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David Goodloe
David Goodloe
Articles (769) 

Many of Ron Baron's 1st-Quarter Divestitures Are Overvalued Today

Stake in ITC Holdings was guru's largest divestiture

Ron Baron (Trades, Portfolio) of Baron Funds sold more than 40 stakes in the first quarter. Many of his largest divestitures are overvalued today, according to the DCF Calculator.

Baron’s most noteworthy sale of the first quarter was the divestiture of his 12,971,289-share stake in ITC Holdings Corp. (NYSE:ITC), the Novi, Michigan-based parent company of ITC Transmission, for an average price of $40.55 per share. The deal had a -2.36% impact on Baron’s portfolio.

ITC Holdings’ leading shareholder among the gurus is now Eric Mindich (Trades, Portfolio) with a stake of 5,793,640 shares. The stake is 3.79% of ITC Holdings’ outstanding shares and 3.08% of Mindich’s total assets.

ITC Holdings has a P/E of 28.6, a forward P/E of 20.5, a P/B of 3.9 and a P/S of 6.5. GuruFocus gives ITC Holdings a Financial Strength rating of 6/10 and a Profitability and Growth rating of 8/10.

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ITC Holdings sold for $44.56 per share Friday. With a business predictability of 3 stars, ITC Holdings receives a fair value of $44.13 from the DCF Calculator.

Baron sold his 762,284-share stake in Towers Watson & Co. (NASDAQ:TW), an Arlington, Virginia-based professional services company, for an average price of $125.73 per share. The transaction had a -0.45% impact on Baron’s portfolio.

No gurus currently hold shares in Towers Watson. Baron was one of eight gurus to exit his position in the company.

Towers Watson has a P/E of 20.1, a forward P/E of 13.4, a P/B of 2.9 and a P/S of 2.3. GuruFocus gives Towers Watson a Financial Strength rating of 6/10 and a Profitability and Growth rating of 8/10.

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Towers Watson sold for $123 per share Friday. With a business predictability of 3½ stars, Towers Watson receives a fair value of $94.48 from the DCF Calculator.

Baron sold his 1,165,413-share stake in Genesee & Wyoming Inc. (NYSE:GWR), a Darien, Connecticut-based short-line railroad holding company, for an average price of $54.66 per share. The deal had a -0.29% impact on Baron’s portfolio.

Genesee & Wyoming’s leading shareholder among the gurus is now Manning & Napier Advisors with a stake of 375,890 shares. The stake is 0.65% of Genesee & Wyoming’s outstanding shares and 0.14% of Manning & Napier’s total assets.

Genesee & Wyoming has a P/E of 15, a forward P/E of 15.5, a P/B of 1.3 and a P/S of 1.6. GuruFocus gives Genesee & Wyoming a Financial Strength rating of 7/10 and a Profitability and Growth rating of 8/10.

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Genesee & Wyoming sold for $59.19 per share Friday. With a business predictability of 3 stars, Genesee & Wyoming receives a fair value of $55.1 from the DCF Calculator.

The guru sold his 1,996,266-share stake in Diamond Resorts International Inc. (NYSE:DRII), a Las Vegas-based timeshare company, for an average price of $21.4 per share. The divestiture had a -0.24% impact on Baron’s portfolio.

Jim Simons (Trades, Portfolio) is now Diamond Resorts International’s leading shareholder among the gurus with a stake of 552,600 shares. The stake is 0.79% of Diamond Resorts International’s outstanding shares and 0.03% of Simons’ total assets.

Diamond Resorts International has a P/E of 10.9, a P/B of 5.3 and a P/S of 1.8. GuruFocus gives Diamond Resorts International a Financial Strength rating of 5/10 and a Profitability and Growth rating of 6/10.

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Diamond Resorts International sold for $23.34 per share Friday. The DCF Calculator gives Diamond Resorts International a fair value of $22.9.

Baron sold his 4,489,186-share stake in Builders FirstSource Inc. (NASDAQ:BLDR), a provider of building materials to homebuilders and remodelers, for an average price of $8.66 per share. The divestiture had a -0.23% impact on Baron’s portfolio.

Simons is now Builders FirstSource’s leading shareholder among the gurus with a stake of 1,022,500 shares. The stake is 0.93% of Builders FirstSource’s outstanding shares and 0.02% of Simons’ total assets.

Builders FirstSource has a forward P/E of 9, a P/B of 9.7 and a P/S of 0.3. GuruFocus gives Builders FirstSource a Financial Strength rating of 6/10 and a Profitability and Growth rating of 6/10.

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Builders FirstSource sold for $11.78 per share Friday. With a business predictability of 1 star, Builders FirstSource receives a fair value of $-3.21 from the DCF Calculator.

Baron sold his 205,898-share stake in LinkedIn Corp. (NYSE:LNKD), a Mountain View, California-based career-oriented social networking service, for an average price of $148.17 per share. The divestiture had a -0.21% impact on Baron’s portfolio.

Frank Sands (Trades, Portfolio) is LinkedIn’s leading shareholder among the gurus with a stake of 7,344,523-share stake. The stake is 5.5% of LinkedIn’s outstanding shares and 2.48% of Sands’ total assets.

LinkedIn has a forward P/E of 30.6, a P/B of 3.8 and a P/S of 5.3. GuruFocus gives LinkedIn a Financial Strength rating of 7/10 and a Profitability and Growth rating of 6/10.

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LinkedIn sold for $131.36 per share Friday. The DCF Calculator gives LinkedIn a fair value of $-14.02.

The guru sold his 1,807,038-share stake in Forest City Realty Trust Inc. (NYSE:FCE.A), a Cleveland-based real estate management and development company, for an average price of $19.63 per share. The divestiture had a -0.18% impact on Baron’s portfolio.

Third Avenue Management (Trades, Portfolio) is Forest City Realty’s leading shareholder among the gurus with a stake of 5,661,733 shares. The stake is 2.18% of Forest City Realty’s outstanding shares and 4.59% of Third Avenue’s total assets.

Forest City Realty has a P/E of 280.6, a P/B of 1.9 and a P/S of 4.9. GuruFocus gives Forest City Realty a Financial Strength rating of 5/10 and a Profitability and Growth rating of 5/10.

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Forest City Realty sold for $22.45 per share Friday. With a business predictability of 1 star, Forest City Realty receives a fair value of 86 cents from the DCF Calculator.

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About the author:

David Goodloe
I'm a journalist by training. I grew up in Arkansas and earned my B.A. at the University of Arkansas. I earned my master's degree at the University of North Texas. My background includes stints at newspapers in Arkansas and Texas and teaching news writing and news editing to students at the University of Oklahoma and Richland College here in Dallas. I'm a writer/editor at GuruFocus.

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