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The Top 5 Holdings of Villere & Co.

A glance at the portfolio of our upcoming Value Investing Live guest

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Graham Griffin
Oct 19, 2021

Summary

  • Villere & Co.'s century-old roots have led to strong profits from its top five holdings.
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Villere & Co. was established in 1911 and has been operated by the Villere family for over a century. The team invests selectively and independently—taking a long-term perspective. Their active, concentrated portfolio strategy allows them to pursue their most compelling investment ideas. Villere & Co. consistently applies a disciplined, proven investment process, refined over decades and tested in virtually every market environment.

Sandy Villere III, our upcoming Value Investing Live guest, joined the firm in 1999 when the firm launched its first mutual fund. Based on Villere and the team’s investment philosophy, the firm’s top five holdings include Visa Inc. (

V, Financial), Pool Corp. (POOL, Financial), Roper Technologies Inc. (ROP, Financial), Steris PLC (STE, Financial) and Teleflex Inc. (TFX, Financial).

Visa

The firm’s largest holding is Visa (

V, Financial) with a 6.03% weighting in the portfolio. The holding first started being tracked in the second quarter of 2013 and it contained 1.91 million shares. The firm grew the holding to a total of 2.28 million shares by the same quarter in 2014. Over the last several years, the holding has been consistently reduced as share prices continue to rise. GuruFocus estimates the total gain of the holding at 161.26%.

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Visa is the largest payment processor in the world. In fiscal 2020, it processed almost $9 trillion in purchase transactions. Visa operates in over 200 countries and processes transactions in over 160 currencies. Its systems are capable of processing over 65,000 transactions per second.

On Oct. 19, the stock was trading at $233.06 per share with a market cap of $511.51 billion. According to the GF Value Line, the stock is trading at a modestly overvalued rating.

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GuruFocus gives the company a financial strength rating of 6 out of 10, a profitability rank of 9 out of 10 and a valuation rank of 1 out of 10. There are currently no severe warning signs issued for the company, but several medium warning signs are listed, including slowing revenue per share growth. While Visa’s cash-to-debt ratio of 0.92 is poor compared to a median of 34.21, it ranks better than 64.93% of industry competitors.

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Top guru shareholders in Visa (

V, Financial) include Ken Fisher (Trades, Portfolio), Frank Sands (Trades, Portfolio), Warren Buffett (Trades, Portfolio), Pioneer Investments and Chuck Akre (Trades, Portfolio).

Pool

Falling just behind the firm’s top holding, Pool (

POOL, Financial) has secured a 6.01% weighting in the equity portfolio. The position has followed a similar path to the firm’s top position and grew through 2014 before slowly being sold off. Villere maintains 243,851 shares, approximately a tenth of the peak amount of shares, that have steadily grown in price throughout the last decade. Overall, the holding has a solid estimated gain of 159.98%.

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Pool distributes swimming pool supplies and related products. It sells national-brand and private-label products to its customers. The products include non-discretionary pool-maintenance products, like chemicals and replacement parts, as well as pool equipment, like packaged pools (kits to build swimming pools), cleaners, filters, heaters, pumps and lights. Customers include pool builders and remodelers, independent retail stores and pool repair and service companies.

As of Oct. 19, the stock was trading at $466.24 per share with a market cap of $18.70 billion. The GF Value Line shows the stock trading at a significantly overvalued rating.

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GuruFocus gives the company a financial strength rating of 6 out of 10, a profitability rank of 9 out of 10 and a valuation rank of 1 out of 10. There are currently two severe warning signs issued for assets growing faster than revenue and a Beneish M-Score indicating the company may manipulate its financials. The company’s operating and net margins both beat at least 84% of industry competitors and boost the company’s profitability rank.

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Pool (

POOL, Financial) shares are also maintained by Ken Fisher (Trades, Portfolio), Pioneer Investments, Jerome Dodson (Trades, Portfolio), Chuck Royce (Trades, Portfolio) and Ray Dalio (Trades, Portfolio).

Roper Technologies

Roper Technologies (

ROP, Financial) lands firmly as the firm’s third-largest holding with a 5.18% weighting in the portfolio. The holding was established in the fourth quarter of 2018 with the purchase of 222,995 shares. Over the last three years, the firm has consistently made incremental additions and reductions to the holding. Thanks to a low average purchase price compared to current share prices, the firm has a total estimated gain of 62.99% on the holding.

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Roper is a diversified technology company that operates out of four segments: application software; network software and systems; measurement and analytical solutions; and process technologies. The firm's culture emphasizes acquiring asset-light, cash-generative businesses. Roper then reinvests this excess cash in businesses that yield incrementally higher rates of return. Roper has now rotated a clear majority of its business from legacy industrial products into technology software in mature, niche markets with large quantities of deferred revenue.

