Robert Olstein (Trades, Portfolio), chairman and chief investment officer of Olstein Capital Management, disclosed earlier this month that his firm's top trades during the first quarter included a new holding in L3Harris Technologies Inc. (LHX, Financial), the closure of its DuPont de Nemours Inc. (DD, Financial) position and the reduction in its stakes in Discovery Inc. (DISCK, Financial) and ViacomCBS Inc. (VIAC, Financial).
The New York-based firm selects stocks by looking behind the numbers of a company's financial statements to measure a company's financial strength and downside risk. To qualify for Olstein Capital Management's defense first approach, a company must have solid cash flows, avoid aggressive accounting principles and have solid balance sheet fundamentals.
As of March 31, Olstein's $715 million equity portfolio contains 100 stocks, with eight new positions and a turnover ratio of 11%. The top three sectors in terms of weight are financial services, health care and industrials, representing 18.33%, 16.01% and 15.70% of the equity portfolio.
L3Harris
Olstein purchased 39,000 shares of L3Harris (LHX, Financial), giving the position 1.1% weight in the equity portfolio. Shares averaged $187.59 during the first quarter; the stock is modestly undervalued based on Tuesday's price-to-GF Value ratio of 0.87.
GuruFocus ranks the Melbourne, Florida-based aerospace and defense company's profitability 8 out of 10 on the back of a high Piotroski F-score of 7 and a three-year revenue growth rate that outperforms more than 89% of global competitors.
Gurus with large positions in L3Harris include the T Rowe Price Equity Income Fund (Trades, Portfolio) and Diamond Hill Capital (Trades, Portfolio).
DuPont de Nemours
Olstein sold 111,000 shares shares of DuPont de Nemours (DD, Financial), trimming 1.26% of the equity portfolio. Shares averaged $76.28 during the first quarter; the stock is significantly overvalued based on Tuesday's price-to-GF Value ratio of 1.33.
GuruFocus ranks the Wilmington, Delaware-based chemical company's financial strength 5 out of 10: Although the company has a high Piotroski F-score of 7, DuPont has a weak Altman Z-score of 1.19 and interest coverage ratios underperforming over 86% of global competitors.
Discovery
Olstein sold 250,933 Class C shares of Discovery (DISCK, Financial), trimming the position by 34.67% and the equity portfolio by 1.05%. Shares averaged $42.38 during the first quarter; the stock is fairly valued based on Tuesday's price-to-GF Value ratio of 1.07.
GuruFocus ranks the Silver Spring, Maryland-based diversified media company's profitability 8 out of 10 on the back of profit margins and returns outperforming more than 76% of global competitors.
ViacomCBS
Olstein sold 144,200 Class B shares of ViacomCBS (VIAC, Financial), trimming 41.53% of the position and 0.86% of the equity portfolio. Shares averaged $61.05 during the first quarter; the stock is significantly overvalued based on Tuesday's price-to-GF Value ratio of 1.38.
GuruFocus ranks the New York-based media company's profitability 8 out of 10 on the back of profit margins and returns outperforming over 77% of global competitors.
Despite good profitability, ViacomCBS' financial strength ranks 4 out of 10 driven on interest coverage and debt ratios underperforming more than 70% of global diversified media companies.
Disclosure: No positions.
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.
