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Kahn Brothers' Top 4 Buys in the 3rd Quarter

Firm of the late Irving Kahn reports quarterly portfolio

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Nov 04, 2021
Summary
  • Firm’s top trade is a boost in its Pfizer position.
  • Firm also boosts holdings in VOXX International, BP and GlaxoSmithKline.
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Kahn Brothers (Trades, Portfolio), the firm founded by the late Irving Kahn and his brothers Thomas Graham Kahn and Alan Kahn, disclosed in a regulatory portfolio filing that its top four buys during the third quarter were Pfizer Inc. (PFE, Financial), VOXX International Corp. (VOXX, Financial), BP PLC (BP, Financial) and GlaxoSmithKline PLC (GSK, Financial).

The New York-based firm employs a bottom-up stock investing approach and invests in undervalued, out-of-favor equity securities. Kahn applies a Benjamin Graham investing style and selects stocks based on assets, operating performance and long-term fundamental business prospects.

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As of Sept. 30, the firm’s $710 million equity portfolio contains 43 stocks with no new holdings and a turnover ratio of 3%. The top three sectors in terms of weight are financial services, health care and energy, representing 36.95%, 30.98% and 16.62% of the equity portfolio.

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Pfizer

The firm purchased 156,484 shares of Pfizer (

PFE, Financial), boosting the position by 18.98% and its equity portfolio by 0.95%.

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Shares of Pfizer averaged $44.27 during the third quarter; the stock is modestly undervalued based on Thursday’s price-to-GF Value ratio of 0.79.

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GuruFocus ranks the New York-based drug manufacturer’s profitability 6 out of 10 on the back of three-year revenue and earnings growth rates that are underperforming more than 70% of global competitors despite profit margins and returns outperforming more than 80% of global drug manufacturers.

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Gurus with holdings in Pfizer include the

Vanguard Health Care Fund (Trades, Portfolio), Pioneer Investments and Diamond Hill Capital (Trades, Portfolio).

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VOXX International

The firm invested in 566,136 shares of VOXX International (

VOXX, Financial), increasing the position by 40.81% and its equity portfolio by 0.91%.

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Shares of VOXX averaged $11.46 during the third quarter; the stock is significantly overvalued based on Thursday’s price-to-GF Value ratio of 1.66.

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GuruFocus ranks the Orlando-based audio hardware company’s financial strength 7 out of 10 on several positive investing signs, which include a high Piotroski F-score of 7 and debt ratios that outperform more than 83% of global competitors despite interest coverage ratios lagging 66% of global hardware companies.

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BP

The firm purchased 116,360 shares of BP (

BP, Financial), boosting the position by 5.37% and its equity portfolio by 0.45%.

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Shares of BP averaged $25.08 during the third quarter; the stock is fairly valued based on Thursday’s price-to-GF Value ratio of 0.98.

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GuruFocus ranks the U.K.-based energy company’s profitability 5 out of 10 on the back of profit margins and returns outperforming just over 57% of global competitors despite the company having a high Piotroski F-score of 7.

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GlaxoSmithKline

The firm purchased 56,249 shares of GlaxoSmithKline (

GSK, Financial), boosting the position by 4.34% and its equity portfolio by 0.30%.

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Shares of GlaxoSmithKline averaged $40.21 during the third quarter; the stock is fairly valued based on Thursday’s price-to-GF Value ratio of 1.01.

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GuruFocus ranks the U.K.-based drug manufacturer’s profitability 7 out of 10 on the back of operating margins increasing approximately 6.6% per year on average over the past five years and outperform more than 70% of global competitors.

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