Donald Smith (Trades, Portfolio), CIO of the firm that bears his name, likes to invest in companies that are out of favor but have positive earnings potential in the next 2-4 years. One of the most noteworthy things about his second-quarter activity was how much of it involved companies that mine gold. Conventional wisdom holds that demand for and prices of gold go up when demand for and prices of stocks go down. Gold has been experiencing a price slump in recent months.
Smith added 22,147,678 shares to the ninth-most valuable stake in his portfolio, Kinross Gold Corp. (KGC, Financial), Canadian-based gold mining company. Smith paid an average price of $2.38 per share. The transaction had a 1.14% impact on his portfolio.
Kinross has a market cap of $2.34 billion and an enterprise value of $3.84 billion. It has a Price/Book of 0.5 and a Price/Sales of 0.7. First Eagle Investment (Trades, Portfolio), Jim Simons (Trades, Portfolio), Ray Dalio (Trades, Portfolio), Arnold Van Den Berg (Trades, Portfolio), David Dreman (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), Robert Bruce (Trades, Portfolio) and Mario Gabelli (Trades, Portfolio) have shares of Kinross in their portfolios.
Smith also added to his stake in Aspen Insurance Holdings Ltd. (AHL, Financial), an insurance and reinsurance company with offices around the world. Smith bought 588,582 shares for an average price of $47.41 per share. The deal had a 0.63% impact on Smith’s portfolio
Aspen has a market cap of $2.97 billion and an enterprise value of $2.23 billion. It has a P/E of 12.4, a Price/Book of 0.9 and a Price/Sales of 1.2. HOTCHKIS & WILEY, Richard Pzena (Trades, Portfolio), Chuck Royce (Trades, Portfolio), Jim Simons (Trades, Portfolio), David Dreman (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio) and Mario Gabelli (Trades, Portfolio) have shares of Aspen in their portfolios.
Smith also added to his stake in Loews Corp. (L, Financial), a diversified company based in New York City, buying 564,487 shares for an average price of $40.69 per share. The acquisition had a 0.48% impact on Smith’s portfolio.
Loews has a market cap of $14.11 billion and an enterprise value of $24.2 billion. It has a P/E of 20.9, a Price/Book of 0.8 and a Price/Sales of 1.0. Mason Hawkins (Trades, Portfolio), Chris Davis (Trades, Portfolio), Brian Rogers (Trades, Portfolio), James Barrow (Trades, Portfolio), NWQ Managers (Trades, Portfolio), Third Avenue Management (Trades, Portfolio), Martin Whitman (Trades, Portfolio), Arnold Van Den Berg (Trades, Portfolio), Charles Brandes (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio), Murray Stahl (Trades, Portfolio), Diamond Hill Capital (Trades, Portfolio), First Eagle Investment (Trades, Portfolio), Ray Dalio (Trades, Portfolio), Mario Gabelli (Trades, Portfolio), Dodge & Cox and Joel Greenblatt (Trades, Portfolio) have shares of Loews in their portfolios.
Smith added to 17 other existing stakes, including Resolute Forest Products Inc. (RFP, Financial), Korea Electric Power Corp. (KEP, Financial) and Yamana Gold Inc. (AUY, Financial).
Smith bought four new stakes in the second quarter, the largest (by volume) being his purchase of an 815,000-share stake in Alamos Gold Inc. (AGI, Financial), a mineral exploration company in northwestern Mexico, for an average price of $6.45 per share. The deal had a 0.1% impact on Smith’s portfolio.
Alamos Gold has a market cap of $476.46 million and an enterprise value of $136.09 million. It has a Price/Book of 0.6 and a Price/Sales of 2.8. Columbia Wanger (Trades, Portfolio), Chuck Royce (Trades, Portfolio) and Mario Gabelli (Trades, Portfolio) have shares of Alamos Gold in their portfolios.
Smith also bought a stake in Citigroup Inc. (C, Financial), a Manhattan-based financial services company. Smith acquired 69,332 shares for an average price of $54.36 per share. The transaction had a 0.08% impact on Smith’s portfolio.
