Jeff Auxier (Trades, Portfolio) released his portfolio for the first quarter in May.
The guru’s Oregon-based firm, Auxier Asset Management, 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 quarterly commentary, Auxier discussed the recent bank failures, noting, “A big culprit was the stretch for yield by many banks into mortgage-backed securities.” He wrote:
“I remember back in 1986 after rates had plummeted there was an investor rush into GNMA pools. Many were shocked at the large losses that resulted as interest rates rose sharply in 1987. This serves as a reminder of the value of diligent, rigorous risk management. So often today we see automated models that substitute for nitty-gritty detail. Jim Sinegal, the founder of Costco would preach ‘retail is detail.; The same kind of attention to detail is critical just to survive in today’s competitive business environment as only 25% of U.S. companies are still operating after 15 years. In less than 36 hours Silicon Valley Bank, a franchise and reputation built over 40 years, was wiped out. This company had 22 buy recommendations just prior to the failure.”
Keeping these considerations in mind, 13F filings show Auxier established three new positions during the three-month period ended March 31, sold out of five stocks and added to or trimmed a slew of other existing investments. His most notable trades included increased bets on Lowe’s Companies Inc. (LOW, Financial), CVS Health Corp. (CVS, Financial) and Unilever PLC (UL, Financial) as well as reductions to the Mastercard Inc. (MA, Financial) and Microsoft Corp. (MSFT, Financial) holdings.
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.
Lowe’s Companies
Auxier boosted the Lowe’s (LOW, Financial) position by 11.82%, investing in 4,305 shares. The transaction impacted the equity portfolio by 0.15%. The stock traded for an average price of $203.15 per share during the quarter.
He now holds a total of 40,733 shares, which occupy 1.41% of the equity portfolio. GuruFocus estimates Auxier has gained 271.47% on the long-held investment.
The Mooresville, North Carolina-based retailer, which specializes in home improvement products, has a $121.88 market cap; its shares were trading around $208 on Monday with a price-earnings ratio of 20.25 and a price-sales ratio of 1.33.
The GF Value Line suggests the stock is modestly undervalued currently based on its historical ratios, past financial performance and analysts’ future earnings projections.
At 93 out of 100, the GF Score indicates the company has high outperformance potential. While Lowe’s received high ratings for profitability, growth and momentum, its financial strength and value ranks were more moderate.
Of the gurus invested in Lowe’s, Bill Ackman (Trades, Portfolio) has the largest stake with 1.68% of its outstanding shares. Ken Fisher (Trades, Portfolio), Tom Gayner (Trades, Portfolio), Steven Cohen (Trades, Portfolio), Elfun Trusts (Trades, Portfolio), Ron Baron (Trades, Portfolio), PRIMECAP Management (Trades, Portfolio), Ray Dalio (Trades, Portfolio)’s Bridgewater Associates and many other gurus also own the stock.
CVS Health
The guru expanded the CVS Health (CVS, Financial) holding by 8.82%, picking up 9,680 shares. The transaction had an impact of 0.12% on the equity portfolio. Shares traded for an average price of $83.86 each during the quarter.
Auxier now holds a total of 119,456 shares, which represent 1.53% of the equity portfolio. GuruFocus data shows he has gained 58.03% on the investment so far.
The retail pharmacy chain, which is headquartered in Woonsocket, Rhode Island, has a market cap of $91.22 billion; its shares were trading around $71.15 on Monday with a price-earnings ratio of 23.48, a price-book ratio of 1.27 and a price-sales ratio of 0.28.
According to the GF Value Line, the stock is significantly undervalued currently.
The GF Score of 78 implies the company is likely to have average performance going forward on the back of high ratings for profitability, growth and value, a moderate financial strength rank and low momentum.
With a 0.98% stake, Dodge & Cox is the company’s largest guru shareholder. Other top guru investors include Hotchkis & Wiley, Jim Simons (Trades, Portfolio)’ Renaissance Technologies, Barrow, Hanley, Mewhinney & Strauss, PRIMECAP, Dalio’s firm and the T Rowe Price Equity Income Fund (Trades, Portfolio).
