As we approach the halfway point of 2022, several of Jeff Auxier (Trades, Portfolio)’s stocks are trading close to their 52-week lows.
While the market attempts to rebound from bear market lows as rising inflation and interest rates, high gas prices, the Russia-Ukraine conflict and supply shortages continue to act as headwinds, six stocks in the Auxier Asset Management’s equity portfolio have declined.
Similarly, after posting a 28.7% total return for 2021, the S&P 500 Index has fallen around 18.70% year to date.
The guru’s Oregon-based firm seeks to invest in “compelling, undervalued” companies that have, among other attributes, strong or improving fundamentals, consistent operating results, a significant competitive advantage, understandable products and a demonstrated ability to earn a high return on capital.
In his first-quarter commentary, Auxier discussed the effects inflation, interest rates and the Ukraine war are having on the market, noting that during these periods, “markets tend to be rangebound.” He wrote:
“A market like we are seeing this year reinforces our focus on buying enduring businesses with sticky demand, recurring revenues and strong pricing power. In this environment, knowing what you own and what it is worth is more important than ever as the market is punishing the grossly overpriced and shaky business models.”
According to 13F filings, his equity portfolio consisted of 171 stocks as of the three months ended March 31, which was valued at $630 million. Auxier’s holdings have posted mixed performances so far in 2022, with 14 of the top 20 positions declining.
Investors should be aware 13F filings do not give a complete picture of a firm’s holdings as the reports only include its positions in U.S. stocks and American depository receipts, but they can still provide valuable information. Further, the reports only reflect trades and holdings as of the most-recent portfolio filing date, which may or may not be held by the reporting firm today or even when this article was published.
As of June 28, six Auxier stocks that have collapsed to near their lowest prices in a year were Nike Inc. (NKE, Financial), Taiwan Semiconductor Manufacturing Co. Ltd. (TSM, Financial), Weyerhaeuser Co. (WY, Financial), Medtronic PLC (MDT, Financial), CSX Corp. (CSX, Financial) and Toyota Motor Corp. (TM, Financial).
Nike
Shares of Nike (NKE, Financial) have dropped about 31.64% over the past 12 months. After seeing a slight decline on Monday to close at $110.46, shares edged 0.57% higher on Tuesday morning. The stock is currently 3.71% above its annual low of $103.46.
Auxier owns 15,440 shares of the company, reflecting 0.33% of his equity portfolio.
The Beaverton, Oregon-based company, which is known for its sports apparel, athletic shoes and equipment, has a $167.09 billion market cap; its shares were trading around $105.73 on Tuesday with a price-earnings ratio of 28.02, a price-book ratio of 11.30 and a price-sales ratio of 3.66.
GuruFocus rated Nike’s financial strength 8 out of 10. In addition to a comfortable level of interest coverage, the company’s Altman Z-Score of 6.93 indicates it is in good standing even though assets are building up at a faster rate than revenue is growing. The return on invested capital also overshadows the weighted average cost of capital, meaning value is being created as the company grows.
The company’s profitability fared even better with a 9 out of 10 rating. Although the operating margin is in decline, the returns on equity, assets and capital top a majority of competitors. Nike also has a high Piotroski F-Score of 7 out of 9, indicating conditions are healthy, and consistent earnings and revenue growth contributed to a predictability rank of 3.5 out of five stars. According to GuruFocus research, companies with this rank return an average of 9.3% annually over a 10-year period.
Of the many gurus invested in Nike, Ken Fisher (Trades, Portfolio) has the largest stake with 0.53% of outstanding shares. Franks Sands and Spiros Segalas (Trades, Portfolio) also have significant positions in the stock.
Taiwan Semiconductor Manufacturing
Taiwan Semiconductor’s (CBRE) shares have tumbled around 30% over the past year. After posting a small gain to close at $85.88 on Monday, shares were down 0.40% on Tuesday morning. The stock is currently 4.48% above its yearly low of $82.75.
The investor owns 5,487 shares of the company, which represent 0.09% of his equity portfolio.
The Taiwanese manufacturer of semiconductor chips has a market cap of $444.53 billion; its shares were trading around $85.52 on Tuesday with a price-earnings ratio of 19.48, a price-book ratio of 5.58 and a price-sales ratio of 7.52.
Taiwan Semiconductor’s financial strength was rated 8 out of 10 by GuruFocus. Although the company has issued new long-term debt over the past three years, it is manageable due to a sufficient level of interest coverage. The robust Altman Z-Score of 6.67 indicates the company is in good standing even though assets are building up at a faster rate than revenue is growing. The ROIC also eclipses the WACC, so value is being created.
The company’s profitability scored a 10 out of 10 rating, driven by an expanding operating margin, strong returns that top a majority of industry peers and a moderate Piotroski F-Score of 5 out of 9, which indicates conditions are typical for a stable company. Taiwan Semiconductor’s steady revenue per share growth contributed to a four-star predictability rank. GuruFocus data shows companies with this rank return, on average, 9.8% annually.
Fisher has the largest stake in Taiwan Semiconductor with 0.51% of its outstanding shares. Sands, First Eagle Investment (Trades, Portfolio), Baillie Gifford (Trades, Portfolio), Ruane Cunniff (Trades, Portfolio), Ron Baron (Trades, Portfolio), Segalas, Sarah Ketterer (Trades, Portfolio) and Jeremy Grantham (Trades, Portfolio) also have notable holdings.
Weyerhaeuser
Shares of Weyerhaeuser (WY, Financial) have declined approximately 1.03% over the past 52 weeks. Recording a loss on Monday to close at $33.88, shares fell 0.71% on Tuesday morning. The stock is currently 4.60% above its annual low of $32.58.
