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Tiziano Frateschi
Tiziano Frateschi
Articles (1557)  | Author's Website |

Fairholme Fund Cuts Bank of America, Buys Lands' End

Fund invests in NOW, MRC Global, Leucadia National

Fairholme Fund (Trades, Portfolio) is managed by its founder, Bruce Berkowitz (Trades, Portfolio). In the 10-year period after inception in 1999, the fund gained 253% while the Standard & Poor's lost money. During the fourth quarter Berkowitz traded many stocks.

The investor reduced its stake in Bank of America Corp. (BAC) by 71.16%; the deal had an impact of -15.61% on the portfolio.

The company through its banking and various nonbanking subsidiaries, throughout the U.S. and in selected international markets, provides a diversified range of banking and nonbanking financial services and products through five business segments: Consumer and Business Banking, Consumer Real Estate Services, Global Wealth and Investment Management, Global Banking and Global Markets. Consumer and Business Banking is composed of Deposits and Consumer Lending. Fourth quarter net income grew 9% from the same quarter of a year before and driven by lower operating expenses; noninterest expense decreased 2% from the fourth quarter of 2014.

GuruFocus gives the stock a profitability and growth rating of 4 out of 10 with weak returns of ROE of 5.73% and ROA of 0.74% that are underperforming 71% of the companies in the Global Banks - Global industry. Financial strength has a rating of 6 out of 10 with a cash-to-debt of 0.63 that is far below the industry median of 2.77.

Dodge & Cox is the company's largest shareholder among the gurus with 1.81% of outstanding shares followed by James Barrow (Trades, Portfolio) with 0.82%, HOTCHKIS & WILEY with 0.47%, Ken Fisher (Trades, Portfolio) with 0.42%, Bill Nygren (Trades, Portfolio) with 0.34% and Richard Pzena (Trades, Portfolio) with 0.28%.

The guru acquired 6,266,800 shares in NOW Inc. (DNOW) with an impact of 3.82% on the portfolio.

The company distributes products including pipe and tubing, manual and actuated valves, fittings, flanges, gaskets, fasteners, instrumentation, power transmission products, mill and janitorial supplies, hand and power tools, machine cutting tools, safety products, personal protective equipment, electrical products, artificial lift equipment, pumps, drilling and production products and industrial paint and coatings. During the fourth quarter the company reported a net loss of $2.33 per fully diluted share compared to net income of 14 cents per fully diluted share in the same period of 2014. The company’s revenues experienced a decrease of 14% from the third quarter of 2015.

GuruFocus gives the stock a profitability and growth rating of 3 out of 10 with negative returns of ROE of -28.29% and ROA of -21.46% that are underperforming 78% of the companies in the Global Oil & Gas Equipment & Services industry. Financial strength has a rating of 7 out of 10 with a cash-to-debt of 0.83 that is above the industry median of 0.43.

The company’s largest shareholder among the gurus is First Eagle Investment (Trades, Portfolio) with 7.79% of outstanding shares followed by Berkowitz with 6.7%, Dodge & Cox with 2.32%, Warren Buffett (Trades, Portfolio) with 1.7% and Joel Greenblatt (Trades, Portfolio) with 0.79%.

The investor bought 4,720,500 shares in MRC Global Inc. (MRC) with an impact of 2.31% on the portfolio.

The company is the global industrial distributor of pipe, valves and fittings and related products and services to the energy industry.

GuruFocus gives the stock a profitability and growth rating of 6 out of 10 with negative returns of ROE of -26.49% and ROA of -9.90% that are underperforming 80% of the companies in the Global Oil & Gas Equipment & Services industry. Financial strength has a rating of 7 out of 10 with a cash-to-debt of 0.13 that is far below the industry median of 0.43.

Berkowitz is the company's largest shareholder among the gurus with 5.67% of outstanding shares followed by Tweedy Browne (Trades, Portfolio) with 5.67%, Greenblatt with 2.69%, Arnold Schneider (Trades, Portfolio) with 2.15% and Jim Simons (Trades, Portfolio) with 0.31%.

The guru reduced his stake in Leucadia National (Trades, Portfolio) Corp. (LUK) by 39.72%. The deal had an impact of -2.21% on the portfolio.

The company through its subsidiaries is engaged in a variety of businesses, including investment banking and capital markets, beef processing, manufacturing, energy projects, asset management and real estate and other investments, which include Berkadia, Linkem and Garcadia. During the quarter the company repurchased a total of 4.4 million of its common shares. Revenues increased 33.4%, and pretax income went up 30.7%.

