Mariko Gordon (Trades, Portfolio) of Daruma Capital Management looks for small cap stocks when making investment decisions and believes the best time to acquire stock is not only when it provides good value but also when it is clear to the investor what will push its price up.
Gordon’s quarterly transactions always provide a mix of buys and sells, purchases of new stakes and sales of old ones to study. The best measure of the strategy’s success may be the record of Daruma’s Small Cap Composite. It posted a return of better than 44% in 2014.
Gordon’s most significant third-quarter transaction was the sale of a 1,109,815-share stake in Dealertrack Technologies Inc. (TRAK, Financial), an auto dealer software company and a member of the Atlanta-based Cox Automotive network, for an average price of $62.47 per share. The deal had a -3.06% impact on Gordon’s portfolio.
Dealertrack Technologies has a market cap of $3.5 billion and an enterprise value of $4.28 billion. It has a forward P/E of 35.1, a P/B of 3.2 and a P/S of 3.5. GuruFocus has given Dealertrack Technologies a Financial Strength rating of 3/10 and a Profitability and Growth rating of 5/10.
Dealertrack Technologies sold for $63.16 per share Tuesday.
Gordon sold a 3,258,692-share stake in HMS Holdings Corp. (HMSY, Financial), an Irving, Texas-based business services company, for an average price of $11.15 per share. The transaction had a -2.46% impact on Gordon’s portfolio.
HMS Holdings has a market cap of $1.12 billion and an enterprise value of $1.17 billion. It has a P/E of 84.8, a forward P/E of 19.3, a P/B of 2.1 and a P/S of 2.5. GuruFocus has given HMS Holdings a Financial Strength rating of 7/10 and a Profitability and Growth rating of 7/10.
RS Investment Management (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio) have shares of HMS Holdings in their portfolios.
On Tuesday HMS Holdings sold for $12.97 per share.
Gordon also sold a 3,321,964-share stake in Bankrate Inc. (RATE, Financial), a North Palm Beach, Fla.-based financial services company, for an average price of $10.02 per share. The deal had a -1.53% impact on Gordon’s portfolio.
Bankrate has a market cap of $1.45 billion and an enterprise value of $1.6 billion. It has a forward P/E of 20.2, a P/B of 1.8 and a P/S of 2.7. GuruFocus has given Bankrate a Financial Strength rating of 6/10 and a Profitability and Growth rating of 3/10.
Columbia Wanger (Trades, Portfolio), Chuck Royce (Trades, Portfolio), Steven Cohen (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio) have shares of Bankrate in their portfolios.
Bankrate sold for $14.59 per share Tuesday.
Gordon bought three new stakes in the third quarter – Babcock & Wilcox Enterprises Inc. (BW, Financial), Analogic Corp. (ALOG, Financial) and Flowers Foods Inc. (FLO, Financial).
Gordon invested in a 2,824,648-share stake in Babcock & Wilcox, a Charlotte, N.C.-based power company. Gordon paid an average price of $18.45 per share in a transaction that had a 2.92% impact on her portfolio.
Babcock & Wilcox has a market cap of $1.02 billion and an enterprise value of $819.7 million. It has a forward P/E of 12.4 and a P/S of 0.6. GuruFocus has given Babcock & Wilcox a Financial Strength rating of 3/10 and a Profitability and Growth rating of 3/10.
With the purchase, Gordon became Babcock & Wilcox’s leading shareholder among the gurus. First Pacific Advisors (Trades, Portfolio), Steven Cohen (Trades, Portfolio), FPA Capital Fund (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), Charles Brandes (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio) and Jim Simons (Trades, Portfolio) have shares of Babcock & Wilcox in their portfolios.
On Tuesday Babcock & Wilcox sold for $19.05 per share.
Gordon acquired a 531,690-share stake in Analogic, a Peabody, Mass.-based medical imaging company, for an average price of $81 per share. The deal had a 2.68% impact on Gordon’s portfolio.
Analogic has a market cap of $1.04 billion and an enterprise value of $916.86 million. It has a P/E of 31.5, a forward P/E of 20.4, a P/B of 1.9 and a P/S of 1.9. GuruFocus has given Analogic a Financial Strength rating of 9/10 and a Profitability and Growth rating of 7/10.
Chuck Royce (Trades, Portfolio), NWQ Managers (Trades, Portfolio), Richard Snow (Trades, Portfolio) and Jim Simons (Trades, Portfolio) have shares of Analogic in their portfolios.
Analogic sold for $83.71 per share Tuesday.
Gordon raised her stake in Forward Air Corp. (FWRD, Financial), a Greeneville, Tenn.-based provider of transportation and related services to the air freight market, by nearly 91%. Gordon acquired 610,895 shares for an average price of $47.3 per share. The transaction had a 1.56% impact on her portfolio.
Forward Air has a market cap of $1.5 billion and an enterprise value of $1.49 billion. It has a P/E of 30.5, a forward P/E of 17.9, a P/B of 3.0 and a P/S of 1.6. GuruFocus has given Forward Air a Financial Strength rating of 9/10 and a Profitability and Growth rating of 7/10.
Chuck Royce (Trades, Portfolio), Columbia Wanger (Trades, Portfolio), Jim Simons (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio) have shares of Forward Air in their portfolios.
On Tuesday Forward Air sold for $48.58 per share.
Gordon reduced her stake in Electronics for Imaging Inc. (EFII, Financial), a Fremont, Calif.-based computer peripherals company, by almost 35%. Gordon sold 767,789 shares for an average price of $44.45 per share in a deal that had a -1.47% impact on her portfolio.
Electronics for Imaging has a market cap of $2.34 billion and an enterprise value of $2.13 billion. It has a P/E of 67.6, a forward P/E of 20.1, a P/B of 2.8 and a P/S of 2.8. GuruFocus has given Electronics for Imaging a Financial Strength rating of 7/10 and a Profitability and Growth rating of 6/10.
Gordon is Electronics for Imaging’s leading shareholder with 1,426,842 shares in her portfolio. Ron Baron (Trades, Portfolio) and Jim Simons (Trades, Portfolio) also have shares of Electronics for Imaging in their portfolios.
Electronics for Imaging sold for $48.99 per share on Tuesday.
Gordon reduced her stake in Texas Capital Bancshares Inc. (TCBI, Financial), a Dallas-based bank and financial holding company, by more than 28%, selling 417,544 shares for an average price of $55.85 per share. The deal had a -1.14% impact on Gordon’s portfolio.
Texas Capital Bancshares has a market cap of $2.72 billion and an enterprise value of $2.1 billion. It has a P/E of 19.8, a forward P/E of 16.1, a P/B of 1.9 and a P/S of 4.6. GuruFocus has given Texas Capital Bancshares a Financial Strength rating of 6/10 and a Profitability and Growth rating of 7/10.
James Barrow (Trades, Portfolio), John Keeley (Trades, Portfolio), Ken Fisher (Trades, Portfolio) and Jim Simons (Trades, Portfolio) have shares of Texas Capital Bancshares in their portfolios.
On Tuesday Texas Capital Bancshares sold for $59.36 per share.
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