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James Li
James Li
Articles (1398)  | Author's Website |

FPA Capital Fund's Top 5 Trades in the 3rd Quarter

Los Angeles-based fund releases quarterly portfolio

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. (NYSE:NCR), ACI Worldwide Inc. (NASDAQ:ACIW) and GCI Liberty Inc. (NASDAQ:GLIBA) and sells in Vail Resorts Inc. (NYSE:MTN) and Noble Energy Inc. (NASDAQ:NBL).

Managed by Arik Ahitov, 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.

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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.

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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.

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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.

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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.

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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.

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Gurus with large holdings in ACI Worldwide include Wallace Weitz (Trades, Portfolio) and Ken Fisher (Trades, Portfolio).

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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.

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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.

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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.

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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.

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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.

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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.

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Disclosure: No positions.

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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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