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Sydnee Gatewood
Sydnee Gatewood
Articles (2730) 

Steven Cohen Adds to ANGI Homeservices

Guru increases stake in company that owns Angie's List

Steven Cohen (Trades, Portfolio), the billionaire leader of Point72 Asset Management, revealed his firm upped its stake in ANGI Homeservices Inc. (NASDAQ:ANGI) by 64.87% earlier this week.

With the goal of generating superior risk-adjusted returns, the guru's Stamford, Connecticut-based firm invests in a wide range of asset classes worldwide. Its long-short strategy is based on bottom-up research processes focusing on fundamentals and macroeconomic conditions.

According to GuruFocus Real-Time Picks, a Premium feature, Cohen invested in an additional 1.48 million shares of the Denver-based company on Sept. 22, which had an impact of 0.1% on the equity portfolio. The stock traded for an average price of $10.50 per share on the day of the transaction.

The guru now holds 3.78 million shares total, which represent 0.26% of the equity portfolio. GuruFocus estimates he has gained 2.22% on the investment since establishing it during the second quarter.

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The company, which operates platforms such as HomeAdvisor and Angie's List to help consumers find and connect with home service professionals like landscapers, painters and cleaners, has a $4.9 billion market cap; its shares were trading around $10.05 on Thursday with a price-earnings ratio of 247, a price-book ratio of 3.79 and a price-sales ratio of 3.59.

The GFs Value Line suggests the stock is significantly undervalued based on its historical price-earnings, price-book and price-sales ratios, an adjustment factor based on the company's past returns and growth as well as future estimates of business performance.

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ANGI reported its second-quarter results on Aug. 10. It posted earnings of 2 cents per share, which topped analysts' estimates of a loss of 1 cent per share. Revenue grew 9.1% from the prior-year quarter to $375.06 million, surpassing expectations of $364.45 million.

GuruFocus rated ANGI Homeservices' financial strength 7 out of 10. Although the company has weak interest coverage, the robust Altman Z-Score of 5.77 indicates it is in good standing. The return on invested capital has also been eclipsed by the weighted average cost of capital, implying it is not turning a profit on its projects and is, therefore, destroying value for shareholders.

The company's profitability fared much worse, scoring a 3 out of 10 rating on the back of margins and returns that are underperforming at least half of its competitors. ANGI Homeservices also has a moderate Piotroski F-Score of 5, which suggests operations are stable, but the predictability rank of one out of five stars is on watch as a result of revenue declining over the past five years. GuruFocus says companies with this rank typically see their stocks gain an average of 1.1% annually over a 10-year period.

With a 1.1% stake, Jim Simons (Trades, Portfolio)' Renaissance Technologies is ANGI's largest guru shareholder. PRIMECAP Management (Trades, Portfolio), Lee Ainslie (Trades, Portfolio), Ruane Cunniff (Trades, Portfolio) and Joel Greenblatt (Trades, Portfolio) also have positions in the stock.

Portfolio composition

Cohen's $15.33 billion equity portfolio, which was composed of 778 stocks as of the three months ended June 30, is most heavily invested in the health care, technology and consumer cyclical sectors.

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Other communication services stocks the guru held large positions in as of the end of the second quarter included Twilio Inc. (NYSE:TWLO), Electronic Arts Inc. (NASDAQ:EA), T-Mobile US Inc. (NASDAQ:TMUS), Alphabet Inc. (NASDAQ:GOOGL) and Pinterest Inc. (NYSE:PINS). This sector accounts for 5.6% of the overall portfolio.

Disclosure: No positions.

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About the author:

Sydnee Gatewood
I am the editorial director at GuruFocus. I have a BA in journalism and a MA in mass communications from Texas Tech University. I have lived in Texas most of my life, but also have roots in New Mexico and Colorado. Follow me on Twitter! @gurusydneerg

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