Wallace Weitz Chops Redwood Trust and Aon Positions in 3rd Quarter

Benjamin Graham-style investor releases quarterly portfolio

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Nov 16, 2021
Summary
  • Weitz slices stakes in Redwood Trust and Berkshire holding Aon.
  • Firm also exits position in First Hawaiian.
  • Firm boosts holdings in Dun & Bradstreet and CoStar Group.
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Wallace Weitz (Trades, Portfolio), manager of the Weitz Value Fund and Weitz Partners Value Fund, disclosed in a regulatory portfolio filing that his firm’s top five trades during the third quarter included reductions to its holdings in Redwood Trust Inc. (RWT, Financial) and Aon PLC (AON, Financial), the closure of its stake in First Hawaiian Inc. (FHB, Financial) and boosts to its positions in Dun & Bradstreet Holdings Inc. (DNB, Financial) and CoStar Group Inc. (CSGP, Financial).

Weitz’s Omaha, Nebraska-based firm combines Benjamin Graham’s price sensitivity and insistence on a margin of safety with a conviction in which qualitative factors that allow a company to have control over its destiny can be more important than statistical measurements like historical book value and reported earnings.

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As of Sept. 30, Weitz’s $2.36 billion equity portfolio contains 55 stocks with a turnover ratio of 1%. The top four sectors in terms of weight are financial services, communication services, technology and consumer cyclical, representing 29.06%, 26.05%, 14.72% and 9.30% of the equity portfolio.

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Redwood Trust

Weitz sold 410,000 shares of Redwood Trust (

RWT, Financial), chopping 76.64% of the stake and 0.21% of its equity portfolio. Shares averaged $12.24 during the third quarter.

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GuruFocus ranks the Mill Valley, California-based real estate investment trust’s financial strength 2 out of 10 on several warning signs, which include cash-to-debt and debt-to-equity ratios that underperform more than 70% of global competitors.

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Aon

The firm sold 27,790 shares of Aon (

AON, Financial), slicing 6.57% of the position and 0.28% of its equity portfolio. Shares averaged $268.54 during the third quarter.

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GuruFocus ranks the U.K.-based insurance company’s financial strength 4 out of 10 on several warning signs, which include a low Altman Z-score of 1.94 and interest coverage and debt ratios that underperform more than 79% of global competitors.

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Gurus with holdings in Aon include

Warren Buffett (Trades, Portfolio)’s Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial) and First Pacific Advisors (Trades, Portfolio).

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First Hawaiian

Weitz sold 150,000 shares of First Hawaiian (

FHB, Financial), trimming 0.18% of its equity portfolio.

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Shares of First Hawaiian averaged $27.82 during the third quarter; the stock is fairly valued based on Tuesday’s price-to-GF Value ratio of 1.06.

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According to GuruFocus, the Honolulu-based bank’s cash-to-debt and debt-to-equity ratios outperform more than 80% of global competitors.

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Dun & Bradstreet

The firm purchased 260,000 shares of Dun & Bradstreet (

DNB, Financial), boosting the position by 16.5% and its equity portfolio by 0.19%. Shares averaged $19.07 during the third quarter.

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GuruFocus ranks the Short Hills, New Jersey-based software company’s financial strength 3 out of 10 on several warning signs, which include interest coverage and debt ratios that are underperforming more than 82% of global competitors.

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CoStar Group

The firm purchased 40,000 shares of CoStar Group (

CSGP, Financial), increasing the position by 4.45% and its equity portfolio by 0.15%.

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Shares of CoStar averaged $86.40 during the third quarter; the stock is fairly valued based on Tuesday’s price-to-GF Value ratio of 0.97.

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GuruFocus ranks the Northwest, Washington-based real estate company’s financial strength 7 out of 10 on several positive investing signs, which include a strong Altman Z-score of 14 and interest coverage and debt ratios that outperform more than 66% of global competitors.

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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
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