The T Rowe Price Equity Income Fund (Trades, Portfolio), part of Baltimore-based T. Rowe Price Group Inc. (TROW), disclosed this week that is top sells during the third quarter included the closure of its positions in Citrix Systems Inc. (CTXS, Financial) and Occidental Petroleum Corp. (OXY, Financial) and reductions to its holdings of Xcel Energy Inc. (XEL, Financial), Loews Corp. (L, Financial) and United Parcel Service Inc. (UPS, Financial).
Managed by John Linehan, the fund seeks long-term capital appreciation by investing in undervalued companies that have a strong record of paying dividends.
As of September, the fund’s $15.37 billion equity portfolio contains 115 stocks, with eight new positions and a quarterly turnover ratio of 5%. The topfour sectors in terms of weight are financial services, health care, industrials and utilities, representing 21.13%, 18.22%, 10.11% and 9.58% of the equity portfolio.
Investors should be aware that portfolio updates for mutual funds do not necessarily provide a complete picture of a guru’s holdings. The data is sourced from the quarterly updates on the website of the fund(s) in question. This usually consists of long equity positions in U.S. and foreign stocks. All numbers are as of the quarter’s end only; it is possible the guru may have already made changes to the positions after the quarter ended. However, even this limited data can provide valuable information.
Citrix Systems
The fund sold all 990,00 shares of Citrix Systems (CTXS, Financial), trimming 0.58% of its equity portfolio.
Shares of Citrix Systems averaged $102.42 during the third quarter; the stock is modestly undervalued based on its price-to-GF Value ratio of 0.83 as of Wednesday.
The Fort Lauderdale, Florida-based virtualization software company has a GF Score of 80 out of 100 based on a profitability rank of 8 out of 10, a growth rank of 7 out of 10, a GF Value rank of 6 out of 10, a financial strength rank of 5 out of 10 and a momentum rank of 3 out of 10.
Citrix Systems’ profitability ranks 8 out of 10 on the back of operating margins outperforming more than 80% of global competitors despite declining approximately 12% per year on average over the past five years.
Gurus with holdings in Citrix Systems include Jeremy Grantham (Trades, Portfolio)’s GMO, Mario Gabelli (Trades, Portfolio)’s GAMCO Investors Inc. (GBL) and Prem Watsa (Trades, Portfolio)’s Fairfax Financial Ltd. (TSX:FFH).
Occidental Petroleum
The fund sold all 730,000 shares of Occidental Petroleum (OXY, Financial), reducing its equity portfolio by 0.26%.
Shares of Occidental Petroleum averaged $64.01 during the third quarter; the stock is significantly overvalued based on its price-to-GF Value ratio of 1.32 as of Wednesday.
The Houston-based energy exploration and production company has a GF Score of 63 out of 100 based on a profitability rank of 7 out of 10, a growth rank of 5 out of 10, a financial strength rank of 4 out of 10, a momentum rank of 3 out of 10 and a GF Value rank of 1 out of 10.
Occidental Petroleum’s profitability ranks 7 out of 10 on several positive investing signs, which include a high Piotroski F-score of 7 out of 9 and an operating margin that outperforms more than 76% of global competitors.
Warren Buffett (Trades, Portfolio)’s Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial) owns more than 278 million shares of Occidental. According to GuruFocus Real-Time Picks, a Premium feature of GuruFocus based on SEC 13-D, 13-G and Form 4 filings, Berkshire purchased 5,985,190 shares of Occidental on Sept. 28.
Xcel Energy
The fund sold 1,010,000 shares of Xcel Energy (XEL, Financial), chopping 80.16% of the position and 0.42% of its equity portfolio.
Shares of Xcel Energy averaged $72.80 during the third quarter; the stock is modestly undervalued based on its price-to-GF Value ratio of 0.83.
The Minneapolis-based electricity company has a GF Score of 80 out of 100: Even though the company’s financial strength ranks just 3 out of 10, Xcel Energy has a momentum rank of 6 out of 10 and a rank of 7 out of 10 for profitability, growth and GF Value.
Xcel Energy’s profitability ranks 7 out of 10 on several positive investing signs, including 10 years of positive operating income over the past decade and gross profit margins outperforming approximately 70% of global competitors.
Loews
The firm sold 1,060,000 shares of Loews (L, Financial), trimming 26.04% of the position and 0.38% of its equity portfolio.
Shares of Loews averaged $56.12 during the third quarter; the stock is fairly valued based on its price-to-GF Value ratio of 0.94 as of Wednesday.
The New York-based based property and casualty insurance company has a GF Score of 73 out of 100 based on a momentum rank of 8 out of 10, a profitability rank of 6 out of 10, a GF Value rank of 5 out of 10 and a rank of 4 out of 10 for growth and financial strength.
United Parcel Service
The firm sold 300,000 shares of United Parcel Service (UPS, Financial), trimming 12.82% of the position and 0.33% of its equity portfolio.
Shares of UPS averaged $189.34 during the third quarter; the stock is modestly undervalued based on its price-to-GF Value ratio of 0.83 as of Wednesday.
The Atlanta-based logistics company has a GF Score of 93 out of 100, driven by a rank of 9 out of 10 for profitability, growth and momentum despite financial strength and GF Value ranking just between 6 out of 10 and 7 out of 10.
