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Holly LaFon
Holly LaFon
Articles (8057) 

Wallace Weitz's 3 New Q2 Buys

August 09, 2013 | About:
Wallace Weitz’s Weitz Investments oversees $4 billion for clients and has had an excellent year so far. Its value fund returned 17.9% in the first half, outpacing the S&P 500’s 13.8%. While extended QE pumped up the markets further in the second quarter, Weitz hesitated to call a short-term market direction in his second quarter letter. As a result, he avoids taking any extreme positions in his portfolios but held ample cash at quarter-end after it sold shares of companies whose share priced approached his estimates of fair value. “But we still own a group of companies that we believe have excellent long-term prospects,” Weitz said in his letter.

When stocks do get cheap again, he added, “we will follow Warren Buffett’s advice: ‘When it’s raining gold, go out with a bucket, not a thimble.’”

In the second quarter, he established three new, relatively small positions: World Fuel Services Corporation (NYSE:INT), ProShares Short 20+ Year Treasury ETF (TBF) and ACI Worldwide Inc. (NASDAQ:ACIW).

World Fuel Services Corporation (NYSE:INT)

Weitz purchased 230,000 shares of World Fuel Services Corp. at $40 per share on average. Down 4% since, the stock is $38.03 Friday.

World Fuel Services Corporation was incorporated in Florida in July 1984. World Fuel Services Corporation has a market cap of $2.75 billion; its shares were traded at around $37.81 with a P/E ratio of 14.00 and P/S ratio of 0.10. The dividend yield of World Fuel Services Corporation stocks is 0.40%. World Fuel Services Corporation had an annual average earnings growth of 23.3% over the past 10 years. GuruFocus rated World Fuel Services Corporation the business predictability rank of 4-star.

World Fuel Services Corp. long-term revenue and earnings history:


The Peter Lynch chart suggests it is undervalued:


ProShares Short 20+ Year Treasury ETF (TBF)

Weitz purchased 150,000 shares of ProShares Short 20+ Year Treasury ETF at $29 per share on average. The holding represents 0.19% of the portfolio. Having increased 9%, the stock is $32.10 Friday. Weitz has owned shares of the ETF previously:

The ProShares Short ETF says that it “invests in derivatives that ProShare Advisors believes, in combination, will have similar daily return characteristics as the inverse (-1x) of the daily return of the Index. The Index includes all publicly issued, U.S. Treasury securities that have a remaining maturity greater than 20 years, are non-convertible, are denominated in U.S. dollars, are rated investment grade (at least Baa3 by Moody’s Investors Service Inc. or BBB- by Standard and Poor’s Financial Services, LLC), and have more than $250 million par outstanding.”

The ProShares Short ETF price history:


ACI Worldwide Inc. (NASDAQ:ACIW)

Weitz purchased 7,000 shares of ACI Worldwide Inc. for $46 per share on average, establishing a 0.013% position. Having dropped 7%, the stock is $48.50 Friday. He also traded this stock previously:

ACI Worldwide Inc. was formed as a Delaware corporation in November 1993 under the name ACI Holding Inc. ACI Worldwide Inc. has a market cap of $1.94 billion; its shares were traded at around $48.85 with a P/E ratio of 40.90 and P/S ratio of 2.80. ACI Worldwide Inc. had an annual average earnings growth of 7.1% over the past 10 years.

ACI Worldwide’s revenue and earnings history:


The Peter Lynch chart indicates the stock is overvalued:


See Wallace Weitz’s portfolio here. Also check out the Undervalued Stocks, Top Growth Companies and High Yield stocks of Wallace Weitz.

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Rating: 2.3/5 (3 votes)


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