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ValueAct Holdings' Top 5 Trades of the 3rd Quarter

Activist firm boosts holding in Fiserv and curbs Citigroup stake

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Nov 30, 2021
Summary
  • ValueAct continues to boost its Fiserv holding.
  • Firm exits stake in TopBuild.
  • Firm also reduces positions in Citigroup, KKR & Co. and CBRE Group.
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ValueAct Holdings LP (Trades, Portfolio), the activist firm founded by Jeff Ubben in 2000, disclosed in a regulatory portfolio filing that its top five trades during the third quarter included a position boost in Fiserv Inc. (

FISV, Financial), the closure of its position in TopBuild Corp. (BLD, Financial) and reductions to its stakes in Citigroup Inc. (C, Financial), KKR & Co. (KKR, Financial) and CBRE Group Inc. (CBRE, Financial).

The San Francisco-based firm seeks long-term capital appreciation by acquiring stakes in fundamentally undervalued companies and pushing for management changes to unlock shareholder value. Ubben left the firm in June 2020 to pursue social investing, having stepped down as chief investment officer in 2017.

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As of Sept. 30, the firm’s $8.63 billion equity portfolio contains 13 stocks, with one new position and a turnover ratio of 7%. The top-three sectors in terms of weight are technology, financial services and consumer cyclical, representing 34.86%, 31.66% and 12.56% of the equity portfolio.

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Fiserv

The firm purchased 4,775,001 shares of Fiserv (

FISV, Financial), boosting the position by 77.51% and its equity portfolio by 6%.

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Shares averaged $111.75 during the third quarter; the stock is modestly undervalued based on Tuesday’s price-to-GF Value ratio of 0.77.

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GuruFocus ranks the Brookfield, Wisconsin-based payment processing software company’s profitability 8 out of 10 on several positive investing signs, which include a high Piotroski F-score of 8 and profit margins that outperform more than 70% of global competitors.

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Other gurus with holdings in Fiserv include Dodge & Cox and

Bill Nygren (Trades, Portfolio)’s Oakmark Fund.

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TopBuild

ValueAct sold all 480,000 shares of TopBuild (

BLD, Financial), paring 1.05% of its equity portfolio.

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Shares of TopBuild averaged $210.02 during the third quarter; the stock is significantly overvalued based on Tuesday’s price-to-GF Value ratio of 1.78.

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GuruFocus ranks the Daytona Beach, Florida-based construction company’s profitability 7 out of 10 on several positive investing signs, which include a high Piotroski F-score of 8 and profit margins and returns that are outperforming more than 82% of global competitors.

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Citigroup

The firm sold 6,899,597 shares of Citigroup (

C, Financial), chopping 33.26% of the stake and 5.41% of its equity portfolio.

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Shares of Citigroup averaged $69.93 during the third quarter; the stock is modestly undervalued based on Tuesday’s price-to-GF Value ratio of 0.90.

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GuruFocus ranks the New York-based bank’s financial strength 3 out of 10 on the back of debt ratios underperforming over 75% of global competitors despite the company having a high Piotroski F-score of 7.

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KKR & Co.

The firm sold 3,165,777 shares of KKR & Co. (

KKR, Financial), curbing 11.63% of the position and 2.08% of its equity portfolio.

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Shares of KKR averaged $62.78 during the third quarter; the stock is modestly undervalued based on Tuesday’s price-to-GF Value ratio of 0.85.

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GuruFocus ranks the New York-based asset management company’s financial strength 3 out of 10 on several warning signs, which include a low Altman Z-score of 0.5 and debt ratios that underperform over 70% of global competitors.

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CBRE Group

The firm sold 1 million shares of CBRE Group (

CBRE, Financial), slicing 9.77% of the holding and 0.95% of its equity portfolio.

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Shares of CBRE averaged $92.90 during the third quarter; the stock is significantly overvalued based on Tuesday’s price-to-GF Value ratio of 1.50.

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GuruFocus ranks the Los Angeles-based real estate company’s profitability 8 out of 10 on several positive investing signs, which include a four-star business predictability rank and a high Piotroski F-score of 7.

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