The FPA Capital Fund (Trades, Portfolio), part of Los Angeles-based First Pacific Advisors (Trades, Portfolio), disclosed this week that its top five trades during the third quarter included purchases in NCR Corp. (NCR, Financial), ACI Worldwide Inc. (ACIW, Financial) and GCI Liberty Inc. (GLIBA, Financial) and sells in Vail Resorts Inc. (MTN, Financial) and Noble Energy Inc. (NBL, Financial).
Managed by Dan Kaplan, the fund seeks long-term capital appreciation through investments in small and mid-cap companies with strong balance sheets, understandable business strategies, capable management teams and unique business characteristics.
As of the quarter's end, the fund's $107 million equity portfolio contains 24 stocks, with three new positions and a turnover ratio of 17%. The top three sectors in terms of weight are technology, communication services and consumer cyclical, representing 28.40%, 23.08% and 15.48% of the equity portfolio.
NCR
The fund purchased 248,723 shares of NCR, giving the position 5.15% weight in the equity portfolio. Shares averaged $19.35 during the third quarter; the stock is modestly undervalued based on its current price-to-GF Value ratio of 0.76.
GuruFocus ranks the Atlanta-based automated teller machine operator's profitability 7 out of 10 on several positive investing signs, which include expanding operating margins and a high Piotroski F-score of 7. Despite this, NCR's financial strength ranks 4 out of 10 on the back of debt ratios underperforming over 87% of global competitors.
ACI Worldwide
The fund added 87,205 shares of ACI Worldwide, increasing the position 45.48% and the equity portfolio 2.13%. Shares averaged $27.69 during the third quarter; the stock is modestly undervalued with a price-to-GF Value ratio of 0.87.
GuruFocus ranks the Naples, Florida-based payment processor's profitability 7 out of 10 on the back of profit margins outperforming over 65% of global competitors.
Gurus with large holdings in ACI Worldwide include Wallace Weitz (Trades, Portfolio) and Ken Fisher (Trades, Portfolio).
GCI Liberty
The fund purchased 27,027 shares of GCI Liberty, giving the position 2.07% weight in the equity portfolio. Shares averaged $78.72 during the third quarter.
GuruFocus ranks the Englewood, Colorado-based telecommunication service company's profitability 5 out of 10: Although the company's returns are outperforming over 72% of global competitors, GCI Liberty's operating margin has declined approximately 7.2% per year on average over the past five years and is underperforming over 72% of global competitors.
Vail Resorts
The fund sold 10,792 shares of Vail Resorts, trimming the equity portfolio 1.95%. Shares averaged $205.93 during the third quarter; the stock is modestly overvalued based on its current price-to-GF Value ratio of 1.16.
GuruFocus ranks the Broomfield, Colorado-based resort hotel operator's profitability 7 out of 10 on the back of operating margins that are outperforming over 82% of global competitors despite three-year revenue and earnings growth rates underperforming over 63% of global travel and leisure companies.
Noble Energy
The fund sold 206,714 shares of Noble Energy, reducing the position 34.37% and the equity portfolio 1.84%. Shares averaged $9.77 during the third quarter; the stock is a possible value trap based on its current price-to-GF Value ratio of 0.49 and low GuruFocus financial strength rank of 2.
The Houston-based energy company's low financial strength rank stems from several warning signs, including a weak Piotroski F-score of 3, a cash-to-debt ratio and a debt-to-equity ratio that both underperform over 85% of global competitors.
Disclosure: No positions.
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