Sarah Ketterer (Trades, Portfolio) is the Chief Executive Officer of Causeway since June 2001. Her firm manages more than $15 billion as of May 2008. She is responsible for investment research in global financials and healthcare. Prior to her current position, Ms. Ketterer worked for the Hotchkis and Wiley division of Merrill Lynch Investment Managers ("HW-MLIM"). At HW-MLIM, she was a Managing Director and co-head of the firm's HW-MLIM International and Global Value team. Ms. Ketterer has a BA in Economics and Political Science from Stanford University and an MBA from the Amos Tuck School at Dartmouth College.
Web Page:Ă‚ http://www.causewayfunds.com/fundhome.aspx
Her portfolio is composed of 79 stocks and has a total value of $3,461 Mil and 73.8% of companies she owns come from the Consumer Cyclical Industry. Here I want to highlight the top four stocks that are undervalued based on the DCF model. I am talking about Oracle Corporation (ORCL), NetEase Inc (NTES), Qualcomm Inc. (QCOM), Microsoft Corp (MSFT).
Oracle Corporation (ORCL)
ORCL has a market cap of $188.26 billion and based on the DCF model, its fair value is $60.65, and these days the stock is trading with a margin of safety of 28%. The stock looks Undervalued even for the Peter Lynch Earnings line that gives a Fair Value of $48.2 and a margin of safety of 10%.
The stock is currently trading at P/E (ttm) of 18.40 at very cheap level compared to the Global Software - Infrastructure industry that has an average P/E value of 82.50. Over the last 12 months, the price rose by 7% and is giving a return of 21% to Ms. Ketterer’s portfolio
Over the last 5 years (but even over the last 10 years), the company's revenue grew by 12.80%, EBITDA grew by 14.40%, Book Value Grew by 15.90% and EPS growth rate is 18.50%. ORCL has positive returns (23.08% of ROE, 11.43% of ROA and 471.15% of ROC) and good Financial strength, rated 7/10.
Jeremy Grantham is the Guru holding the large number of Shares Outstanding of ORCL (0.95%) followed by Donald Yacktman and James Barrow (0.87% each).
NetEase Inc (NTES)
NTES has a market Cap of $ 15.22 billion and based on the DCF model, its fair value is $167.04, and these days the stock is trading with a margin of safety of 29%. But if the DCF model put the stock as Undervalued, the Peter Lynch Earnings line put it as Overpriced by 16%
The stock is currently trading at P/E (ttm) of 20.10 at very cheap level compared to the Global Internet Content & Information industry that has an average P/E of 145.30. The price rose by 72% over the last 12 months and is giving a positive return of 24.2% to the Investor’s portfolio
Over the last 5 years, the company's revenue grew by 29.10%, EBITDA grew by 22.00%,Ă‚ Free Cash Flow grew by 30.10%, Book Value grew by 32.60% and EPS growth rate is 18.50 %. NTES has positive returns (21.97% of ROE, 17.37% of ROA and 91.78% of ROC) and very good Financial strength, rated 10/10.
Jim Simons is the main Guru holding NTES with 2.03% of shares outstanding and 2,645,600 shares, followed by Matthews China Fund (0.17%) and Chris Davis (0.09%).
Qualcomm Inc. (QCOM)
QCOM has a market Cap of $ 114.38 billion and based on the DCF model, its fair value is $92.42, and these days the stock is trading with a margin of safety of 25%. The stock looks Undervalued even with the Peter Lynch Earnings line with a current fair value of $87.3 and a margin of safety of 21%
The stock is currently trading at P/E (ttm) of 14.60 at very cheap level compared to the Global Communication Equipment industry that has a Median P/E of 98.20. Over the last 12 months, the price dropped by 13% and is giving a return of -5.5%% to Ms. Ketterer’s portfolio.
Over the last 5 years, the company's revenue grew by 22.30%, EBITDA grew by 22.00%, Book Value grew by 15.40% and EPS growth rate is 32.60%. QCOM has positive returns (20.99% of ROE, 16.83% of ROA and 319.52% of ROC) and good Financial strength, rated 9/10. The company has no debt, outperforming the industry and at best results of its history.
PRIMECAP Management is the main Guru holding QCOM with 0.87% of shares outstanding, followed byJeremy Grantham (0.76%) and Ken Fisher who holds 0.56%.
Microsoft Corp (MSFT)
MSFT has a market cap of $333.52 billion and based on the DCF model, its fair value is $61, and these days the stock is trading with a margin of safety of 32%. The stock looks Undervalued even for the Peter Lynch Earnings line that gives a fair value of $49.4 with a current margin of safety of 16%
The stock is currently trading at P/E (ttm) of 16.80 at very cheap level compared to the Global Software - Infrastructure industry that has a Median P/E of 82.50. The price rose by 4% over the last 12 months and +21% to the Guru’s portfolio.
Over the last 5 years, the company's revenue grew by 9.60%, EBITDA grew by 8.00%, Book Value Grew by 20.00% and EPS growth rate is 8.20%. MSFT has positive returns (23.26% of ROE, 12.51% of ROA and 214.26% of ROC) and good Financial strength, rated 9/10 with a Cash to Debt ratio of 3.19.
