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Tiziano Frateschi
Tiziano Frateschi
Articles (2559)  | Author's Website |

Euclid Advisors' Largest Buys During the Second Quarter

Electronic Arts and Robert Half among the biggest new buys

At the end of the second quarter of 2015, hedge fund Euclid Advisors reported a total value of its portfolio of $5,065 million, with a decrease of 6.96% since the previous quarter. During the quarter, it bought 249 new stocks and increased 97 of its stakes. The following are the most heavily weighted buys during the quarter.


It bought shares of Electronic Arts Inc. (EA) with an impact of 1.42% on its portfolio. The Company develops, markets, publishes and distributes game software and content that can be played by consumers on a variety of platforms, including Video game consoles such as the Microsoft Xbox 360 and One and the Sony PlayStation 3 and 4, personal computers (PCs), and mobile phones and tablets.

The company has a profitability and growth rating of 6 out of 10 with positive returns (ROE 34.00%, ROA 16.62%) that are outperforming 91% of the Global Electronic Gaming & Multimedia industry. Financial strength has a rating of 8 out of 10 with a very high interest coverage of 30.58 and a positive cash to debt of 4.55 that is underperforming the industry median of 20.37.

The price of the stock has risen by 344% during the last 5 years, by 45% year to date and rose by 79% during the last 12 months and is now -16.13% from its 52-week high and +100.00% from its 52-week low.

For Electronic Arts, Q1 was a great start to fiscal year 2016 as they continue to deliver amazing entertainment experiences. EA delivered first quarter revenue, margins and EPS above guidance through strength in catalog sales and outperformance in digital live services. Non-GAAP net revenue of $693 million was above their guidance of $640 million. For fiscal year 2016, GAAP net revenue is expected to be approximately $4.3 billion.

The main hedge fund holding shares of the company is Manning & Napier Advisors Inc with 2.14% of outstanding shares, followed by PRIMECAP Management (Trades, Portfolio) with 0.65% and Joel Greenblatt (Trades, Portfolio) with 0.40%.


It bought shares of Robert Half (RHI) with an impact of 1.42% on its portfolio. The company, through its Accountemps, Robert Half Finance & Accounting, and Robert Half Management Resources divisions, is a provider of temporary, full-time, and project professionals in the fields of accounting and finance.

The company has a profitability and growth rating of 8 out of 10 with positive returns (ROE 34.18%, ROA 20.48%) that are outperforming 85% of the Global Staffing & Outsourcing Services industry. Financial strength has a rating of 7 out of 10 with a strong cash to debt of 254.37 that is very high if compared to the industry median of 3.94.

The price of the stock has risen by 137% during the last 5 years, has dropped by 11% year to date and has increased by 2% during the last 12 months, and is now -20.31% from its 52-week high and +11.30% from its 52-week low.

In the second quarter of 2015, due to significantly higher revenue in the Steel Division in Europe and North America as well as in the environment, energy, chemicals, glass and nonferrous metals business units, the RHI Group increased its revenue by 12.7% compared with the first quarter of 2015.

This quarter was Robert Half's 21st straight quarter of double-digit net income and earnings per share percentage grew on a year-over-year basis. Second quarter 2015 results were up 9% from the second quarter one year ago, or up 13% adjusted for currency. Earnings per share was up 21% from last year.

The main hedge fund holding shares of the company is Columbia Wanger (Trades, Portfolio) with 1.62% of outstanding shares, followed by RS Investment Management (Trades, Portfolio) with 0.35% and Jim Simons (Trades, Portfolio) with 0.17%.


It bought shares of CBRE Group (CBG) with an impact of 1.40% on its portfolio. The company offers real estate and investment services to occupiers, owners, lenders and investors in office, retail, industrial, multifamily and other types of commercial real estate.

The company has a profitability and growth rating of 8 out of 10 with good returns (ROE 23.51%, ROA 7.01%) that are outperforming 79% of the Global Real Estate Services industry. Financial strength has a rating of 6 out of 10 with an interest coverage of 7.07, and a weak cash to debt of 0.16 that is ranked lower than 66% of its competitors.

The price of the stock has risen by 104% during the last 5 years, has dropped by 6% since the beginning of the year and did not face any change during the last 12 months; the current price is -20.62% from its 52-week high and +14.84% from its 52-week low.

CBRE's excellent start of 2015 extended into the second quarter and revenues for the quarter had an increase of 12% (19% in local currency) and adjusted net income rose 18%.

CBRE continued to capitalize on strong capital flows into commercial real estate, and global property sales revenue rose 23% (32% in local currency) with growth in the vast majority of countries worldwide.

In regard of their business’ positive underlying momentum, the company expects earnings per share to trend the upper end of the guidance range in 2015, in the range of $1.90–$1.95 per share.

The main shareholder of the company is Jeff Urben with 9.40% of outstanding shares, followed by Richard Blum (Trades, Portfolio) with 2.48% and Ron Baron (Trades, Portfolio) with 1.67%.


It bought shares of Level 3 Communications (LVLT) with an impact of 1.39% on its portfolio. It is a facilities based provider of a range of integrated communications services. The company has created its communications network generally by constructing its own assets, but also through a combination of purchasing and leasing other companies and facilities. The Company's network is a, facilities based communications network.

The company has a profitability and growth rating of 4 out of 10 with easy returns (ROE 5.60%, ROA 1.44%) that are ranked lower than 61% of the other companies in the Global Telecom Services industry. Financial strength has a rating of 6 out of 10 with very low ratios, interest coverage of 1.55 and a cash to debt of 0.05are underperforming the 90% of their competitors.

The price of the stock has risen by 195% during the last 5 years; is almost flat year to date and is trading -24.40% from its 52-week high and +14.73% from its 52-week low

Adjusted EBITDA margins expanded to 32.3% in the second quarter of 2015, up from 29.4% from the previous quarter. Total revenue increased by $31 million compared to the second quarter 2014; as a result of the capital markets transactions completed during the quarter, the cash interest expense in the second quarter was a little higher than usual.

For the rest of year they expect adjusted EBITDA growth of 14% to 17% and also they expect to generate free cash flow of $600 million to $650 million for the full year 2015.

The main guru holding shares of the company is Mason Hawkins (Trades, Portfolio) with 11.77% of outstanding shares, followed by Jim Simons (Trades, Portfolio) with 0.92% and George Soros (Trades, Portfolio) with 0.59%.

Increased stakes

The hedge fund also increased seven of its stakes, and the most important are the following: Nike Inc (NKE) by 91%, Hca Holdings Inc (HCA) by 135%, Mckesson Corp (MCK) by 69%, Thermo Fisher Scientific Inc (TMO) by 55%, Marathon Pete Corp (MPC) by 8%, Johnson Controls Inc (JCI) by 15.89%, Cbs Corp New (CBS) by 81.17% and Archer Daniels Midland Co (ADM) by 242.17%.
 

Euclid Advisors Top Buys Q2 2015

Ticker

Value (x1000)

Impact %

Trade

EA

72,000

1.42%

New Buy

RHI

71,832

1.42%

New Buy

CBG

71,026

1.40%

New Buy

LVLT

70,167

1.39%

New Buy

As of the latest quarter, the hedge fund has its portfolio divided by the following sectors:

Main Sectors

Consumer Discretionary

24%

Finance

15%

Information Technology

13%

Health Care

12%

Industrials

10%

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About the author:

Tiziano Frateschi
You can read about me on www.theextraincome.info, which gives suggestions on position trading.

Visit Tiziano Frateschi's Website


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