First Eagle Investment (Trades, Portfolio) Management recently disclosed its portfolio updates for the third quarter of 2020, which ended on Sept. 30.
The firm takes a long-term, flexible, absolute return-oriented investment approach that does not attempt to "beat the benchmark." Instead, it seeks to achieve attractive returns while providing downside protection. The firm's portfolio managers operate a variety of funds under the leadership of president and CEO Mehdi Mahmud and Chief Financial Officer Brian Margulies.
Based on its investing strategy, the firm's biggest buys for the quarter were in Boston Properties Inc. (BXP, Financial) and American Express Co. (AXP, Financial), while its biggest sells were in Barrick Gold Corp. (GOLD, Financial) and Wheaton Precious Metals Corp. (WPM, Financial).
Boston Properties
The firm upped its investment in Boston Properties by 1,931,972 shares, or 352.66%, for a total holding of 2,479,794 shares, impacting the equity portfolio by 0.47%. During the quarter, shares traded for an average price of $87.35.
Boston Properties is a real estate investment trust based in Boston. It invests in office buildings primarily in the regions of Boston, Los Angeles, New York City, San Francisco and Washington, D.C.
On Nov. 11, shares of Boston Properties traded around $90.83 for a market cap of $14.10 billion and a price-earnings ratio of 14.14. According to the GuruFocus Value chart, the stock is a possible value trap.
GuruFocus gives the company a financial strength rating of 3 out of 10 and a profitability rating of 8 out of 10. While the cash-debt ratio of 0.13 is higher than the industry median of 0.08, the Piotroski F-Score of 5 out of 9 indicates its financial strength is neither particularly good nor particularly bad. The three-year revenue growth rate of 4.9% is higher than the three-year Ebitda growth rate of 1.1%.
American Express
The firm added 1,344,745 shares, or 45.25%, to its American Express position for a total of 4,316,239 shares, impacting the equity portfolio by 0.41%. Shares traded for an average price of $98.42 during the quarter.
American Express is a financial services company headquartered in New York City. It is one of the largest and most well-known providers of credit cards, charge cards, gift cards and similar financial payment products in the U.S.
On Nov. 11, shares of American Express traded around $111.26 for a market cap of $89.59 billion and a price-earnings ratio of 27.61. According to the GuruFocus Value chart, the stock is fairly valued.
GuruFocus gives the company a financial strength rating of 3 out of 10 and a profitability rating of 5 out of 10. The cash-debt ratio of 0.71 is higher than 66% of competitors, though the Piotroski F-Score of 5 out of 9 is middling at best. Over the company's history, the return on equity has been on a general uptrend to 29.74% in the last full fiscal year.
Barrick Gold
The firm reduced its stake in Barrick Gold by 9,761,433 shares, or 24.75%, leaving a remaining holding of 29,683,377 shares. The trade had a -0.83% impact on the equity portfolio. During the quarter, shares traded for an average price of $28.46.
Barrick is a mining company engaged in the procurement of gold and copper. Headquartered in Toronto, the company has 16 operating sites throughout 13 countries.
On Nov. 11, shares of Barrick traded around $25.62 for a market cap of $45.61 billion and a price-earnings ratio of 14.63. According to the GuruFocus Value chart, the stock is significantly overvalued.
GuruFocus gives the company a financial strength rating of 6 out of 10 and a profitability rating of 6 out of 10. While the interest coverage ratio of 11.78 is lower than 74% of peers, the Altman Z-Score of 2.52 suggests the company is not likely to face liquidity issues in the next couple of years. The return on invested capital has far surpassed the weighted average cost of capital in recent quarters, though this is not always the case for such a cyclical company.
Wheaton Precious Metals
The firm also reduced its Wheaton Precious Metals position by 3,479,993 shares, or 15.96%, for a remaining holding of 18,324,661 shares. The trade had a -0.48% impact on the equity portfolio. Shares traded for an average price of $50.87 during the quarter.
Wheaton is a precious metals mining and streaming company based in Vancouver, Canada. It produces a variety of precious metals through its operations, including cobalt, and it also sells the silver it gains as a byproduct of its main operations.
On Nov. 11, shares of Wheaton traded around $44.19 for a market cap of $19.93 billion and a price-earnings ratio of 54.31. According to the GuruFocus Value chart, the stock is significantly overvalued.
GuruFocus gives the company a financial strength rating of 7 out of 10 and a profitability rating of 7 out of 10. The cash-debt ratio of 0.21 is lower than the industry median of 16.14, but the Altman Z-Score of 16.76 indicates the company is plenty able to keep itself afloat financially. The ROIC has recently surpassed the WACC, indicating a turn to profitability.
Portfolio overview
At the end of the quarter, First Eagle held 101 stocks in a common stock portfolio valued at $33.33 billion. The firm's top holdings were Oracle Corp. (ORCL) with 5.30% of the equity portfolio, Comcast Corp. (CMCSA) with 4.50% and Newmont Corp. (NEM) with 3.7%.
In terms of sector weighting, the firm was most invested in basic materials, technology and financial services.
Disclosure: Author owns no shares in any of the stocks mentioned. The mention of stocks in this article does not at any point constitute an investment recommendation. Portfolio updates reflect only common stock positions as per the regulatory filings for the quarter in question and may not include changes made after the quarter ended.
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