During the fourth quarter, Steven Romick (Trades, Portfolio) of FPA Crescent Fund purchased four new international stocks, bringing the total number of international positions to 19.
The fund’s fact sheet states that about 65% of the portfolio’s assets are in the U.S., followed by 29.7% in Europe, and 3% in emerging markets.
In the fourth quarter update, Romick noted that the current environment makes it challenging to find bargains, but that the fund was concentrating on finding opportunities in the energy sector.
The following stocks are Romick’s international purchases during the quarter in order of portfolio impact:
Carlsberg AS (OCSE:Carl B)
Romick purchased 2,330,569 shares of Carlsberg at an average price of kr.510.94 per share. The company accounts for 1.6% of FPA Crescent’s portfolio.
Carlsberg is a Danish brewing company that produces more than 500 local, regional, and internationally distributed beers. It offers regional beers in a multitude of countries including Malawi, Vietnam, U.K., China, Germany, and Sweden.
Carlsberg’s stock has been down 18% over the past year, and may be undervalued according to the Peter Lynch chart.
The company’s balance sheet needs improvement — the current ratio is 0.58, which indicates Carlsberg cannot cover its short-term obligations with cash on hand.
Carlsberg has continuously increased its dividend since 2010, and the current yield is 1.18% and close to the five-year high. In addition, institutional ownership is relatively low compared to U.S. companies at 29%.
Sulzer AG (XSWX:SUN, Financial)
The fund purchased 1,464,873 shares of Sulzer at an average price of CHF 106.54 per share, which accounts for 1.4% of the portfolio.
Sulzer is a Swiss industrial engineering and manufacturing firm that operates in three business divisions. The company produces centrifugal pumps and agitators for the oil and gas industry, hydrocarbon processing, and power generation, among others.
Over the long term, the company is struggling to grow its revenue and earnings, as evidenced by the table below. Notably, revenue growth has declined more than 20% over the past 10 years.
Sulzer’s operating margin has also been in long-term decline — over the past five years, the margin declined by 8.35%.
Sberbank of Russia (LSE:SBER, Financial) (MIC:SBERP, Financial)
The fund holds 3,001,708 U.K. shares of Sberbank of Russia, as well as 20,370,200 Russian shares of the company. This accounts for 0.18% and 0.11% of the portfolio, respectively.
Sberbank of Russia is a shareholder-owned bank headquartered in Moscow. About 70% of Russians use the bank’s services, which accounts for one-third of the country’s banking system.
The bank’s U.K. stock has been down 61% over the past year. The Peter Lynch earnings line suggests the stock is undervalued when compared to the price.
The current dividend yield is 8.43%, which is near the two-year high.
The Russian stock has been down 44% over the past year. GuruFocus rates the bank’s business predictability as 7 out of 10, based on revenue and earnings growth, while profitability and growth also scores 7 out of 10.
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