GuruFocus gives the stock a profitability and growth rating of 6 out of 10 with weak returns of ROE of 2.62% and ROA of 0.56% that are underperforming 62% of the companies in the Global Capital Markets industry. Financial strength has a rating of 6 out of 10 with a cash-to-debt of 4.27.

The company’s largest shareholder among the gurus is First Pacific Advisors (Trades, Portfolio) with 4.89% of outstanding shares followed by Charles Brandes (Trades, Portfolio) with 1.24%, Columbia Wanger (Trades, Portfolio) with 1.04%, Murray Stahl (Trades, Portfolio) with 0.31% and Third Avenue Management (Trades, Portfolio) with 0.06%.

Lands' End Inc. (LE) saw a huge increase of 10,123.59% with an impact of 1.91% on the portfolio.

The company offers its products through catalogs, online at www.landsend.com and affiliated specialty and international websites and through retail locations, primarily at Lands' End Shops at Sears, stand-alone Lands' End Inlet stores and international shop-in-shops that sell merchandise in various retail department stores.

GuruFocus gives the stock a profitability and growth rating of 4 out of 10 with easy returns of ROE of 13.07% and ROA of 3.89% that are overperforming 54% of the companies in the Global Specialty Retail industry. Financial strength has a rating of 6 out of 10 with a cash-to-debt of 0.21 that is far below the industry median of 0.92.

Edward Lampert (Trades, Portfolio) is the company's largest shareholder among the gurus with 21% of outstanding shares followed by Berkowitz with 9.51%, Robert Olstein (Trades, Portfolio) with 0.35%, Stahl with 0.3% and Chuck Royce (Trades, Portfolio) with 0.25%.

The guru raised his stake in Fannie Mae (FNMAS) by 7.10%. The deal had an impact of 0.55% on the portfolio.

The company has three business segments for management reporting purposes: Single-Family Credit Guaranty, Multifamily and Capital Markets. Single-Family business provides funds to the mortgage market by acquiring single-family loans through lender swap transactions or, working also with its Capital Markets group, through loan purchases. Net revenues, which consist of net interest income and fees and other income, were $5.8 billion for the third quarter of 2015 compared with $6.2 billion for the second quarter of 2015, and net interest income, which includes guaranty fee revenue, was $5.6 billion for the third quarter of 2015 compared with $5.7 billion for the second quarter.

GuruFocus gives the stock a profitability and growth rating of 7 out of 10 with weak returns of ROE of -6.13% and ROA of 0.34% that are underperforming 95% of the companies in the Global Specialty Finance industry. Financial strength has a rating of 5 out of 10 with a cash-to-debt of 0.01 that is far below the industry median of 2.77.

The investor bought 640,300 shares of Sears Hometown & Outlet Stores Inc. (SHOS) with an impact of 0.25% on the portfolio.

The company is a national retailer focused on selling home appliances, lawn and garden equipment, tools and hardware. It also provides its customers with access to a full suite of related services, including home delivery, installation and extended-service plans.

GuruFocus gives the stock a profitability and growth rating of 4 out of 10 with negative returns of ROE of -1.13% and ROA of -0.73 that are underperforming 77% of the companies in the Global Department Stores industry. Financial strength has a rating of 4 out of 10 with a cash-to-debt of 0.46 that is below the industry median of 0.92.

The company’s largest shareholder among the gurus is Lampert with 21% of outstanding shares followed by Francis Chou (Trades, Portfolio) with 6.69%, Stahl with 4.25%, Berkowitz with 3.42% and Fairholme Fund (Trades, Portfolio) with 2.82%.

The guru increased his stake in Sears Holdings Corp. (SHLD) by 0.05%, and the deal had an impact of 1.95% on the portfolio.

The company along with its subsidiaries is an integrated retailer with 1,725 full-line and specialty retail stores in the U.S., operating through Kmart and Sears.

GuruFocus gives the stock a profitability and growth rating of 3 out of 10 with negative ROA of -0.85% that is underperforming 86% of the companies in the Global Department Stores industry. Financial strength has a rating of 6 out of 10 with a cash-to-debt of 0.08 that is far below the industry median of 0.92.

Berkowitz is the company's largest shareholder among the gurus with 26.43% of outstanding shares followed by Lampert with 20.94%, Fairholme Fund (Trades, Portfolio) with 13.33% and Stahl with 2.96%.

About the author:

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

It gives suggestions on position trading.

Visit Tiziano Frateschi's Website


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