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James Li
James Li
Articles (1538) 

Southeastern Asset Management Trims Graham Holdings Stake

Mason Hawkins' firm reduces holding in Kaplan education platform operator

Southeastern Asset Management, the firm founded by Mason Hawkins (Trades, Portfolio), disclosed this week that it reduced its holding of Graham Holdings Co. (NYSE:GHC) according to GuruFocus Real-Time Picks, a Premium feature.

The Memphis, Tennessee-based firm seeks long-term capital appreciation through investments in the stock of companies with good businesses, good people and good prices. Management at Southeastern believes the portfolio should contain top investment ideas; further, the firm generally holds at most 25 stocks per portfolio.

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Transaction details and company background

Southeastern reduced its Graham Holdings position by 57,353 shares, approximately 20.54% of the third-quarter holding of 279,235 shares. The stock traded around $549.67 on the Jan. 11 transaction date.

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The Arlington, Virginia-based company provides a wide range of educational services through its Kaplan International, Kaplan Higher Education, Kaplan Test Preparation and Kaplan Professional platforms. Graham Holdings also provides television broadcasting and online services.

Financial position

According to GuruFocus, Graham Holdings has an Altman Z-score of 3 and a Beneish M-score of -2.72, suggesting a low possibility of financial distress and earnings manipulation.

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Additionally, the company has a moderately strong Piotroski F-score of 6 and debt ratios that outperform over 53% of global competitors. Based on these observations, GuruFocus ranked Graham Holdings' financial strength 6 out of 10.

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Company profitability overview

GuruFocus ranks Graham Holdings' profitability 6 out of 10 on the back of three-year earnings growth rates and Joel Greenblatt (Trades, Portfolio) returns on capital outperforming over 70% of global competitors, yet weighed down by operating margins declining approximately 6.4% per year on average over the past five years.

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See also

As of the September 2020 portfolio filing date, Southeastern's top five holdings are Lumen Technologies Inc. (NYSE:LUMN), CNX Resources Corp. (NYSE:CNX), Mattel Inc. (NASDAQ:MAT), FedEx Corp. (NYSE:FDX) and General Electric Co. (NYSE:GE).

Other gurus with positions in Graham Holdings include Jim Simons (Trades, Portfolio)' Renaissance Technologies, David Einhorn (Trades, Portfolio)'s Greenlight Capital Re Ltd. (NASDAQ:GLRE) and Jeremy Grantham (Trades, Portfolio)'s GMO.

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Disclosure: The author has no further positions in the stocks mentioned. Except for the real-time trade in Graham Holdings, the mention of stock holdings do not reflect any further trades or portfolio hedges made during the fourth quarter of 2020.

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