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Donald Smith Makes Five New Buys in First Quarter

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May 17, 2015
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Guru Donald Smith (Trades, Portfolio) is known for investing in companies that have fallen from the public’s favor and are selling at discounted rates, but have strong earning potential. His success at doing what he does may best be measured by his success with the firm he founded in 1980, Donald Smith (Trades, Portfolio) & Co. Thirty years later, it had $3.6 billion under management.

In the first quarter of 2015, Smith had five new buys, but only one had a significant impact on his portfolio.

Smith bought 772,356 shares of RenaissanceRe Holdings Ltd (

RNR, Financial), a property and casualty insurance company based in Bermuda, for an average price of $99.99 per share, which is $6.10 above the stock’s 52-week low and $9 below its 52-week high. The purchase had a 1.65% impact on his portfolio.

RenaissanceRe Holdings has a market cap of $4.81 billion and an enterprise value of $3.7 billion. It has a P/E of 7.8, a Price/Book of 1.0 and a Price/Sales of 3.2.

Joel Greenblatt (Trades, Portfolio) also has shares of RenaissanceRe Holdings in his portfolio.

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Also in the first quarter, Smith purchased stakes in Aspen Insurance Holdings Ltd (

AHL, Financial), B2Gold Corp (BTG, Financial), Biglari Holdings Inc (BH, Financial) and Euronav NV (EURN, Financial).

Smith added to his stakes in 19 companies in the first quarter.

He bought 588,974 shares of Unum Group (

UNM, Financial), an insurance company based in Chattanooga, Tennessee, for an average price of $33.17 per share. The transaction had a 0.43% impact on Smith’s portfolio and made Unum his 19th-largest stake by volume.

Unum Group has a market cap of $8.59 billion and an enterprise value of $10.56 billion. It has a P/E of 22.3, a Price/Book of 1.0 and a Price/Sales of 0.8. First Eagle Investment,

Joel Greenblatt (Trades, Portfolio) and David Dreman (Trades, Portfolio) have stakes in Unum Group.

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Smith purchased 910,058 shares of Korea Electric Power Corp (

KEP, Financial), the largest electric utility in South Korea, for an average price of $19.78 per share. That acquisition had a 0.4% impact on Smith’s portfolio.

Korea Electric Power has a market cap of $27.54 billion and an enterprise value of $27.46 billion. It has a P/E of 10.5, a Price/Book of 0.6 and a Price/Sales of 0.5.

David Dreman (Trades, Portfolio) also has shares of Korea Electric Power in his portfolio.

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Smith also added to his stakes in American National Insurance Company (

ANAT, Financial), Kinross Gold Corp (KGC, Financial), Ingram Micro Inc (IM, Financial), Tech Data Corp (TECD, Financial), Sanmina Corp (SANM, Financial), Ruby Tuesday Inc (RT), Loews Corp (L), Photronics Inc (PLAB), Mattson Technology (MTSN), Coeur Mining Inc (CDE), Alliance One International Inc (AOI), Bridgepoint Education Inc (BPI), General Motors Co (GM), M/I Homes Inc (MHO), Pep Boys - Manny Moe & Jack (PBY), Primero Mining Corp (PPP) and Sypris Solutions Inc (SYPR).

Divestitures

Smith sold his stakes in two companies in the first quarter – Platinum Underwriters Holdings Ltd (PTP) and Exelon Corp (EXC).

Smith divested himself of his 2,000,005-share stake in Platinum Underwriters Holdings for an average price of $74.94 per share. The sale had a -2.9% impact on his portfolio.

Platinum Underwriters has a market cap of $1.9 billion and an enterprise value of $711.92 million. It has a P/E of 12.4, a Price/Book of 1.1 and a Price/Sales of 3.5.

Mario Gabelli (Trades, Portfolio) also sold his stake in the company in the first quarter; David Dreman (Trades, Portfolio) sold his stake in the fourth quarter of 2014.

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Smith also sold 109,388 shares of Exelon, a Chicago-based nuclear power plant operator, for an average price of $34.73 per share. That transaction had a -0.081% impact on his portfolio.

Exelon has a market cap of $29.02 billion and an enterprise value of $51.51 billion. It has a P/E of 19.1, a Price/Book of 1.8 and a Price/Sales of 1.0.

John Burbank (Trades, Portfolio), PRIMECAP Management (Trades, Portfolio), Mario Gabelli (Trades, Portfolio), Charles Brandes (Trades, Portfolio), Arnold Van Den Berg (Trades, Portfolio), John Hussman (Trades, Portfolio) and David Dreman (Trades, Portfolio) have shares of Exelon in their portfolios.

Smith also reduced his stakes in 46 companies in the first quarter. His most significant reduction involved XL Group PLC (XL), a Dublin, Ireland-based insurance company.

Smith sold 1,615,598 shares of XL Group for an average price of $35.85. XL Group has a market cap of $11.48 billion and an enterprise value of $10.18 billion. It has a Price/Book of 1.0 and a Price/Sales of 1.6.

Leon Cooperman (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), James Barrow (Trades, Portfolio) and David Dreman (Trades, Portfolio) have shares of XL Group in their portfolios.

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