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Richard Snow's Top 5 Trades of the 2nd Quarter

Snow Capital releases quarterly portfolio

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James Li
Aug 24, 2021

Summary

  • Top new buys include Lumentum and Check Point Software Technologies.
  • Firm also increased its holdings in Cinemark and Hasbro.
  • Firm reduces position in NetApp.
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Richard Snow (Trades, Portfolio), founder of Snow Capital, disclosed this week that his firm’s top five trades during the second quarter included new buys in Lumentum Holdings Inc. (LITE, Financial) and Check Point Software Technologies Ltd. (CHKP, Financial), position boosts in Cinemark Holdings Inc. (CNK, Financial) and Hasbro Inc. (HAS, Financial) and a reduction in NetApp Inc. (NTAP, Financial).

Snow began his career investing the proceeds from the sale of the Snow family business. Through its contrarian investing approach, the firm seeks companies that are financially strong, but with stock prices that are depressed due to temporary or intermediate-term difficulties.

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As of June 30, the firm’s $703 million equity portfolio contains 138 stocks, with 12 new positions and a turnover ratio of 10%. The top four sectors in terms of weight are financial services, technology, consumer cyclical and industrials, representing 30.06%, 12.10%, 11.97% and 10.67% of the equity portfolio.

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Lumentum Holdings

Snow purchased 142,308 shares of Lumentum Holdings (

LITE, Financial), giving the position 1.66% weight in the equity portfolio. Shares averaged $84.27 during the second quarter; the stock is modestly overvalued based on Tuesday’s price-to-GF Value ratio of 1.23.

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GuruFocus ranks the San Jose, California-based optic hardware company’s financial strength 6 out of 10 on the back of a strong Altman Z-score of 4.06 despite interest coverage and debt ratios underperforming more than 73% of global competitors.

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Other gurus with holdings in Lumentum include

ValueAct Holdings LP (Trades, Portfolio) and Ken Fisher (Trades, Portfolio).

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Check Point Software

The firm purchased 60,604 shares of Check Point Software (

CHKP, Financial), giving the position 1% weight in the equity portfolio. Shares averaged $117.82 during the second quarter; the stock is fairly valued based on Tuesday’s price-to-GF Value ratio of 0.92.

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GuruFocus ranks the Israeli cybersecurity software company’s financial strength 8 out of 10 on several positive investing signs, which include a high Piotroski F-score of 8, a strong Altman Z-score of 8 and interest coverage ratios that outperform more than 77% of global competitors.

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Other gurus with holdings in Check Point Software include

John Rogers (Trades, Portfolio)’ Ariel Investment and Jim Simons (Trades, Portfolio)’ Renaissance Technologies.

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Cinemark

Snow purchased 479,854 shares of Cinemark (

CNK, Financial), expanding the position by 417.09% and the equity portfolio by 1.50%. Shares averaged $22.15 during the second quarter; the stock is significantly overvalued based on Tuesday’s price-to-GF Value ratio of 1.72.

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GuruFocus ranks the Plano, Texas-based movie company’s financial strength 2 out of 10 on several warning signs, which include a low Piotroski F-score of 2 and a debt-to-equity ratio that underperforms more than 95% of global competitors.

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Hasbro

Snow purchased 66,115 shares of Hasbro (

HAS, Financial), boosting the position 174.02% and the equity portfolio 0.89%. Shares averaged $96.09 during the second quarter; the stock is fairly valued based on Tuesday’s price-to-GF Value ratio of 0.91.

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GuruFocus ranks the Pawtucket, Rhode Island-based board game producer’s financial strength 4 out of 10: Although the company has a solid Piotroski F-score of 6, Hasbro’s interest coverage and debt ratios underperform more than 62% of global competitors.

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NetApp

Snow sold 137,940 shares of NetApp (

NTAP, Financial), slashing 79.53% of the position and 1.46% of its equity portfolio. Shares averaged $77.95 during the second quarter; the stock is modestly overvalued based on Tuesday’s price-to-GF Value ratio of 1.19.

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GuruFocus ranks the Sunnyvale, California-based data management hardware company’s financial strength 5 out of 10 on the back of a solid Piotroski F-score of 6 despite a modestly weak Altman Z-score of 2.59 and an interest coverage ratio that underperforms approximately 60% of global competitors.

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Disclosures

I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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