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James Li
James Li
Articles (1538) 

ValueAct's Top 5 Trades of the 4th Quarter

Firm founded by Jeff Ubben releases portfolio

ValueAct Holdings LP (Trades, Portfolio), the firm founded in 2000 by Jeff Ubben, disclosed last month that its top five trades during the fourth quarter of 2020 included a new position in Fiserv Inc. (NASDAQ:FISV), the closure of its holding in A.O. Smith Corp. (NYSE:AOS) and reductions in KKR & Co. Inc. (NYSE:KKR), Morgan Stanley (NYSE:MS) and Seagate Technology PLC (NASDAQ:STX).

The San Francisco-based firm seeks long-term capital appreciation by acquiring stakes in fundamentally undervalued companies and pushes for changes to maximize shareholder return. Ubben left ValueAct in June 2020 to pursue social investing, having stepped down as chief investment officer in 2017. The guru co-founded Inclusive Capital Partners, a San Francisco-based investment firm focused on increasing shareholder value and promoting sound environmental, social and governance practices.


As of December 2020, ValueAct's $8.62 billion equity portfolio contains 11 stocks with a turnover ratio of 1%. The firm's top three sectors in terms of weight are financial services, technology and consumer cyclical, with weights of 48.42%, 22.73% and 8.81%.



ValueAct purchased 328,281 shares of Fiserv (NASDAQ:FISV), giving the position 0.43% equity portfolio weight. Shares averaged $107.82 during the fourth quarter; the stock is fairly valued based on Monday's price-to-GF Value ratio of 0.95.


GuruFocus ranks the Brookfield, Wisconsin-based payment software company's financial strength 4 out of 10 on several warning signs, which include a weak Altman Z-score of 1.41 and interest coverage and debt ratios that underperform over 70% of global competitors.


Other gurus with holdings in Fiserv include Dodge & Cox and Leon Cooperman (Trades, Portfolio).


A.O. Smith

The firm sold 2,092,510 shares of A.O. Smith (NYSE:AOS), trimming the equity portfolio 1.55%. Shares averaged $55.14 during the fourth quarter.


The Milwaukee-based industrial company manufactures a wide range of residential and commercial gas and water heater tanks. GuruFocus ranks the company's financial strength and profitability 8 out of 10 on several positive investing signs, which include a strong Altman Z-score of 7, debt ratios and profit margins outperforming over 80% of global competitors.


KKR & Co.

The firm sold 6.95 million shares of KKR & Co. (NYSE:KKR), trimming the position 15.44% and the equity portfolio 3.36%. Shares averaged $37.83 during the fourth quarter.


GuruFocus ranks the New York-based alternative investment company's financial strength 3 out of 10 on several warning signs, which include a low Piotroski F-score of 2, a weak Altman Z-score of 0.88 and debt ratios that are underperforming over 80% of global competitors.


Morgan Stanley

The firm sold 3,216,278 shares of Morgan Stanley (NYSE:MS), curbing the position 27.97% and the equity portfolio 2.19%. Shares averaged $57.54 during the fourth quarter.


GuruFocus ranks the New York-based investment bank's financial strength 3 out of 10: Although the company has a high Piotroski F-score of at least 7, Morgan Stanley's debt ratios are underperforming over 70% of global competitors.


Seagate Technology

The firm sold 1,407,687 shares of Seagate Technology (NASDAQ:STX), paring the position 4.46% and the equity portfolio 0.98%. Shares averaged $56.33 during the fourth quarter.


GuruFocus ranks the Dublin, Ireland-based technology company's profitability 7 out of 10 on several positive investing signs, which include expanding profit margins and returns outperforming over 90% of global competitors. Despite this, three-year revenue and earnings growth rates are underperforming more than half of global hardware companies.


See also

Shares of Exxon Mobil Corp. (NYSE:XOM) surged over 3% on Monday on the energy company's announcement that Ubben joined the company's board of directors.

Disclosure: No positions.

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