Wallace Weitz (Trades, Portfolio), the portfolio manager of the Weitz Value Fund and Weitz Partners Value Fund, disclosed in a regulatory 13F filing that his firm’s top trades during the first quarter included a new holding in Live National Entertainment Inc. (LYV, Financial) and the closure of its positions in Charles Schwab Corp. (SCHW, Financial) and First Republic Bank (FRCB, Financial). The firm also trimmed its holdings in Fidelity National Information Services Inc. (FIS, Financial) and Axalta Coating Systems Ltd. (AXTA, Financial).
The Omaha, Nebraska-based firm’s investing strategy combines Benjamin Graham’s price sensitivity and insistence on a margin of safety with a conviction that qualitative factors that allow a company to have some control over its destiny can be more important than statistical measurements like historical book value or reported earnings.
As of March, the firm’s $1.72 billion 13F equity portfolio contains 51 stocks with a quarterly turnover ratio of 1%. The top four sectors in terms of weight are communication services, financial services, technology and health care, representing 22.97%, 22.90%, 22.87% and 9.63% of the equity portfolio.
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.
Live Nation Entertainment
Weitz purchased 61,500 shares of Live Nation Entertainment (LYV, Financial), giving the position 0.25% equity portfolio weight. Shares averaged $73.32 during the first quarter.
GuruFocus’ GF Value Line labeled the Beverly Hills, California-based live entertainment company a possible value trap based on its low price-to-GF Value ratio of 0.36 as of Friday and poor ranks for profitability and growth.
Live Nation Entertainment’s profitability ranks 4 out of 10 on several warning signs, which include a gross profit margin that underperforms more than 71% of global competitors. Additionally, the company had just one year of positive net income over the past decade; further, the company had negative income during seven of the past 12 quarters.
The company has a GF Score of 64 out of 100 based on a momentum rank of 7 out of 10, a financial strength rank of 5 out of 10, a growth rank of 2 out of 10 and a rank of 4 out of 10 for GF Value and profitability.
Charles Schwab
The firm sold all 726,426 shares of Charles Schwab (SCHW, Financial), slicing 3.46% of its equity portfolio.
Shares of Charles Schwab averaged $73.23 during the first quarter; the stock is significantly undervalued based on its price-to-GF Value ratio of 0.65 as of Friday.
The Westlake, Texas-based brokerage and wealth management company has a GF Score of 78 out of 100 based on a GF Value rank of 10 out of 10, a growth rank of 9 out of 10, a profitability rank of 7 out of 10, a financial strength rank of 3 out of 10 and a momentum rank of 2 out of 10.
The company’s equity-to-debt ratio of 0.07 underperforms more than 91% of global competitors, suggesting high leverage. Despite this, Charles Schwab’s high profitability rank is driven by several positive investing signs, which include a five-star business predictability rank, a high Piotroski F-score of 7 out of 9 and a return on equity that outperforms approximately 84% of global competitors.
First Republic Bank
The firm sold all 117,450 shares of First Republic Bank (FRCB, Financial), trimming 0.82% of its equity portfolio.
Weitz said in his shareholder letter that his firm sold the position in the high $30s, which he said was “suboptimal but kept a bad outcome from becoming worse.” Shares of First Republic Bank traded over the counter for just 30 cents as of Friday.
On May 1, JPMorgan Chase & Co. (JPM) received a substantial amount of First Republic Bank’s assets and deposits following the Federal Deposit Insurance Corp. seizing the embattled bank’s assets and deposits and auctioning them. As of April 13, First Republic had approximately $229.1 billion in total assets and $103.9 billion in total deposits, compared with $212.6 billion in total assets and $176.4 billion in total deposits as of December 2022.
First Republic Bank has a GF Score of 64 out of 100 based on a growth rank of 9 out of 10, a profitability rank of 6 out of 10, a financial strength rank of 3 out of 10, a GF Value rank of 2 out of 10 and a momentum rank of 1 out of 10.
Fidelity National Information Services
Weitz sold 219,400 shares of Fidelity National Information Services (FIS, Financial), chopping 32.46% of the position and 0.85% of its equity portfolio. Shares averaged $65.09 during the first quarter.
GuruFocus’ GF Value Line labeled the Jacksonville, Florida-based payment processing company a possible value trap based on the company’s low price-to-GF Value ratio of 0.41 as of Friday and low ranks for financial strength, growth and momentum.
The company’s low financial strength rank is driven by several warning signs, which include a low Altman Z-score of -0.49 and an interest coverage ratio that underperforms approximately 83% of global competitors.
The stock has a GF Score of 61 out of 100 based on a profitability rank of 6 out of 10, a growth rank of 1 out of 10 and a rank of 4 out of 10 for momentum, financial strength and GF Value.
Axalta Coating Systems
The firm sold 357,623 shares of Axalta Coating Systems (AXTA, Financial), slicing 68.64% of the position and 0.52% of its equity portfolio.
Shares of Axalta Coating Systems averaged $28.74 during the first quarter; the stock is fairly valued based on its price-to-GF Value ratio of 0.91 as of Friday.
The Glen Mills, Pennsylvania-based coating systems company has a GF Score of 75 out of 100 based on a momentum rank of 9 out of 10, a profitability rank of 7 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.
