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Monica Wolfe
Monica Wolfe
Articles (757) 

Learning From the Worlds’ Best – Francisco Garcia Parames’ Top 5

One of our favorite international gurus, Francisco Garcia Paramés, reported his third quarter portfolio changes last week. Paramés is a self-taught value investor from Madrid, Spain, who strictly adheres to the value management of Graham, Buffett and Lynch. The guru is the chief investment officer of Bestinver Asset Management and has often been referred to as the “Spanish Warren Buffett.”

During the second quarter the Spanish guru sold out of twenty-four companies and bought into four new ones. As of the close of the third quarter, Paramés’ portfolio contained thirty less stocks than Q2 with 87 international and US-based stocks valued at over $1.527 billion.

Wolters Kluwer NV (XAMS:WKL)

The guru’s largest position is in Netherlands-based Wolters Kluwer where he owns 5,610,327 shares of the company’s stock. His position in the company represents 7.8% of his total portfolio and 1.89% of the company’s shares outstanding.

Paramés increased his position in Wolters Kluwer 1.17% over the third quarter by purchasing 65,075 shares of the company’s stock. He bought this stock in the price range of €19.81 to €21.94, with an estimated quarterly price of €21.03. Since then the price per share has dropped approximately -1%.

The guru has held a position in the company since 2012Q2, and has seen average gains of 66.7%. Paramés’ historical holding history:

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Wolters Kluwer is a leading global information services and publishing company. The company provides products and services globally for professionals in the health, tax, accounting, corporate, financial services, legal, and regulatory sectors.

Wolters Kluwer’s historical revenue and net income:

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Francisco Garcia Paramés is the only guru shareholder of XAMS:WKL.

The analysis on Wolters Kluwer reports that the company has issued EUR109 million of debt over the past year, its revenue per share has slowed down over the past year and its dividend yield is near a 5-year low. It also notes that the company’s price is near a 5-year high, its operating margin is expanding and its Piotroski F-Score is high.

The Peter Lynch Chart suggests that the company currently appears to be overvalued:

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Wolters Kluwer has a market cap of €6.17 billion. Its shares are currently trading at around €20.82 with a P/E ratio of 18.10, a P/S ratio of 1.75 and a P/B ratio of 3.89. The company had an annual average earnings growth of 4.3% over the past ten years.

GuruFocus rated the company the business predictability rank of 2.5-star.

Bayerische Motoren Werke AG (XTER:BMW3)

Francisco Paramés’ second largest position is in the German auto maker Bayerische Motoren Werke (XTER:BMW3) where the guru holds on to 1,814,145 shares of the company’s stock. His position in BMW represents 7.7% of his total portfolio.

BMW was Paramés’ largest position during the second quarter of 2014, but the guru did not alter his position over the duration of the third quarter. Paramés has held a position in BMW since 2012Q2 and has seen average gains of around 41%. The guru’s historical holding history as of the close of the third quarter:

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Bayerische Motoren Werke, or BMW, manufactures automobiles and motorcycles worldwide. The company's activities are divided into three segments: Automobiles, Motorcycles and Financial Services.

BMW3’s historical revenue and net income:

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The analysis on BMW reports that the company’s operating margin expanding, its revenue has been in decline over the past year and its price is nearing a 10-year high.

Francisco Garcia Paramés is the only guru shareholder of XTER:BMW3.

The Peter Lynch Chart suggests that the company is currently undervalued:

1415038375614.png

Bayerische Motoren Werke has a market cap of €51.36 billion. Its shares are currently trading at around €90.97 with a P/E ratio of 9.10, a P/S ratio of 0.65 and a P/B ratio of 1.54. The dividend yield at BMW is 2.18% and the company had an annual average earnings growth of 1.70% over the past ten years.

GuruFocus rated BMW the business predictability rank of 2.5-star.

Thales (XPAR:HO)

Francisco Paramés’ third largest holding is in Thales where he holds on to 2,057,673 shares of the company’s stock. His position in Thales represents 5.5% of his total portfolio and 1.00% of the company’s shares outstanding.

During the third quarter Paramés increased his position 4.47% by increase 83,049 shares of Thales stock. He bought these shares in the third quarter price range of €37.49 to €44.73, with an estimated average quarterly price of €42.78 per share. Since then the price per share is down about -9.7%.

Paramés’ holding history as of the close of the third quarter:

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Thales is a French multinational company that designs and builds electrical systems and provides services for the aerospace, defense, transportation and security markets.

Thales’ historical revenue and net income:

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The analysis on Thales reports that the company’s dividend yield is near a 2-year high and its P/E, P/S and P/B ratios are near a 1-year low.

The Peter Lynch Chart suggests that the company is currently undervalued:

1415034423389.png

Thales has a market cap of €8.12 billion. Its shares are currently trading at around €38.60 with a P/E ratio of 13.60, a P/S ratio of 0.55 and a P/B ratio of 1.99. The company had an annual average earnings growth of 87.80% over the past five years.

Informa PLC (LSE:INF)

Parames’ fourth largest holding is new to the top five. This holding now goes to UK-based Informa PLC where he holds on to 11,206,094 shares of the company’s stock. This position makes up for a total of 4.6% of his total portfolio managed as well as 1.86% of Informa’s shares outstanding.

Over the duration of the third quarter Parames upped his holdings in Informa 6.26% by purchasing a total of 660,464 shares of the company’s stock. He bought these shares near the estimated average quarterly price of £5 per share, and from this average price the price per share has fallen approximately -3.8%.

Parames’ historical holding history of Informa:

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Informa PLC is engaged in providing academics, businesses and individuals with unparalleled knowledge, up-to-date information and highly specialized skills and services. Its segments are Academic Information, Professional & Commercial Information and Events & Training.

Informa’s historical revenue and net income:

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The analysis on Informa reports that the company’s revenue per share has been in decline over the past five years, its dividend yield is near a 5-year high and over the past three years the company has issued GBP33.5 million of debt, but overall its debt level is acceptable.

The Peter Lynch Chart suggests that the company is currently overvalued:

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Informa has a market cap of £2.9 billion. Its shares are currently trading at around £4.81 with a P/S ratio of 2.56 and a P/B ratio of 2.44. The dividend yield of the company is currently sitting at 3.93%.

Hyundai Motor Co (XKRX:005387)

Paramés fifth largest holding goes to Hyundai Motor Co, as traded on the South Korean markets. The guru holds on to 624,120 shares of the company’s stock, representing 3.7% of his total assets managed.

Over the past quarter Paramés cut his stake -2.22% by purchasing 14,169 shares of the company’s stock. He bought these shares near the average quarterly price of ₩155661 per share, and since then the price per share is down approximately -17.8%.

Paramés’ historical holding history of Hyundai Motor:

1415037353528.png

Since Parames’ first buy back in the third quarter of 2013, the price per share is trading up approximately 20%.

Hyundai Motor Company manufactures and distributes motor vehicles and vehicle parts. Its business is segmented into two - Vehicle and Finance.

Hyundai Motor’s historical revenue and net income:

1415037786443.png

The GuruFocus analysis on Hyundai Motor reports that the company’s operating margin is expanding, its price is near a 3-year low, its dividend yield is near a 3-year low and over the past three years the company has issued KRW17.5 billion of debt.

Hyundai Motors is currently trading around ₩128000 with a P/E ratio of 3.70 and a P/B ratio of 0.67. The company also has a dividend yield of 1.38%. Hyundai Motor had an annual average earnings growth of 13.10% over the past five years.

Check out the entirety of Francisco Garcia Paramés’ third quarter portfolio.

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