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James Li
James Li
Articles (1533) 

Ken Heebner's CGM Reveals Top Trades for 2nd Quarter

Growth-oriented firm sells 2 REITs, buys 2 RV companies

Capital Growth Management, a money management firm co-founded by Ken Heebner (Trades, Portfolio), disclosed earlier this month that its top trades during the second quarter featured sales of Phillip Morris International Inc. (NYSE:PM), The GEO Group Inc. (NYSE:GEO) and CoreCivic Inc. (NYSE:CXW) and new buys in Thor Industries Inc. (NYSE:THO), Teradyne Inc. (NASDAQ:TER) and Winnebago Industries Inc. (NYSE:WGO).

The Boston-based firm makes bold and swift sector calls, making large bets based on Heebner's convictions. As of the quarter-end, the firm's $860 million equity portfolio contains 41 stocks, with 29 new holdings and a turnover ratio of 49%. The consumer cyclical sector occupies 53.90% of the equity portfolio while the materials and health care sectors have weights of 16.83% and 10.30%.

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Phillip Morris

CGM sold 420,000 shares of Phillip Morris, reducing its equity portfolio 4.30%. Shares averaged $72.91 during the second quarter.

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GuruFocus ranks the New York-based tobacco producer's profitability 8 out of 10 on the back of operating margins and Greenblatt returns on capital outperforming over 82% of global competitors. Despite this, Phillip Morris' three-year revenue growth rate underperforms over 56% of global tobacco producers.

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The Geo Group

CGM sold 2.157 million shares of The Geo Group, reducing its equity portfolio 3.68%. Shares averaged $12.22 during the second quarter.

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GuruFocus ranks the Boca Raton, Florida-based detention center REIT's financial strength 3 out of 10 on several warning signs, which include interest coverage and debt ratios that are underperforming over 75% of global competitors. Despite this, GEO's profitability ranks 7 out of 10 on the back of a three-star business predictability rank, suggesting good and consistent revenue growth.

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CoreCivic

CGM sold 2.095 million shares of CoreCivic, reducing its equity portfolio 3.29%. Shares averaged $11.40 during the second quarter.

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GuruFocus ranks the Nashville, Tennessee-based REIT's profitability 7 out of 10 on the back of returns outperforming over 68% of global competitors. Despite this, CoreCivic's financial strength ranks 4 out of 10, driven by a low Altman Z-score of 0.89 and a debt-to-equity ratio that underperforms 84.76% of global REITs, suggesting high use of financial leverage.

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Thor Industries

CGM purchased 270,000 shares of Thor Industries, giving the position 3.34% weight in its equity portfolio. Shares averaged $77.34 during the second quarter.

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GuruFocus ranks the Elkhart, Indiana-based recreational vehicle manufacturer's profitability 9 out of 10 on several positive investing signs, which include a 3.5-star business predictability rank and a Greenblatt return on capital and a three-year revenue growth rate that outperform approximately 90% of global competitors.

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Teradyne

CGM purchased 315,000 shares of Teradyne, giving the holding 3.09% weight in its equity portfolio. Shares averaged $66.68 during the second quarter.

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GuruFocus ranks the North Reading, Massachusetts-based semiconductor company's financial strength and profitability 8 out of 10 on several positive investing signs, which include a high Altman Z-score of 7.98, expanding operating margins and returns that are outperforming 97% of global competitors.

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Winnebago

CGM purchased 395,000 shares of Winnebago, giving the position 3.06% weight in its equity portfolio. Shares averaged $50.58 during the second quarter.

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GuruFocus ranks the Forest City, Iowa-based RV manufacturer's profitability 7 out of 10 on several positive investing signs, which include expanding operating margins and three-year revenue and earnings growth rates outperforming over 90% of global competitors. Despite this, net margins are outperforming just 56.75% of global vehicles and parts companies.

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Disclosure: No positions.

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