ValueAct Holdings, the activist firm founded in 2000 by Jeff Ubben, disclosed last week that its top five trades during the second quarter included boosts to its holdings in Fiserv Inc. (FISV, Financial) and Insight Enterprises Inc. (NSIT, Financial) and reductions to its positions in Seagate Technology Holdings PLC (STX, Financial), Trinity Industries Inc. (TRN, Financial) and KKR & Co. Inc. (KKR, Financial).
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 June 30, the firm’s $9.02 billion equity portfolio contains 13 stocks, with one new position and a turnover ratio of 10%. The firm’s top four sectors in terms of weight are financial services, technology, consumer cyclical and real estate, representing 41.98%, 29.92%, 12.68% and 10.49% of the equity portfolio.
Fiserv
The firm purchased 5,300,200 shares of Fiserv (FISV, Financial), expanding the position by 616.30% and the equity portfolio by 6.28%. Shares averaged $116.37 during the second quarter; the stock is modestly undervalued based on Monday’s price-to-GF Value ratio of 0.91.
GuruFocus ranks the Brookfield, Wisconsin-based software company’s profitability 8 out of 10 on several positive investing signs, which include a Greenblatt return on capital that outperforms more than 81% of global competitors and profit margins that outperform over 66% of global software companies.
Other gurus with holdings in Fiserv include Dodge & Cox, Bill Nygren (Trades, Portfolio) and Sarah Ketterer (Trades, Portfolio).
Insight Enterprises
The firm purchased 1,743,690 shares of Insight Enterprises (NSIT, Financial), increasing the position by 158.52% and the equity portfolio by 2.08%. Shares averaged $100.96 during the second quarter; the stock is significantly overvalued based on Monday’s price-to-GF Value ratio of 1.43.
GuruFocus ranks the Tempe, Arizona-based software company’s profitability 7 out of 10 on several positive investing signs, which include a three-star business predictability rank and an operating margin that has increased approximately 6.7% per year on average over the past five years and is near a 10-year high of 3.44%.
Seagate Technology
The firm sold 5,634,153 shares of Seagate Technology (STX, Financial), curbing 24.48% of the position and 5.05% of its equity portfolio. Shares averaged $89.82 during the second quarter; the stock is significantly overvalued based on Monday’s price-to-GF Value ratio of 1.54.
GuruFocus ranks the Dublin, Ireland-based hard disk drive company’s profitability 8 out of 10 on several positive investing signs, which include a high Piotroski F-score of 7 and profit margins that outperform more than 80% of global competitors.
Trinity
The firm sold 8.1 million shares of Trinity Industries (TRN, Financial), knocking off 35.06% of the position and 2.69% of its equity portfolio. Shares averaged $28.20 during the second quarter; the stock is significantly overvalued based on Monday’s price-to-GF Value ratio of 1.71.
GuruFocus ranks the Dallas-based railroad company’s financial strength 2 out of 10 on several warning signs, which include a weak Altman Z-score of 0.77 and interest coverage and debt ratios that underperform more than 90% of global competitors.
KKR
The firm sold 4,364,546 shares of KKR (KKR, Financial), discarding 13.82% of the position and 2.49% of its equity portfolio. Shares averaged $55.32 during the second quarter; the stock is modestly undervalued based on Monday’s price-to-GF Value ratio of 0.81.
GuruFocus ranks the New York-based asset management company’s financial strength 3 out of 10 on several warning signs, which include a weak Altman Z-score of 0.53 and interest coverage and debt ratios that are underperforming more than 80% of global competitors.
