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Tiziano Frateschi
Tiziano Frateschi
Articles (1598)  | Author's Website |

GAMCO Investors' Largest Sales During Second Quarter

Mario Gabelli-led firm sold out TRW Automotive and Journal Communications

September 14, 2015 | About:

At the end of the second quarter of 2015, the hedge fund GAMCO Investors Inc. reported a total value of its portfolio of $18.4 billion with a decrease of 3.16% since the previous quarter.

During Q2 2015, the hedge fund sold out 47 stocks and reduced 436 of its existing stakes. The following are the most heavily weighted sales.

It sold out its stake in TRW Automotive Holdings Corp. (TRW) that was 0.78% of its total assets. The company is a supplier of automotive systems, modules and components to automotive original equipment manufacturers and related aftermarkets. It conducts substantially all of its operations through subsidiaries. These operations encompass the design, manufacture and sale of active and passive safety related products and systems.

The stock is trading with a high P/E(ttm) ratio of 27.80 that is ranked lower than 73% of other companies in the Global Auto Parts industry. The price of the stock has risen by 2% during the last 12 months and by 272% during the last 10 years. According to the DCF calculator, the company looks overpriced by 90% at the current price of $55.61, and the Peter Lynch earnings line puts the stock as overvalued with a fair value of $45.5.

TRW achieved a strong start to 2015 in which sales increased by 7% compared to the prior year period. TRW's planned assumptions for industry production volumes in 2015 are approximately up 2% compared to 2014 levels.

During the last quarter, the company has been sold out by all its main shareholders and hedge funds, like Eric Mindich (Trades, Portfolio), Richard Pzena (Trades, Portfolio), Mario Gabelli (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), Jim Simons (Trades, Portfolio), Jeff Auxier (Trades, Portfolio), Louis Moore Bacon (Trades, Portfolio), First Eagle Investment (Trades, Portfolio) and Ruane Cunniff (Trades, Portfolio).

It sold out its stake in Journal Communications Inc. (JRN) that was 0.64% of its total assets. It is a media company with operations in publishing, radio and television broadcasting, interactive media and printing services. Its business segments are: broadcasting; publishing; and corporate. 

The stock is trading with a P/E(ttm) ratio of 16.50 that is ranked higher than 61% of other companies in the the Global Broadcasting - TV industry, and the price has risen by 44% during the last 12 months, while is almost flat during the last 10 years.

The company looks overpriced by 29% at the current price of $14.82 according to the DCF calculator. The Peter Lynch earnings line put the stock as overpriced, giving a fair value of $11.00.

Due to a 13% decline in advertising and marketing services, revenue was down 11% compared to non-GAAP merged company revenue in the prior-year period, and adjusted EBITDA was up by 2% versus the prior year period. For the third quarter 2015, total revenue is expected to be down in the high single-digits when compared to the quarterly merged company revenue in the prior-year period.

It sold out its stake in Salix Pharmaceuticals Ltd. (SLXP) that was 0.45% of its total assets. The company is a specialty pharmaceutical company engaged in acquiring, developing and commercializing prescription drugs and medical devices used in the treatment of gastrointestinal diseases. Its search and development efforts are designed to identify and acquire late-stage and/or marketed proprietary pharmaceutical products for the treatment of gastrointestinal disease that have an existing base of safety and efficacy data.

The stock is trading with a high P/E(ttm) ratio of 19.23 that is ranked higher than 60% of other companies in the Global Drug Manufacturers - Specialty & Generic industry. The price has risen by 16% during the last 12 months, and by 710% during the last 10 years and the company looks overpriced according to the Peter Lynch earnings line that gives a fair value of $13.7 while it is now trading at $172.

The company reported the second quarter with an increase of 34% for total revenue over the prior year and driven by U.S. businesses and emerging markets and its organic sales have grown by 19%. For the full year 2015, they expect total revenue to be in the range of $10.7 - $11.1 billion up from $10.4 - $10.6 billion in the last year.

During the last quarter, the company has been sold out by John Paulson (Trades, Portfolio), Eric Mindich (Trades, Portfolio), Mario Gabelli (Trades, Portfolio), George Soros (Trades, Portfolio), Jim Simons (Trades, Portfolio), First Eagle Investment (Trades, Portfolio), Pioneer Investments (Trades, Portfolio) and Ruane Cunniff (Trades, Portfolio).

It sold out its stake in Exelis Inc.(XLS) that was 0.24% of its total assets. The company is a diversified aerospace, defense, information and services company. The company operates in two segments: Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance (C4ISR) Electronics and Systems and Information and Technical Services to military, government and commercial customers in the United States and internationally.

The stock is trading with a high P/E(ttm) ratio of 18.40 that is ranked higher than 58% of other companies in the Global Aerospace & Defense industry.

The price has risen by 45% during the last 12 months, and by 130% during the last 10 years. According to the DCF calculator, the company looks overpriced by 25% at the current price of $20.66 and even the Peter Lynch earnings line put the stock as overpriced, giving a fair value of $19.3.

During the last quarter, revenue from continuing operations increased 5% over the first quarter of 2014 and operating margin from continuing operations increased by 13.2%. First quarter revenue and profitability growth reflect the strength of their current backlog and improvements in their operational efficiency.

During the last quarter, Mario Gabelli (Trades, Portfolio), Jim Simons (Trades, Portfolio), John Keeley (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio) and the hedge fund First Eagle Investment (Trades, Portfolio), sold out their shares of XLS.

Reduced stakes

The hedge fund also reduced 436 of its stakes, and the most important are the following: Directv (DTV) by -7.23%, Legg Mason Inc. (LM) by -3.84%, American Express Co. (AXP) by -4.22%, Genuine Parts Co. (GPC) by -2.57% and Madison Square Garden Company (MSG) by -2.28%.

Gamco Investors Top Buys Q2 2015

Ticker

Shares Sold

Previous %

Trade

TRW

1,416,450

0.78%

Sold Out

GY

5,280,859

0.64%

Sold Out

JRN

5,844,317

0.45%

Sold Out

SLXP

442,350

0.40%

Sold Out

XLS

1,881,681

0.24%

Sold Out

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About the author:

Tiziano Frateschi
You can read about me on this blog: www.theextraincome.info

It gives suggestions on position trading.

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