-based industrial conglomerate merged with Raytheon to from Raytheon Technologies Corp. (NYSE:RTX). Carrier manufactures heating, ventilation and air conditioning systems for residential and commercial entities.

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Mondelez

Diamond Hill purchased 2,950,571 shares of Mondelez, increasing the position 63.39% and the equity portfolio 0.89%. Shares averaged $51.34 during the second quarter.

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The Deerfield, Illinois-based company produces well-known snack brands like Oreos and Chips Ahoy. GuruFocus ranks Mondelez's profitability 6 out of 10: Although the company has expanding operating margins, its three-year revenue growth rate of 2.50% underperforms 52.88% of global competitors.

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Public Storage

Diamond Hill purchased 610,679 shares of Public Storage, giving the holding 0.69% weight in the equity portfolio. Shares averaged $193.16 during the second quarter.

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The Glendale, California-based REIT owns and operates over 2,300 self-storage facilities in 38 states. GuruFocus ranks Public Storage's financial strength 7 out of 10 on the back of debt ratios outperforming over 90% of global competitors, partially offset by a moderately low Piotroski F-score of 4.

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Proctor & Gamble

Diamond Hill purchased 644,487 shares of Proctor & Gamble, increasing the position 27.44% and the equity portfolio 0.45%. Shares averaged $116.42 during the second quarter.

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GuruFocus ranks the Cincinnati-based consumer products giant's profitability 7 out of 10: The company's three-year revenue growth outperforms just 56% of global competitors despite a high Piotroski F-score of 7 and expanding operating margins.

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Disclosure: Long Proctor & Gamble.

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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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