The guru owns 13,672 shares of the company, accounting for 0.08% of his equity portfolio.
The forest products company headquartered in Seattle has a $25.16 billion market cap; its shares were trading around $33.65 on Tuesday with a price-earnings ratio of 9.42, a price-book ratio of 2.47 and a price-sales ratio of 2.35.
GuruFocus rated Weyerhaeuser’s financial strength 7 out of 10, driven by adequate interest coverage and a solid Altman Z-Score of 3.81. The ROIC also exceeds the WACC, so value creation is occurring.
The company’s profitability fared better, scoring a 9 out of 10 rating on the back of operating margin expansion, strong returns that top a majority of competitors and a high Piotroski F-Score of 9. Weyerhaeuser also has a one-star predictability rank. Based on GuruFocus data, companies with this rank return an annual average of 1.1%.
With a 2.04% stake, First Eagle is the company’s largest guru shareholder. Other top guru investors include the T Rowe Price Equity Income Fund (Trades, Portfolio), Diamond Hill Capital (Trades, Portfolio), Murray Stahl (Trades, Portfolio), Third Avenue Management (Trades, Portfolio), Ray Dalio (Trades, Portfolio), Fisher, Joel Greenblatt (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio).
Medtronic
Medtronic’s (MDT, Financial) shares have declined almost 30% over the past year. After posting a small gain to close at $90.49 on Monday, shares were down 1.25% on Tuesday. The stock is currently 5.12% above its 52-week low of $86.95.
Auxier owns 140,832 shares of the company, which make up 2.48% of his equity portfolio. It is also his seventh-largest holding.
The Irish medical device manufacturer with headquarters in Minneapolis, which produces pacemakers, defibrillators, heart valves and other devices, has a market cap of $118.71 billion; its shares were trading around $89.34 on Tuesday with a price-earnings ratio of 23.95, a price-book ratio of 2.26 and a price-sales ratio of 3.81.
Medtronic’s financial strength was rated 6 out of 10 by GuruFocus. In addition to sufficient interest coverage, the company has a high Altman Z-Score of 3.06. The ROIC also surpasses the WACC, so value is being created.
The company’s profitability scored an 8 out of 10 rating. Although the operating margin is in decline, it is supported by strong returns that top a majority of industry peers, a high Piotroski F-Score of 8 and a one-star predictability rank.
Of the gurus invested in Medtronic, Barrow, Hanley, Mewhinney & Strauss has the largest stake with 0.36% of its outstanding shares. Dodge & Cox, Diamond Hill Capital (Trades, Portfolio), Grantham, Hotchkis & Wiley, Fisher, Mairs and Power (Trades, Portfolio), the T. Rowe Price Equity Income Fund, Dalio and PRIMECAP Management (Trades, Portfolio) also have large holdings.
CSX
Shares of CSX (CSX, Financial) have retreated about 8% over the past 12 months. Recording a slight gain on Monday to close at $29.32, shares declined 0.39% on Tuesday. The stock is currently 2.71% above annual low of $28.44.
The guru owns 8,166 shares of the company, giving it 0.05% space in the equity portfolio.
The Jacksonville, Florida-based company, which provides rail-based freight transportation in the U.S., has a $63.55 billion market cap; its shares were trading around $29.21 on Tuesday with a price-earnings ratio of 16.60, a price-book ratio of 4.83 and a price-sales ratio of 4.97.
GuruFocus rated CSX’s financial strength 5 out of 10. Despite having sufficient interest coverage, the Altman Z-Score of 2.63 indicates the company is under some pressure. The ROIC is higher than the WACC, however, suggesting value is being created.
The company’s profitability fared better with a 9 out of 10 rating, boosted by an expanding operating margin, strong returns that outperform a majority of competitors and a high Piotroski F-Score of 7. Consistent earnings and revenue growth also contributed to a 2.5-star predictability rank. GuruFocus says companies with this rank return, on average, 7.3% annually.
CSX’s largest guru shareholder is Fisher with a 0.87% stake. Other top gurus investors include Daniel Loeb (Trades, Portfolio), Jim Simons (Trades, Portfolio)’ Renaissance Technologies, PRIMECAP and Steven Cohen (Trades, Portfolio).
Toyota Motor
Toyota’s (TM, Financial) shares have declined more than 10% over the past 52 weeks. After posting a small decline to close at $156.45 on Monday, shares rose 0.47% on Tuesday. The stock is currently 3.23% above its yearly low of $152.39.
The investor owns 1,590 shares of the company, which have 0.05% space in his equity portfolio.
The Japanese automaker has a market cap of $216.18 billion; its shares were trading around $157.27 on Tuesday with a price-earnings ratio of 10.39, a price-book ratio of 1.12 and a price-sales ratio of 0.96.
Toyota’s financial strength was rated 6 out of 10 by GuruFocus. Despite the company issuing new long-term debt in recent years, it is manageable due to solid interest coverage. The Altman Z-Score of 1.67, however, warns it could be in danger of bankruptcy since assets are building up at a faster rate than revenue is growing. The ROIC also outshines the WACC, so value is being created.
The company’s profitability also fared well with an 8 out of 10 rating, driven by operating margin expansion, strong returns that top a majority of industry peers and a high Piotroski F-Score of 7. Steady earnings and revenue growth contributed to Toyota’s three-star predictability rank. GuruFocus data shows companies with this rank return an average of 8.2% annually.
Fisher is the company’s largest guru shareholder with a 0.37% stake. Charles Brandes (Trades, Portfolio) also owns the stock.
