Irving Kahn, the legendary investor who was recently the oldest active professional investor, died on Feb. 24 at the age of 109. His firm, Kahn Brothers (Trades, Portfolio), continues today and in the first quarter sold two stocks and added to its position in four more.
Kahn began his career in value investing in 1929 during the thick of the Great Depression. He managed to profit that year by shorting 50 shares of Magma Copper, tripling his $300 investment.
Founded in 1978, Kahn Brothers (Trades, Portfolio) today manages approximately $1 billion in institutional and private funds. As of the first quarter 2015, the portfolio held 42 stocks, with 32% of assets in the financial services sector.
Sold out
The firm sold 19,000 shares of USG at an average price of $28.36 per share. The graph below depicts the holding history.
USG manufactures building materials and products for residential, nonresidential, and remodel construction. The stock declined 8% over the past year, and its current P/E ratio is a very high 326.5, while the P/S ratio is 1.
In 2014, USG’s net income was $37 million, down from $47 million the year before. The company reported consistent losses from 2008 to 2012 during the housing market downturn.
The company’s EBIT per share in 2014 was $1.12, down from $2.32 the year before. The operating margin also contracted from 7.23% to 4.35%.
The firm also let go of its holding in PHI after the stock price plunged during the quarter. It sold 6,500 shares for an average price of $33.34 per share.
The company provides helicopter transportation services in the Gulf of Mexico, serving offshore facilities in the oil and gas exploration industry. It also provides air medical transportation to third parties in North America and the Middle East.
The stock dropped 27% over the past year and now trades at $31.41, with a P/E ratio of 14.5 and P/S ratio of 0.6. EBIT per share in 2014 was $7.12, which has increased by more than 35% over the last five years.
Net income in 2014 was $32.7 million, down from $59 million the year before. However, over the past five years, net income increased by about 74%.
Add
Blackberry Ltd (BBRY, Financial)
The fund added 513,518 shares to its stake in Blackberry, which traded for an average price of $10.16 during the quarter. It now owns 2,359,528 shares of the technology company.
The stock priced increased 33% over the past year and is currently priced at $9.72. The Peter Lynch chart indicates the stock is overvalued at its current price.
Blackberry has not posted a profit since FY 2013. In 2015, the company reported net income of $-304 million. EBIT per share that year was $-0.80.
The balance sheet looks healthy with a current ratio of 3.05, meaning the company can easily cover its short-term debts.
Patterson-UTI Energy (PTEN, Financial)
The firm upped its stake in Patterson-UTI by 89,214 shares purchased at an average price of $17.15 per share. The total holding now has 979,823 shares.
Patterson-UTI provides contract services to the North American oil and natural gas industry. It owns and operates a large fleet of land-based drilling rigs in the U.S. The stock dropped 38% over the past year and currently trades at $21.21. The P/E ratio is 22.5, while the P/S ratio is 1.
EBIT per share has been declining since 2011 and reported at $1.95 in 2014.
The operating margin has also been in decline. In 2014, the margin was 8.9%. Net income that year was $163 million, down from $188 million the year before.
The firm increased its BP shares by 39,382 shares purchased for an average price of $39.45. It now owns a total of 906,887 shares. BP provides energy products and services.
The current P/E ratio is very high compared to its history at 52, while the P/S ratio is 0.44. EBIT per share in 2014 was $1.94, a sharp decline from $9.86 the year before.
Net income also dropped from more than $23 million in 2013 to just $3,780 million this past year due to low oil prices. The graph below shows the net income trend over time.
GlaxoSmithKline (GSK, Financial)
The firm initiated a position in pharmaceutical company GlaxoSmithKline during Q3 2014, and added 7,200 shares this past quarter for an average price of $45.86 per share. It now holds 58,200 shares in the company.
GSK’s stock dropped 19% over the past year. The current price is $44.22 with a P/E ratio of 26.7 and P/S ratio of 3.21. EBIT per share in 2014 was $2.31, down from $4.68 the previous year.
Net income in 2014 recorded at $4,313 million, half of the figure reported in the previous year. GSK’s current dividend yield is 5.8%, while the payout ratio is 141%. The high payout ratio indicates the dividend may be unsustainable with little room for continued growth.
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