Unilever
The investor increased the Unilever (UL, Financial) investment by 9.84%, buying 9,450 shares. The equity portfolio was impacted 0.09% by the transaction. During the quarter, the stock traded for an average per-share price of $50.50.
Auxier now holds 105,503 shares in total, accounting for 0.95% of the equity portfolio. GuruFocus found he has lost 9.12% on the investment to date.
The British manufacturer of consumer packaged goods, which range from Dove soap to Ben & Jerry’s ice cream and Knorr meals, has a $127.14 billion market cap; its shares were trading around $50.51 on Monday with a price-earnings ratio of 15.96, a price-book ratio of 6.20 and a price-sales ratio of 2.
Based on the GF Value Line, the stock appears to be modestly undervalued currently.
The GF Score of 88 means the company has good outperformance potential, driven by high ratings for four of the criteria. The financial strength rank, however, was more moderate.
Fisher is Unilever’s largest guru shareholder with a 0.33% stake. Hotchkis & Wiley and Tom Russo (Trades, Portfolio) also have notable positions.
Mastercard
With an impact of -0.26% on the equity portfolio, Auxier curbed the Mastercard (MA, Financial) investment by 9.32%, selling 4,335 shares. The stock traded for an average price of $363.23 per share during the quarter.
He now holds 42,180 shares, which make up 2.65% of the equity portfolio as his sixth-largest holding. GuruFocus says he has gained 1,002.17% on the investment over its lifetime.
The Purchase, New York-based financial services company, which focuses on payment processing, has a market cap of $351.82 billion; its shares were trading around $371.26 on Monday with a price-earnings ratio of 37.09, a price-book ratio of 66.06 and a price-sales ratio of 15.69.
The GF Value Line suggests the stock is modestly undervalued currently.
Supported by solid ratings for profitability, growth, value and momentum as well as a more moderate financial strength rank, the GF Score is 97. As such, the company has high outperformance potential.
Holding a 0.62% stake, Chuck Akre (Trades, Portfolio)’s firm is the largest guru shareholder of Mastercard. Warren Buffett (Trades, Portfolio), Fisher, Baillie Gifford (Trades, Portfolio), Russo, the Harbor Capital Appreciation Fund (Trades, Portfolio), Al Gore (Trades, Portfolio)’s Generation Investment and Steve Mandel (Trades, Portfolio) also have large positions in the stock.
Microsoft
Impacting the equity portfolio by -0.11%, the guru’s Microsoft (MSFT, Financial) position was trimmed by 2.31%, shedding 2,732 shares. During the quarter, shares traded for an average price of $255.08 each.
Auxier now holds a total of 115,611 shares, which reflects 5.75% of the equity portfolio as the second-largest position. GuruFocus research shows he has gained around 600.15% on the long-term investment.
The software company headquartered in Redmond, Washington, which is known for its Windows operating system and Office suite of products, has a $2.51 trillion market cap; its shares were trading around $337.77 on Monday with a price-earnings ratio of 36.59, a price-book ratio of 12.90 and a price-sales ratio of 12.15.
According to the GF Value Line, the stock is fairly valued currently.
The GF Score of 94 means the company has high outperformance potential, receiving high ratings for profitability, growth, financial strength and momentum. The value rank, however, was low.
Bill Gates (Trades, Portfolio)’ foundation trust has the largest position in the stock with 0.53% of its outstanding shares. Other top guru investors include Fisher, Dodge & Cox, PRIMECAP, Chase Coleman (Trades, Portfolio), Baillie Gifford (Trades, Portfolio), Harbor Capital, Gore’s firm and Jeremy Grantham (Trades, Portfolio).
Additional trades and portfolio performance
During the quarter, Auxier also established new positions in Deere & Co. (DE, Financial), Occidental Petroleum Corp. (OXY, Financial) and Stryker Corp. (SYK, Financial), added to the holding of British American Tobacco PLC (BTI, Financial) and cut back on Lamb Weston Holdings Inc. (LW, Financial).
Over half of the guru’s $579 million equity portfolio, which is composed of 161 stocks, is invested in the health care, consumer defensive and financial services sectors.
The Auxier Focus Fund returned -4.52% in 2022, outperforming the S&P 500’s -18.11% return.
