Cobas Asset Management, which is managed by Chairman and Chief Investment Officer Francisco Garcia Parames (Trades, Portfolio), has released its portfolio for the third quarter. Top sales during the quarter included reducing positions in Golar LNG Ltd. (GLNG, Financial) and Teekay LNG Partners LP (TGP, Financial) and selling out of several other holdings.
The asset management company follows Warren Buffett (Trades, Portfolio)'s investing strategies and focuses on undervalued assets that show high potential for long-term growth. They focus primarily on European companies, but hold stocks from companies around the world.
Portfolio overview
At the end of the quarter, the portfolio contained 57 stocks, with one new holding in Metrovacesa SA (XMAD:MVC, Financial). It is valued at $424 million and has seen a turnover rate of 5%. Top holdings at the end of the quarter included CIR SpA (LTS:0ONR, Financial), Aryzta AG (XSXW:ARYN, Financial), Teekay LNG Parnters, Golar LNG and Dixons Carphone PLC (LSE:DC., Financial).
By weight, the top three sectors represented are consumer cyclical (26.59%), industrials (25.65%) and energy (25.37%).
Golar LNG
The biggest overall change in the portfolio came from the sale of 1.40 million shares of Golar LNG during the quarter. This reduced the position by 27.66% and the shares traded at an average price of $8.93 during the quarter. Overall, the sale had a -1.93% impact on the portfolio and GuruFocus estimates the total loss of the holding at 48.26%.
Golar LNG is a midstream liquefied natural gas company that operates in the transportation, regasification, liquefaction and trading of LNG. The segment in which the group operates includes power, floating LNG and vessel operations. Its vessel operations segment operates and charters out LNG carriers and floating storage regasification units on fixed terms to customers, whereas the power segment offers integrated LNG based downstream solutions. The FLNG segment includes the costs associated with the conversion of its LNG carrier, the Hilli.
On Nov. 5, the stock was trading at $8.19 with a market cap of $801.96 million. According the the GF Value Line, the stock is a possible value trap, so investors will want to do their due diligence before investing.
GuruFocus gives the company a financial strength rating of 3 out of 10, a profitability rank of 5 out of 10 and a valuation rank of 8 out of 10. There are currently three severe warning signs issued for the company, including new long-term debt, poor financial strength and an Altman Z-Score of -0.03, placing the company in the distress column. Alongside the extremely low Altman Z-Score that indicates bankruptcy as a possibility, the company has a cash-to-debt ratio of 0.05, placing it lower than 83.38% of the industry.
Sacyr
During the quarter, the 1.29 million-share Sacyr SA (XMAD:SCYR) position was cut entirely from the portfolio after being established in the first quarter. The stock traded at an average price of 1.94 euros ($2.29) during the quarter. The sale had an overall impact of -0.54% on the portfolio and GuruFocus estimates the total gain on the holding at 2.95%.
Sacyr develops complex infrastructure projects and provides construction services for various industrial markets. It constructs roads, buildings, water systems, plants and equipment to enhance working environments within facilities. The company has four business divisions: construction, concessions, services and industrial. Its comprehensive range of services primarily relates to the maintenance of facilities, energy-efficient solutions and environmental services geared toward water treatment and waste management.
Nov. 5 saw the stock trading at 1.52 euros per share with a market cap of 877.58 million euros. The GF Value Line indicates the stock is a possible value trap that could be dangerous for investors.
GuruFocus gives the company a financial strength rating of 3 out of 10 and a profitability rank of 5 out of 10. THere are currently three severe warning signs issued, including a low Piotroski F-Score, poor financial strength and an Altman Z-Score of 0.38, placing the company in the distress column. The current weighted average cost of capital outweighs the return on invested capital, which indicates the company will destroy value as it grows.
Samsung Electronic
During the quarter, Samsung Electronic Co. Ltd. (XKRX:005935) also saw the remaining 61,622 shares held in the portfolio sold. The shares traded at an average price of 49,042.4 South Korean won ($43.68) during the quarter. The sale had an overall impact on the portfolio of -0.46% and GuruFocus estimates the total gain on the holding at 2,690.48%.
Samsung Electronics is a diversified electronics conglomerate that manufactures and sells a wide range of products, including smartphones, semiconductor chips, printers, home appliances, medical equipment and telecom network equipment. It is the largest smartphone, television, memory chip and display manufacturer globally.
As of Nov. 5, the stock was trading at 53,500 won with a market cap of 392.19 trillion won. The GF Value Line shows that the company is currently modestly overvalued.
GuruFocus gives the company a financial strength rating of 8 out of 10 and a profitability rank of 8 out of 10. The company has maintained adequate free cash flow to cover the dividend payments while keeping debt at consistently low levels throughout the last decade.
NS Shopping
The third-largest sale during the quarter came from NS Shopping Co. Ltd. (XKRX:138250). The final 219,859 shares were sold during the quarter after major reductions were made in the first two quarters of 2020. The shares traded at an average price of 13,131.8 won during the quarter. The sale had an impact of -0.45% on the portfolio and GuruFocus estimates the total loss on the holding at 29.98%.
NS Shopping is involved in the businesses of TV shopping, internet shopping malls, mobile shopping, interactive TV shopping and international business operations. The company's subsidiaries are engaged in the import and distribution of Korean products and also exporting Chinese products.
On Nov. 5, the stock was trading at 12,700 won with a market cap of 416.82 billion won. The Peter Lynch chart suggests the stock is currently trading well above its intrinsic value.
GuruFocus gives the company a financial strength rating of 4 out of 10 and a profitability rank of 7 out of 10. There are currently five severe warning signs issued for new long-term debt, declining gross margin and operating margin percentages and an Altman Z-Score of 1.38, placing the company in the distress column. Recent years have seen high levels of debt and diminishing cash flows leading to the lower-than-average financial strength.
Teekay LNG Partners
Continuing on a sell pattern since the first quarter of 2019, Teekay LNG Partners was reduced by an additional 7.06% during the third quarter. The 164,572 shares were sold at an average price of $11.22 during the quarter. Overall, the sale had an impact of -0.37% on the portfolio and GuruFocus estimates the total loss of the holding at 25.29%.
Teekay LNG Partners is a provider of marine transportation services for LNG, liquefied petroleum gas and crude oil. The company operates into three segments, namely LNG, LPG and conventional tanker transport. The majority of these services are provided through a time-charter, voyage charter or bareboat charter contract.
As of Nov. 5, the stock was trading at $10.74 per share with a market cap of $932.92 million. The GF Value Line suggests the company is a possible value trap and investors should think twice before investing.
GuruFocus gives the company a financial strength rating of 3 out of 10, a profitability rank of 7 out of 10 and a valuation rank of 9 out of 10. There are currently four severe warning signs issued for new long-term debt, poor financial strength, declining gross margin percentage and an Altman Z-Score of 0.41, placing the company in the distress column. While the company has a lower-than-average cash-to-debt ratio, the operating margin and net margin percentages both outperform the majority of competitors.
Disclosure: Author owns no stocks mentioned.
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