The Causeway International Value (Trades, Portfolio) Fund recently disclosed its 13F portfolio updates for the fourth quarter of 2021, which ended on Dec. 31.
Founded in 2001, the fund is part of Sarah Ketterer (Trades, Portfolio)’s Causeway Capital Management. The portfolio managers of the Los Angeles-based fund utilize a bottom-up, research-based investing strategy to identify value opportunities from among mid-cap and large-cap companies mainly in developed international markets, though it may invest up to 15% of total assets in emerging markets. The fund’s strategy also prefers companies that return cash to shareholders through dividends or repurchases.
Based on its latest 13F report, the fund’s top five trades for the quarter were the sale of its Airbus SE (XPAR:AIR, Financial) holding, additions to its Shell PLC (XAMS:SHELL, Financial) and Fanuc Corp. (TSE:6954, Financial) positions and new buys for GlaxoSmithKline PLC (LSE:GSK, Financial) and Canadian National Railway Co (TSX:CNR, Financial).
Investors should be aware that 13F reports do not provide a complete picture of a guru’s holdings. They include only a snapshot of long equity positions in U.S.-listed stocks and American depository receipts as of the quarter’s end. They do not include short positions, non-ADR international holdings or other types of securities. However, even this limited filing can provide valuable information.
Airbus
The fund sold out of its 723,222-share holding in Airbus (XPAR:AIR, Financial), which previously took up 1.59% of the equity portfolio. During the quarter, shares traded for an average price of 109.64 euros ($121.26).
Airbus is an international aerospace company that primarily designs and manufactures commercial and military aircraft as well as satellites, launch vehicles, missiles and telecommunications and defense systems. It is headquartered in the Netherlands.
On March 3, shares of Airbus traded around 109.68 euros for a market cap of 86.19 billion euros. According to the GF Value chart, the stock is modestly overvalued.
The company has a GuruFocus financial strength rating of 6 out of 10 and a profitability rating of 5 out of 10. Warning signs include declining revenue per share and an Altman Z-Score of 1.38, indicating financial distress, while positive signs include return on equity and return on assets that have recovered to pre-Covid levels.
Shell
The fund increased its Shell (XAMS:SHELL, Financial) position by 140.42% for a total of 5,382,447 shares, adding 1.10% to the equity portfolio. Shares averaged 19.75 euros apiece during the quarter.
Shell is a British-Dutch multinational oil and gas giant headquartered in the U.K. It is involved in the exploration, production, refining, transport, distribution, marketing, power generation and trading aspects of the industry.
On March 3, shares of Shell traded around 24.60 euros for a market cap of 186.40 billion euros. According to the GF Value chart, the stock is modestly overvalued.
The company has a GuruFocus financial strength rating of 6 out of 10 and a profitability rating of 6 out of 10. The return on invested capital is lower than the weighted average cost of capital, which is a warning sign, but positive signs include operating and net margins that are higher than 59% and 65% of industry peers in the oil and gas sector.
Fanuc
The fund upped its stake in Fanuc (TSE:6954, Financial) by 41.9% for a total of 1,025,800 shares, impacting the equity portfolio by 1.04%. During the quarter, shares changed hands for around 23,513.60 Japanese yen ($203.71).
Fanuc is a leading group of robotics companies that supplies automation products for manufacturing, including robotics, CNCs and Motion Control and ROBOMACHINE machining centers. It is headquartered in Oshino, Yamanashi.
On March 3, shares of Fanuc traded around 20,600 yen for a market cap of 3.96 trillion yen. According to the GF Value chart, the stock is modestly undervalued.
The company has a GuruFocus financial strength rating of 10 out of 10 and a profitability rating of 8 out of 10. Warning signs include declining revenue and earnings per share, while positive signs include no long-term debt and a ROIC that typically surpasses WACC, indicating that growth is profitable.
GlaxoSmithKline
The fund established a new stake worth 2,217,388 shares in GlaxoSmithKline (LSE:GSK, Financial), giving it a 0.77% weight in the equity portfolio, after selling out of its previous holding in the stock in the first quarter of 2019. Shares averaged 15.26 British pounds ($20.35) apiece for the quarter.
GlaxoSmithKline is a British multinational pharmaceutical company. It is a major vaccine producer and has the world’s biggest consumer health care business, with a focus on tackling respiratory illnesses, infectious diseases and HIV. It plans to spin off the consumer health care business around mid-2022.
On March 3, shares of GlaxoSmithKline traded around 15.50 pounds for a market cap of 78.81 billion pounds. According to the GF Value chart, the stock is fairly valued.
The company has a GuruFocus financial strength rating of 4 out of 10 and a profitability rating of 8 out of 10. Warning signs include assets growing faster than revenue and a distressed Altman Z-Score of 1.57, while positive signs include a three-year revenue per share growth rate of 2.8% and a three-year Ebitda per share growth rate of 5.3%.
Canadian National Railway
The fund took a 366,300-share position in Canadian National Railway (TSX:CNR, Financial), giving the stock a 0.72% weight in the equity portfolio. During the quarter, shares traded for an average price of 160.21 Canadian dollars ($126.29).
Headquartered in Montreal, Canada, Canadian National Railway is a major freight railway spanning a 20,000-mile network across Canada as well as the Midwestern and Southern U.S. It is the largest Canadian railway and the only transcontinental network in North America.
On March 3, shares of Canadian National Railway traded around CA$157.90 for a market cap of CA$110.50 billion. According to the GF Value chart, the stock is modestly overvalued.
The company has a GuruFocus financial strength rating of 5 out of 10 and a profitability rating of 10 out of 10. Warning signs include a declining gross margin and a cash-debt ratio of 0.07, while positive signs include an operating margin of 41.92% and a net margin of 33.79%.
Portfolio overview
As of the quarter’s end, the Causeway International Value (Trades, Portfolio) Fund’s 13F equity portfolio consisted of 60 holdings valued at a total of $6.22 billion. The turnover rate was 9%.
The top holdings were Rolls-Royce Holdings PLC (LSE:RR., Financial) with 4.10% of the equity portfolio, UniCredit SpA (MIL:UCG, Financial) with 3.8% and Samsung Electronics Co. Ltd. (XKRX:005930, Financial) with 3.64%.
In terms of sector weighting, the fund was most invested in financial services, industrials and health care.
