Get Premium to unlock powerful stock data

Arnold Van Den Berg's 5 Most Profitable Holdings

Several energy companies make the list

Author's Avatar
Oct 26, 2021
Summary
  • The guru's most profitable holdings all see a total estimated gain in excess of 100%.
Article's Main Image

Arnold Van Den Berg (Trades, Portfolio), our upcoming Value Investing Live guest, began his investing career in 1968 and founded Century Management Financial Advisors in 1974. Today, he serves as the company's CEO and co-chief investment officer where he works side by side with son, Scott Van Den Berg (president and portfolio manager), and son-in-law, Jim Brilliant (co-chief investment officer and portfolio manager).

Van Den Berg applies value investment strategies as his investment philosophy. His investment research seeks to determine the appraised value of a company, often referred to as intrinsic value. Investments are then made at a significant discount, normally 40% to 65% below the company's current intrinsic value. This is his margin of safety. He usually holds 35 to 40 companies when fully invested, and invests primarily in U.S.-headquartered companies.

The guru’s strategy has generated five holdings in excess of 100% total estimated gain, including Goodrich Petroleum Corp. (

GDP, Financial), DMC Global Inc. (BOOM, Financial), Danaher Corp. (DHR, Financial), San Juan Basin Royalty Trust (SJT, Financial) and Diamondback Energy Inc. (FANG, Financial).

Goodrich Petroleum

Van Den Berg established a holding in Goodrich Petroleum (

GDP, Financial) in the first quarter of 2021. The second quarter saw the holding get a 102.11% boost with the purchase of an additional 21,199 shares, which have landed it at a 0.12% weighting in the equity portfolio. At an average price paid per share of $10.66, the holding has racked up a solid total estimated gain of 112.75%.

1453034957491634176.png

Goodrich Petroleum is an independent oil and gas producer in the United States. The company operates in the Tuscaloosa Marine Shale region, with minor operations in the Eagle Ford and Haynesville shales. The vast majority of exploitation and development efforts on natural gas are carried out in the core of the Haynesville Shale in North Louisiana.

On Oct. 26, the stock was trading at $22.60 per share with a market cap of $307.56 million. According to the GF Value Line, the stock is trading at a significantly overvalued rating.

1453035839780257792.png

GuruFocus gives the company a financial strength rating of 3 out of 10 and a profitability rank of 4 out of 10. There are currently three severe warning signs issued for new long-term debt, poor financial strength and an Altman Z-Score placing the company in the distress column. The company’s cash-to-debt ratio of 0.01 ranks the company worse than 95.47% of industry competitors.

1453037098310533120.png

Jim Simons (Trades, Portfolio) also maintains a position in Goodrich Petroleum (GDP, Financial).

DMC Global

The guru first established his holding in DMC Global (

BOOM, Financial) in the fourth quarter of 2016. Since then, Van Den Berg has made regular reductions in the holding, cutting it from 1.35 million shares to 216,147 shares and a 2.39% weighting in the equity portfolio. Over the last five years, the company’s share prices have grown significantly and Van Den Berg has landed at a total estimated gain of 145.89% on the holding.

1453063086335557632.png

DMC Global operates a diversified family of technical product and process businesses serving the energy, industrial and infrastructure markets. Its business is organized into two segments: NobelClad and DynaEnergetics. NobelClad is involved in the production of explosion-welded clad metal plates for use in the construction of corrosion-resistant industrial processing equipment and specialized transition joints. DynaEnergetics, which is the key revenue driver, designs manufactures and distributes products utilized by the oil and gas industry principally for the perforation of oil and gas wells. Its sales are from products shipped from its manufacturing facilities and distribution centers located in the United States, Germany, Canada and Russia.

As of Oct. 26, the stock was trading at $43.47 per share with a market cap of $813.97 million. The GF Value Line shows the stock trading at a significantly overvalued rating.

1453063893466447872.png

GuruFocus gives the company a financial strength rating of 8 out of 10, a profitability rank of 6 out of 10 and a valuation rank of 1 out of 10. There are currently no severe warning signs issued for the company. A medium warning sign is issued for the weighted average cost of capital overshadowing the return on invested capital, which took a sharp turn last year.

1453064834957672448.png

Danaher

A position in Danaher (

DHR, Financial) has also performed exceptionally well within Van Den Berg’s portfolio. The position was established in 2017 with the purchase of 110,920 shares at an average price of $83.44 per share. The guru has made consistent reductions to the position with one small addition in the first quarter of 2021. The position has secured a total estimated gain of 150.49% with share prices in excess of $300.

1453067974301941760.png

In 1984, Danaher's founders transformed a real estate organization into an industrial-focused manufacturing company. Through a series of mergers, acquisitions and divestitures, including the Fortive separation in 2016, Danaher now focuses primarily on manufacturing scientific instruments and consumables in three segments: life sciences, diagnostics and environmental and applied solutions. In late 2019, Danaher separated from its dental business through an initial public offering process, and in early 2020, it acquired GE's Biopharma business, now called Cytiva, which added to its life sciences segment.

