Wallace Weitz's Top 5 Sells in the 2nd Quarter

Wallace Weitz (Trades, Portfolio), manager of the Weitz Value and Weitz Partners Value Funds, disclosed this week that his top five sells during the second quarter were in the Financial Select Sector SPDF Fund (XLF), Liberty Global PLC (NASDAQ:LBTYK), Liberty Broadband Corp. (NASDAQ:LBRDK), Intelligent Systems Corp. (INS) and Marvell Technology Group Ltd. (NASDAQ:MRVL).

• XLF 30-Year Financial Data
• The intrinsic value of XLF
• Peter Lynch Chart of XLF

Weitz's approach to value investing combines Benjamin Graham's price sensitivity and insistence on a margin of safety with a conviction that qualitative factors that allow a company to control its destiny could outweigh statistical measures like the company's reported earnings and historical book value.

The fund manager said in his quarterly letter that the Partners Value Fund returned 18.28% during the second quarter, compared with the Russell 3000 Index return of 22.03% and the Standard & Poor's 500 Index return of 20.54%. The fund's year-to-date return of -12.78% underperformed the benchmark returns, driven by underperformance in the company's small- and mid-cap holdings.

As of the quarter's end, Weitz's $2 billion equity portfolio contains 63 stocks, with two new positions and a turnover ratio of 2%. The top three sectors in terms of weight are financial services, communication services and technology, representing 33.39%, 23.91% and 14.93% of the equity portfolio.

Sold out: Financial Select Sector SPDF Fund

Weitz sold 1.2 million shares of the Financial Select Sector SPDF Fund, trimming the equity portfolio 1.33%. Shares averaged $22.68 during the second quarter.

The exchange-traded fund seeks to track the performance of the S&P 500 financials and real estate sectors, which consists of banks, capital markets, mortgage REITs and companies that provide diversified financial services. The fund manager said in his Partners III Opportunity Fund shareholder letter that he exited the position at a profit.

Liberty Global

Weitz sold 1.527 million shares of Liberty Global, reducing the stake 42.26% and the equity portfolio 1.28%. Shares averaged $19.88 during the second quarter.

GuruFocus ranks the U.K.-based diversified media company's financial strength 4 out of 10: Although it has a high Piotroski F-score of 7, Liberty Global has a weak Altman Z-score of 0.85 and debt ratios that underperform over 60% of global competitors.

Liberty Broadband

Weitz sold 166,856 shares of Liberty Broadband, reducing the position 18.42% and the equity portfolio 0.99%. Shares averaged $125.16 during the second quarter.

The Englewood, Colorado-based company provides cable services to both residential and commercial businesses through its fiber, hybrid fiber and coaxial cable infrastructure. GuruFocus ranks the company's financial strength 5 out of 10: a weak Piotroski F-score of 3 offsets a strong Altman Z-score of 10 and a debt-to-equity ratio that outperforms 78.41% of global competitors.

Weitz said in his shareholder letter that he trimmed the position on intra-quarter price strength.

Intelligent Systems

Weitz sold 540,503 shares of Intelligent Systems, reducing the holding 35.12% and the equity portfolio 0.98%. Shares averaged $33.50 during the second quarter.

The Norcross, Georgia-based company provides technology solutions and processing services to the financial technology industry. GuruFocus ranks the company's financial strength 7 out of 10, driven by a double-digit Altman Z-score and a debt-to-equity ratio that outperforms 73.32% of global competitors.

Marvell

Weitz sold 670,600 shares of Marvell, eliminating the position and trimming the equity portfolio by 0.81%. Shares averaged $29.11 during the quarter; based on GuruFocus estimates, the firm gained approximately 29.50% on the stock since initiating the position during the fourth quarter of 2017.

Marvell designs integrated circuits primarily for data storage, networking and communications. GuruFocus ranks the company's profitability 6 out of 10: The three-year revenue decline rate of 3.50% underperforms 69.18% of global competitors, offsetting net margins and returns that are outperforming over 90% of global semiconductor companies.

Weitz said in his quarterly letter that he sold the position "at a significant gain as the stock approached [the fund's] value estimate."

Disclosure: No positions.

Read more here:

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• 4 Construction and Health Care Companies With High Financial Strength
• Yacktman Asset Management's Top 5 Sells of the 2nd Quarter

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