GuruFocus recently added a new guru profile to the site for Azvalor Managers FI (Trades, Portfolio), a unique fund that operates under the Azvalor Asset Management banner.
Azvalor Managers is a tax-transferable UCITS fund whose objective is to find the best investment opportunities worldwide through investment delegation to specialist managers. The fund is led by Javier Saenz de Cenzano, who selects the fund’s management partners through an in-depth and purely qualitative process.
The fund then delegates investments to each of these boutiques based upon their unique specializations. This allows the strategy to find the best investment opportunities around the world. The current team consists of four different managers that have well-established track records in the industry and all operate on the same values as Azvalor.
Azvalor Managers was recently featured on our Value Investing Live stream with presentations from Saenz de Cenzano and their partner Chris Mittleman, the chief investment officer of Mittleman Investment Management LLC. Their great presentation and the requests from the audience sparked the addition of the Azvalor Managers fund to GuruFocus.
Watch the live stream recording here:
Portfolio overview
The fund’s portfolio contains 113 stocks and added seven new holdings during the first quarter. It is valued at $21 million and has seen a turnover rate of 15%. Top holdings include Aimia Inc. (TSX:AIM, Financial), AMA Group Inc. (ASX:AMA, Financial), Cineplex Inc. (TSX:CGX, Financial), Revlon Inc. (REV, Financial) and Greatview Aseptic Packaging Co. Ltd. (HKSE:00468, Financial).
By weight, the top three sectors represented are energy (24.12%), basic materials (17.90%) and consumer cyclical (15.95%).
AMA Group
The fund’s largest trade of the quarter came from a new buy in AMA Group (ASX:AMA, Financial) to create the second-largest holding in the portfolio. The holding was established with the purchase of 2.50 million shares that traded at an average price of 68 cents per share during the first quarter. Overall, the trade had a 4.16% impact on the equity portfolio and GuruFocus estimates the fund has lost 13.22% on the holding.
AMA Group operates in the wholesale vehicle aftercare and accessories market, including smash repair shops, automotive and electrical components, vehicle protection equipment and servicing workshops for brakes and transmissions. The group only operates within one geographical area, Australasia. Its reportable segments include Vehicle Panel Repair; and Automotive Parts and Accessories. The Vehicle Panel Repair segment acts as a revenue driver for the firm.
On June 10, the stock was trading at 59 cents per share with a market cap of $426.66 million. According to the GF Value Line, the company is a possible value trap so investors should think twice before buying shares.
GuruFocus gives the company a financial strength rating of 4 out of 10, a profitability rank of 7 out of 10 and a valuation rank of 10 out of 10. There are currently four severe warning signs issued for the company, including new long-term debt and assets growing faster than revenue. The company’s cash-to-debt ratio of 0.26 ranks it lower than 71.42% of competitors after 2020 saw a large influx of debt to its financial statement.
Cineplex
The fund’s third-largest holding was cut back during the first quarter by 29.65%% with the sale of 42,151 shares. During the quarter, the shares traded at an average price of 12.05 Canadian dollars ($9.97). GuruFocus estimates the total gain of the holding at 73.21% and the sale had a -1.61% impact on the equity portfolio.
Cineplex is a diversified media company that operates chains of movie theaters. The company has three business segments: Film Entertainment and Content, Media and Amusement and Leisure. The Film Entertainment and Content reporting segment includes all direct and ancillary revenues from theatre attendance. The Media reporting segment is the aggregation of two operating segments, cinema media and digital place-based media. The Amusement and Leisure reporting segment comprises the aggregation of three operating segments: amusement solutions, location-based entertainment and eSports. The Film Entertainment and Content segment generates most of the revenue.
As of June 10, the stock was trading at CA$16.21 per share with a market cap of CA$1.03 billion. The GF Value Line gives the stock a significantly overvalued rating.
GuruFocus gives the company a financial strength rating of 1 out of 10, a profitability rank of 5 out of 10 and a valuation rank of 1 out of 10. There are currently seven severe warning signs issued for the company, including poor financial strength and days inventory building up. 2020 saw cash flows fall well into negative values after almost a decade of relative consistency.
Fairfax India Holdings
Another of the fund’s top trades of the first quarter came from a new buy into Fairfax India Holdings Corp. (FFXDF, Financial). The holding was established with the purchase of 18,125 shares that traded at an average price of $11.78 per share during the quarter. The new buy had a 0.88% impact on the equity portfolio and GuruFocus estimates the fund has already gained 9.25% on the holding.
Fairfax India Holdings is an investment holding company. Its investment objective is to achieve long-term capital appreciation, while preserving capital, by investing in public and private equity securities and debt instruments in India and Indian businesses or other businesses with customers, suppliers or businesses conducted in or dependent on India. The company operates through investing in the India segment and it earns income through the source of interest and dividend.
The stock was trading at $12.85 per share with a market cap of $1.92 billion on June 10. The Peter Lynch chart shows the company trading below its intrinsic value.
GuruFocus gives the company a financial strength rating of 4 out of 10 and a profitability rank of 3 out of 10. There are currently no severe warning signs issued for the company. The company has seen profitability take large swings over the last few years before tanking in 2020.
Pioneer Natural Resources
The fund boosted its Pioneer Natural Resources Co. (PXD, Financial) holding by 77.12% with the purchase of 1,419 shares. Throughout the quarter, the shares traded at an average price of $141.84, leading to a total estimated gain on the holding of 14.08% for the fund. Overall, the portfolio saw a 0.87% impact from the trade.
Headquartered in Irving, Texas, Pioneer Natural Resources is an independent oil and gas exploration and production company focusing on the Permian Basin in Texas. At year-end 2020, Pioneer's proven reserves were 1.3 billion barrels of oil equivalent with net production for the year of 367 mboe per day. Oil and natural gas liquids represented 81% of production.
On June 10, the stock was trading at $163.77 per share with a market cap of $39.99 billion. The shares are trading at a significantly overvalued according to the GF Value Line.
GuruFocus gives the company a financial strength rating of 5 out of 10, a profitability rank of 6 out of 10 and a valuation rank of 7 out of 10. There are currently two severe warning signs issued for a low Piotroski F-Score and a Beneish M-Score indicating the company may have manipulated its financials. The company’s net income fell off in 2020 as revenue took a hit due to decreased demand in oil worldwide.
Bonanza Creek Energy
The fund’s boost to its Bonanza Creek Energy Inc. (BCEI) holding rounds out the top five trades of the first quarter. The holding grew by 109.46% with the purchase of 10,691 shares. The shares traded at an average price of $22.34 per share during the quarter. Overall, the purchase had a 0.85% impact on the portfolio and GuruFocus estimates the total gain of the holding at 2.82%.
Bonanza Creek Energy is an exploration and production company focused on the extraction of oil and associated liquids-rich natural gas in the United States. Their operations are focused in the DJ Basin of Colorado and aims to develop the Niobrara and Codell formations.
As of June 10, the stock was trading at $48.48 per share with a market cap of $1.53 billion. The shares are trading at a significantly overvalued rating according to the GF Value Line.
GuruFocus gives the company a financial strength rating of 8 out of 10 and a profitability rank of 4 out of 10. There is currently one severe warning sign issued for a Beneish M-Score indicating the company may manipulate its financials. Strong operating and net margin percentages beat out the majority of competitors in the oil and gas industry despite the company’s lackluster profitability rank.