The stock was trading at $307.96 per share with a market cap of $219.85 billion on Oct. 26. A modestly overvalued rating is given to the stock by the GF Value Line.

1453069437543612416.png

GuruFocus gives the company a financial strength rating of 6 out of 10, profitability rank of 7 out of 10 and a valuation rank of 2 out of 10. There are currently no severe warning signs issued for the company, but investors will want to keep an eye on the six medium warning signs that are listed. The company’s above-average profitability rank is supported by a strong net margin and a return on capital that exceeds 91.46% of industry competitors.

1453071289832144896.png

Danaher (

DHR, Financial) is also owned by the Vanguard Health Care Fund (Trades, Portfolio), Pioneer Investments, Ken Fisher (Trades, Portfolio), Daniel Loeb (Trades, Portfolio) and Chuck Akre (Trades, Portfolio).

San Juan Basin Royalty Trust

At a 0.02% weighting in the portfolio, a holding in the San Juan Basin Royalty Trust (

SJT, Financial) has ballooned into Van Den Berg’s second-most profitable holding. The holding was established with the purchase of 12,500 shares and saw a small addition of 3,000 shares in the fourth quarter of 2020. Share prices have more than doubled since the holding was first established and it shows a total estimated gain of 166.33%.

1453076352730365952.png

San Juan Basin Royalty Trust is an energy sector royalty trust in the United States. It owns approximately 75% net profit interest in a large number of natural gas properties in the San Juan Basin of New Mexico. About 98% of the royalties San Juan collects come from natural gas, with the rest coming from oil.

On Oct. 26, the stock was trading at $7.06 per share with a market cap of $328.60 million. According to the GF Value Line, the stock is trading at a significantly overvalued rating.

1453079178365861888.png

GuruFocus gives the company a financial strength rating of 9 out of 10 and a profitability rank of 7 out of 10. There are currently two severe warning signs issued for a Beneish M-Score indicating the company may manipulate its financials and declining revenue per share. In line with the severe warning sign, the company’s revenue has decreased consistently over the past decade.

1453082189129547776.png

First Eagle Investment (Trades, Portfolio) and Michael Price (Trades, Portfolio) also maintain positions in the San Juan Basin Royalty Trust (SJT, Financial).

Diamondback Energy

Rounding out Van Den Berg’s most profitable holdings is Diamondback Energy (

FANG, Financial). The holding was established in the third quarter of 2020 and the 146,120 shares were purchased at an average price of $38.05. Overall, the holding has grown to a staggering total estimated gain of 190.28%.

1453084384428261376.png

Diamondback Energy is an independent oil and gas producer in the United States. The company operates exclusively in the Permian Basin. At the end of 2020, the company reported net proven reserves of 1.3 billion barrels of oil equivalent. Net production averaged about 300,000 barrels per day in 2020, at a ratio of 60% oil, 20% natural gas liquids and 20% natural gas.

As of Oct. 26, the stock was trading at $112.02 per share with a market cap of $20.23 billion. The GF Value Line shows the stock trading at a fair value rating.

1453084735441174528.png

GuruFocus gives the company a financial strength rating of 4 out of 10 and a profitability rank of 6 out of 10. There are currently four severe warning signs issued for assets growing faster than revenue, a Beneish M-Score indicating the company may manipulate its financials, a Sloan ratio indicating poor quality of earnings and an Altman Z-Score placing the company in the distress column. 2020 saw the company report positive free cash flow for the first time in the last decade.

1453085849230213120.png

Other top guru shareholders in Diamondback Energy (

FANG, Financial) include Bill Nygren (Trades, Portfolio), Pioneer Investments, Ken Heebner (Trades, Portfolio), Steven Cohen (Trades, Portfolio) and Ken Fisher (Trades, Portfolio).

Portfolio overview

Van Den Berg’s portfolio contained 74 stocks and saw seven new holdings added during the last quarter. It was valued at $508 million and has seen a turnover rate of 7%. Top holdings include Berkshire Hathaway Inc. (

BRK.B, Financial), Pioneer Natural Resources Co. (PXD, Financial), Alphabet Inc. (GOOG, Financial), Facebook Inc. (FB, Financial) and Brookfield Asset Management Inc. (BAM, Financial).

1453087869781639168.png

The top represented sectors are financial services (23.06%), energy (17.85%) and communication services (14.24%).

1453088177035378688.png

Join GuruFocus for Value Investing Live featuring

Arnold Van Den Berg (Trades, Portfolio) and a presentation on some of the top headlines on today’s market.

Also check out:

Disclosures

I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours. Click for the complete disclosure
Rating:
4 / 5 (1 votes)
1 Comments
Load More
Author's Avatar
WRITTEN BY

GuruFocus Screeners

Related Articles

Q&A with Gurus