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Green Square Capital's Top Buys in Q2 2015

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Aug 13, 2015
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At the end of the second quarter of 2015, the hedge fund Green Square Capital LLC reported a total value of its portfolio of $449,845,000 with a increase of 1.19% since the previous quarter.

During the Q2 2015, the hedge fund bought 42 new stocks and increased 79 of its stakes. The following are the most heavily weighted buys during the quarter.


It bought shares of Reliance Steel and Aluminum (RS) with an impact of 1.16% on its portfolio. The company operates as a metals service center company in North America. Its network of metals service centers operates in approximately more than 290 locations in 39 states in the U.S. and in 10 other countries. Through this network, the company provides metals processing services and distribute a full line of more than 100,000 metal products, including alloy, aluminum, brass, copper, carbon steel, stainless steel, titanium and specialty steel products, to more than 125,000 customers in a broad range of industries.

The company has a profitability and growth rating of 8 out of 10 with good returns (ROE 9.36%, ROA 4.84%) that are outperforming 78% of companies in the Global Steel industry. Financial strength has a rating of 7 out of 10 with an interest coverage of 4.59 and a cash to debt of 0.06 that is very low if compared to the average ratio of RS’s industry that is 0.34.

Recently, the company reported its second quarter sales, which were 7.4% down compared to the first quarter. Net income was also down 6.5%. But despite ongoing industry headwinds that further pressured metals pricing, they increased their FIFO gross profit margin to 25.7%, up from their strong 2015 first quarter level of 25.4%.

The main shareholder is 

Chuck Royce (Trades, Portfolio) with 4.32% of outstanding shares, followed by First Pacific Advisors (Trades, Portfolio) with 0.46% and FPA Capital Fund (Trades, Portfolio) with 0.25% of outstanding shares.


It bought shares of PPL Corp (PPL) with an impact of 1.04% on its portfolio. The company is an energy and utility holding company. Through subsidiaries, it generates electricity from power plants in the northeastern, northwestern and southeastern U.S., markets wholesale and retail energy in the northeastern and northwestern portions of the U.S., delivers electricity to customers in Pennsylvania, Kentucky, Virginia, Tennessee and the U.K. and delivers natural gas to customers in Kentucky.

The company has a profitability and growth rating of 6 out of 10 with positive returns (ROE 8.28%, ROA 2.33%) that are underperforming 52% of the other companies in the Global Utilities - Diversified industry. Financial strength has a rating of 6 out of 10, and cash to debt is rated 0.04 that is very low compared to the industry median of 0.27%.

The main shareholder is HOTCHKIS & WILEY with 0.68% of outstanding shares, followed by

First Eagle Investment (Trades, Portfolio) with 0.60%, and Jim Simons (Trades, Portfolio) with 0.12%.


It bought shares of Upland Software Inc (UPLD) with an impact of 0.18% on its portfolio. The company is the provider of cloud-based enterprise work management software. It provides a family of cloud-based enterprise work management software applications for the information technology, marketing, finance, professional services and process excellence functions within organizations.

The company has a profitability and growth rating of 2 out of 10 with very negative returns (ROE -42.76%, ROA -12.39%) that are underperforming 87% of the Global Software - Application industry. Financial strength is in better shape, with a rating of 5 out of 10 with a cash to debt of 1.19.

The company reported the fourth consecutive quarter of record revenues, which increased 9% compared to the same quarter of a year before. It also added 81 new customer relationships, including 10 major accounts in demanding verticals, such as healthcare, financial services, government and higher education.


It bought shares of AbbVie Inc (ABBV) with an impact of 0.12% on its portfolio. The company is a research-based biopharmaceutical company with portfolio of proprietary products including a broad line of adult and pediatric pharmaceuticals. The company discovers, develops, manufactures and sells proprietary pharmaceutical products. Its products are used to treat diseases including rheumatoid arthritis, psoriasis, Crohn's disease, HIV, and cystic fibrosis complications.

The company has a profitability and growth rating of 7 out of 10 with positive returns (ROE 70.73%, ROA 8.91%). These ratios are outperforming 72% of the Global Drug Manufacturers - Major industry. Financial strength has a rating of 7 out of 10 with a high interest coverage ratio of 7.95 and a weak cash to debt ratio of 0.52.

Recently its experimental leukemia drug, venetoclax, has met the primary goals in a phase II clinical trial, based upon which the company would seek approval from the US Food and Drug Administration for the drug. The drug was successful in achieving the targeted mid-point, to reduce the cancer cells by the pre-specified margins.

The main hedge fund holding shares of the company is

PRIMECAP Management (Trades, Portfolio) with 0.23% of outstanding shares, followed by Pioneer Investments (Trades, Portfolio) with 0.17% and Larry Robbins (Trades, Portfolio) with 0.15%.

Increased Stakes

The hedge fund increased 79 of its stakes and the most weighted increases are as follow: Enterprise Products Partners Lp (EPD) by 5%, Kinder Morgan Inc (KMI) by 5%, Plains All American Pipeline Lp (PAA) by 5%, Oneok Partners Lp (OKS) by 5.08%, Buckeye Partners LP (BPL) by 5.26% and Merck & Co Inc (MRK) by 7.57%.

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