The stock was trading at $472.54 per share with a market cap of $49.81 billion on Oct. 19. The stock is trading at a modestly overvalued rating according to the GF Value Line.

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GuruFocus gives the company a financial strength rating of 4 out of 10, a profitability rank of 8 out of 10 and a valuation rank of 1 out of 10. There are currently two severe warning signs issued for assets growing faster than revenue and a declining operating margin. Despite the company’s high profitability rank, a poor balance between the return on invested capital and the weighted average cost of capital indicates capital efficiency issues.

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Chuck Akre (Trades, Portfolio), Frank Sands (Trades, Portfolio), Pioneer Investments, Ron Baron (Trades, Portfolio) and the Global Franchise Portfolio also maintain Roper Technologies (ROP, Financial) shares.

Steris

The firm’s Steris (

STE, Financial) position was first established in 2016 with the purchase of 676,450 shares. The holding was sold out and then reacquired at the end of 2018. Share prices have continued to rise since the holding was established and are now well above the firm’s average purchase price. The holding now sits at a total estimated gain of 72.45%.

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Steris is an Ireland-domiciled medical device company focused on sterilization services and infection prevention. The company is the global leader in contract sterilization services, ensuring the safe delivery of single-use and implantable medical equipment to hospitals around the world. Additionally, Steris sells sterilizers, washer-disinfectors and other decontamination equipment and supplies for use by care provider facilities and in biopharma manufacturing sites. Domiciled in the United States before its 2015 inversion to Ireland, the firm continues to derive roughly 70% of revenue from its U.S. operations, 10% from the United Kingdom and the remaining 20% from other international regions.

On Oct. 19, the stock was trading at $227.28 per share with a market cap of $22.67 billion. According to the GF Value Line, the stock is trading at a modestly overvalued rating.

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GuruFocus gives the company a financial strength rating of 5 out of 10, a profitability rank of 8 out of 10 and a valuation rank of 2 out of 10. There is currently one severe warning sign issued for assets growing faster than revenue. The company’s cash flows have risen consistently over the last several years and are more than adequate to support dividend payouts.

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Top guru shareholders in Steris (

STE, Financial) include Al Gore (Trades, Portfolio), Ken Fisher (Trades, Portfolio), Pioneer Investments, Jim Simons (Trades, Portfolio) and Ray Dalio (Trades, Portfolio).

Teleflex

Rounding out the firm’s top five holdings is a position in Teleflex (

TFX, Financial). The 230,443 shares that were purchased at the end of 2018 traded at an average price of $252.72 during the quarter. The firm has racked up a total estimated gain of 43.39% as share prices rose in excess of $400 and even purchased additional shares through the first half of 2021.

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Teleflex is a Wayne, Pennsylvania-based manufacturer of hospital supplies and medical devices primarily in the bloodstream/vascular and surgical areas. The company reports results across seven segments: vascular access (26% of 2020 sales), interventional (15%), surgical (13%), anesthesia (12%), interventional urology (13%), original-equipment manufacturing (7%) and all other (14%). Geographic exposure for the business is primarily in the U.S., which accounts for 60% of revenue, with international markets making up the remainder.

As of Oct. 19, the stock was trading at $368.55 per share with a market cap of $17.24 billion. The GF Value Line shows the stock trading at a fair value rating.

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GuruFocus gives the company a financial strength rating of 5 out of 10, a profitability rank of 7 out of 10 and a valuation rank of 3 out of 10. There are two severe warning signs issued for assets growing faster than revenue and a declining operating margin. Revenue and net income grew consistently through 2019, but took a hit in 2020 amidst the pandemic.

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Teleflex (

TFX, Financial) shares are also owned by the Vanguard Health Care Fund (Trades, Portfolio), Ron Baron (Trades, Portfolio), Pioneer Investments, Ray Dalio (Trades, Portfolio) and Jerome Dodson (Trades, Portfolio).

Portfolio overview

As of July 19, the firm’s portfolio contained 59 stocks with four new holdings in 2U Inc. (

TWOU, Financial), Intel Corp. (INTC, Financial), Luminex Corp. (LMNX, Financial) and The Walt Disney Co. (DIS, Financial). The portfolio is valued at $1.86 billion and has seen a turnover rate of 3%.

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The top sectors represented are financial services (28.65%), health care (25.58%) and technology (17.78%).

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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.
The views of this author are solely their own opinion and are not endorsed or guaranteed by GuruFocus.com
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