Citigroup has a market cap of $172.64 billion and an enterprise value of $274.77 billion. It has a P/E of 14.3, a Price/Book of 0.9 and a Price/Sales of 2.3. James Barrow (Trades, Portfolio), HOTCHKIS & WILEY, Ken Fisher (Trades, Portfolio), Richard Pzena (Trades, Portfolio), First Pacific Advisors (Trades, Portfolio), Andreas Halvorsen (Trades, Portfolio), Steven Romick (Trades, Portfolio), Bill Nygren (Trades, Portfolio), Diamond Hill Capital (Trades, Portfolio), Larry Robbins (Trades, Portfolio), Charles Brandes (Trades, Portfolio), Leon Cooperman (Trades, Portfolio), NWQ Managers (Trades, Portfolio), Ken Heebner (Trades, Portfolio), Sarah Ketterer (Trades, Portfolio), Pioneer Investments (Trades, Portfolio), Kahn Brothers (Trades, Portfolio), RS Investment Management (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio), Arnold Schneider (Trades, Portfolio), Caxton Associates (Trades, Portfolio), Signature Select Canadian Fund (Trades, Portfolio), Mario Gabelli (Trades, Portfolio), Francis Chou (Trades, Portfolio), Julian Robertson (Trades, Portfolio), Chris Davis (Trades, Portfolio), Manning & Napier Advisors, Inc, Jeff Auxier (Trades, Portfolio), David Dreman (Trades, Portfolio), Louis Moore Bacon (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio), Prem Watsa (Trades, Portfolio), John Keeley (Trades, Portfolio), Dodge & Cox and Ruane Cunniff (Trades, Portfolio) have shares of Citigroup in their portfolios.
Smith also bought stakes in Asanko Gold Inc. (AKG, Financial) and Fly Leasing Ltd. (FLY, Financial).
Divestitures and reductions
Smith reduced his positions in 49 stakes in the second quarter. The most significant was his sale of 4,741,522 shares of Celestica Inc. (CLS, Financial), a Toronto-based electronics company, for an average price of $12.18 per share. The sale had a -1.13% impact on Smith’s portfolio.
Celestica has a market cap of $1.85 billion and an enterprise value of $2.1 billion. It has a P/E of 34.5, a Price/Book of 1.8 and a Price/Sales of 0.4. Smith remained Celestica’s top shareholder among the gurus, but Joel Greenblatt (Trades, Portfolio), David Dreman (Trades, Portfolio) and Jim Simons (Trades, Portfolio) also have shares of Celestica in their portfolios.
Smith also reduced his position in RenaissanceRe Holdings Ltd. (RNR, Financial), a Bermuda-based provider of reinsurance, insurance and other business services. Smith sold 471,206 shares for an average price of $103.02 per share. The sale had a -1.01% impact on Smith’s portfolio.
RenaissanceRe Holdings has a market cap of $4.94 billion and an enterprise value of $4.42 billion. It has a P/E of 9.1, a Price/Book of 1.1 and a Price/Sales of 3.2. Smith is also the leading shareholder in RenaissanceRe Holdings among the gurus, but Jim Simons (Trades, Portfolio), Chuck Royce (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio) and Joel Greenblatt (Trades, Portfolio) also have shares of the company in their portfolios.
In both cases, Smith sold more than 61% of his stakes.
Smith’s other reductions included sales of shares of Validus Holdings Inc. (VR, Financial), Royal Caribbean Cruises Ltd. (RCL, Financial) and JetBlue Airways Corp. (JBLU).
Smith sold out only one of his holdings in the second quarter – Nordic American Tankers Ltd. (NAT), a Bermuda-based shipping company. Smith sold his 807,388-share stake for an average price of $12.9 per share. The sale had a -0.21% impact on Smith’s portfolio.
Nordic American Tankers has a market cap of $1.35 billion and an enterprise value of $1.51 billion. It has a Price/Book of 1.5 and a Price/Sales of 3.7. Jim Simons (Trades, Portfolio), Steven Cohen (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio) and George Soros (Trades, Portfolio) have shares of Nordic American Tankers in their portfolios.
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