John Keeley's Portfolio Acquires Stock in Media General in Second Quarter

John L. Keeley Jr., founder of Keeley Asset Management Corp., died in June at the age of 75 of complications from a blood clot. Keeley’s strategy of long-term value investing is alive and well, though, in the transactions that were made in Keeley’s name in the second quarter. While Keeley's investment philosophy doesn't appear to have been hugely successful in 2014 (it recorded only a 0.07% return), it was far more successful in 2013 (34.63%) and 2012 (23.81%).

Keeley’s portfolio’s most significant transaction in the second quarter was its purchase of a 2,597,580-share stake in Media General Inc. (NYSE:MEG), a broadcast and digital media company with offices in Richmond, Va., Providence, R.I., and Austin, Texas, for an average price of $16.61 per share. The transaction had a 1.02% impact on Keeley’s portfolio.

• Warning! GuruFocus has detected 5 Warning Signs with MEG. Click here to check it out.
• MEG 30-Year Financial Data
• The intrinsic value of MEG
• Peter Lynch Chart of MEG

Media General has a market cap of $1.5 billion and an enterprise value of $3.67 billion. It has a P/E of 28.8, a Price/Book of 1.0 and a Price/Sales of 1.3. Mario Gabelli (Trades, Portfolio), Warren Buffett (Trades, Portfolio), Steven Cohen (Trades, Portfolio) and Chuck Royce (Trades, Portfolio) have shares of Media General in their portfolios.

Keeley’s portfolio bought more than two dozen new stakes in the second quarter, most of them modest in volume by comparison. Among its newly acquired stakes are holdings in Hanmi Financial Corp. (NASDAQ:HAFC), Winnebago Industries Inc. (NYSE:WGO) and Tegna Inc. (NYSE:TGNA).

Keeley’s portfolio sold out two dozen of its existing stakes in the second quarter. Its largest divestiture was its sale of a 1,585,340-share stake in Synovus Financial Corp. (NYSE:SNV), a Columbus, Ga.-based financial services company, for an average price of $28.9 per share. The sale had a -0.9% impact on Keeley’s portfolio.

Synovus Financial has a market cap of $4.02 billion and an enterprise value of $4.55 billion. It has a P/E of 20.4, a Price/Book of 1.4 and a Price/Sales of 3.8. RS Investment Management (Trades, Portfolio), Richard Pzena (Trades, Portfolio), HOTCHKIS & WILEY, Private Capital (Trades, Portfolio), Jim Simons (Trades, Portfolio), Steven Cohen (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio) and Joel Greenblatt (Trades, Portfolio) have shares of Synovus Financial in their portfolios.

On Sept. 2, Synovus announced a quarterly dividend of $0.10 will be paid on Oct. 1 to shareholders of record as of Sept. 17.

Keeley’s portfolio also sold a 720,708-share stake in Franklin Electric Co. (NASDAQ:FELE), a Fort Wayne, Ind.-based maker of pump products, for an average price of $35.94 per share. The deal had a -0.56% impact on Keeley’s portfolio.

Franklin Electric has a market cap of $1.39 billion and an enterprise value of $1.47 billion. It has a P/E of 21.7, a Price/Book of 2.2 and a Price/Sales of 1.3. Chuck Royce (Trades, Portfolio), First Pacific Advisors (Trades, Portfolio), Mario Gabelli (Trades, Portfolio), Ron Baron (Trades, Portfolio), Jim Simons (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio) have shares of Franklin Electric in their portfolios.

Keeley’s portfolio sold its 324,500-share stake in Core-Mark Holding Co. Inc. (NASDAQ:CORE), a San Francisco-based company that supplies fresh, chilled and frozen merchandise primarily to convenience stores, for $56.74 per share. The transaction had a -0.42% impact on Keeley’s portfolio.

Core-Mark has a market cap of $1.39 billion and an enterprise value of $1.49 billion. It has a P/E of 29.2, a Price/Book of 2.9 and a Price/Sales of 0.1. Chuck Royce (Trades, Portfolio), Jim Simons (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), Mario Gabelli (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio) have shares of Core-Mark in their portfolios.

Keeley’s portfolio more than doubled its existing stake in Xenia Hotels & Resorts Inc. (NYSE:XHR), the Orlando, Fla.-based hotel segment of Inland American Real Estate Investment Trust, purchasing 1,019,325 shares for an average price of $22.77 per share. The purchase had a 0.52% impact on Keeley’s portfolio.

Xenia Hotels & Resorts has a market cap of $2.07 billion and an enterprise value of $3.2 billion. It has a Price/Sales of 2.1.

Keeley’s portfolio increased its stake in Texas Capital Bancshares Inc. (NASDAQ:TCBI), the Dallas-based bank holding company for Texas Capital Bank, acquiring 305,070 shares for an average price of $54.68 per share. The transaction had a 0.45% impact on Keeley’s portfolio.

Texas Capital Bancshares has a market cap of $2.47 billion and an enterprise value of $2.87 billion. It has a P/E of 16.9, a Price/Book of 1.7 and a Price/Sales of 4.1. James Barrow (Trades, Portfolio), Mariko Gordon (Trades, Portfolio) and Ken Fisher (Trades, Portfolio) have shares of Texas Capital Bancshares in their portfolios.

Keeley’s portfolio added 549,240 shares to its stake in Houghton Mifflin Harcourt Company (NASDAQ:HMHC), a Boston-based book and software publisher, for an average price of $24.78 per share. The acquisition had a 0.33% impact on Keeley’s portfolio.

Hougthon Mifflin Harcourt has a market cap of $3.06 billion and an enterprise value of $3.54 billion. It has a Price/Book of 2.2 and a Price/Sales of 2.3. John Paulson (Trades, Portfolio), Manning & Napier Advisors, Inc., Ron Baron (Trades, Portfolio), Pioneer Investments (Trades, Portfolio), Chuck Royce (Trades, Portfolio), Louis Moore Bacon (Trades, Portfolio), Scott Black (Trades, Portfolio), Julian Robertson (Trades, Portfolio) and Joel Greenblatt (Trades, Portfolio) have shares of Houghton Mifflin Harcourt in their portfolios.

Keeley’s portfolio reduced its stakes in more than 150 companies, and many of those reductions were comparatively small. His most significant reduction was his sale of 346,160 shares of Starz (STRZA), a Meridian,Colo.-based provider of premium subscription video programming services, for an average price of $37.56 per share. The deal had a -0.24% impact on Keeley’s portfolio.

Starz has a market cap of $3.84 billion and an enterprise value of $5.06 billion. It has a P/E of 14.2, a Price/Book of 20.3 and a Price/Sales of 2.4. Jana Partners (Trades, Portfolio), Murray Stahl (Trades, Portfolio), Mario Gabelli (Trades, Portfolio), First Eagle Investment (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), Tom Gayner (Trades, Portfolio), Lee Ainslie (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio) have shares of Starz in their portfolios.

To view the portfolios of more gurus, visit the List of Gurus page. Not a premium member of GuruFocus? Try it free for 7 days.

About the author: