Legendary investor Irving Kahn, along with his brothers Thomas Graham and Alan Kahn, founded the Kahn Brothers (Trades, Portfolio) Group in 1978, an investment firm that manages more than $800 million in assets. Irving Kahn trained directly with Benjamin Graham and served as his teaching assistant at Columbia Business School.
Kahn died in February 2015 and the firm continues to operate on a contrarian value strategy that focuses on margin of safety and capital appreciation. During the first quarter, Kahn Brothers (Trades, Portfolio) added to its stake in eight holdings, including the following.
Kahn Brothers (Trades, Portfolio) upped its stake in BP by 15%, buying more than 164,000 shares at an average of $29.98 per share. The fund now holds 1,254,270 shares in the oil company.
BP’s stock has declined 26% over the past year and trades at $31.57 as of Tuesday afternoon. The company operates in both the upstream and downstream segments. In the first quarter, BP reported losses of 19 cents compared to EPS of 85 cents in the year-ago quarter.
The balance sheet remains healthy with a current ratio of 1.3, meaning the company can cover its short-term obligations.
The dividend yield is close to the 10-year high in the company’s history at 7.71%. Barrow, Hanley, Mewhinney & Strauss is the largest guru shareholder of BP with more than 30 million shares.
GlaxoSmithKline (GSK, Financial)
The fund increased its holding in pharmaceutical company GlaxoSmithKline by 56%, purchasing 47,350 shares for an average of $39.84 per share. Kahn Brothers (Trades, Portfolio) now holds 131,950 shares in the company.
The shares are down 6% over the past year and trade at a very high PE multiple. Diluted EPS in the first quarter was 17 cents, down significantly from $4.97 in the year-ago quarter. EPS for the full year 2015 was $5.16, however, a good improvement from $1.77 the previous year.
After a slight drop in the operating margin in 2014, GSK managed to raise the margin to 43% last year. The company pays a dividend yield of 5.54%.
BlackBerry Ltd. (BBRY, Financial)
Kahn Brothers (Trades, Portfolio) bought more than 194,000 shares of BlackBerry for an average of $7.51 per share. The fund now holds almost 4 million shares in the tech stock.
BlackBerry’s stock has dropped 36% over the past year and trades at $6.69 as of Tuesday afternoon. The often struggling maker of the once popular BlackBerry phone has posted losses since FY 2013. In FY 2016 ended Feb. 29, the company reported losses of 86 cents per share. The prior year, BlackBerry had losses of 58 cents per share.
Primecap Management is the largest guru shareholder with 14.34% of shares outstanding, followed by Prem Watsa (Trades, Portfolio) with an almost 9% stake.
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