MS Global Franchise Fund (Trades, Portfolio) acquired two new holdings and sold two holdings in the second quarter. The fund purchased International Flavors & Fragrances Inc. (IFF, Financial) and Coca-Cola Co. (KO, Financial). The fund sold out of Sanofi SA (XPAR:SAN, Financial) and 3M Co. (MMM, Financial).
MS Global is part of the Morgan Stanley Institutional Funds. It was established in November 2001. The fund seeks long-term capital appreciation by investing in equity securities around the world that have resilient business franchises and growth potential. The investment team follows a bottom-up approach that evaluates each stock’s quality and valuation characteristics.
International Flavors & Fragrances
In International Flavors & Fragrances, the fund purchased 112,647 shares for an average price of $123.66 per share. The transaction had an impact of 1.9% on the portfolio.
International Flavors & Fragrances manufactures and supplies flavors and fragrances for the food, beverage, personal care and household products industries. The company was founded in 1958 and is headquartered in New York. It has a market cap of $11.1 billion with an enterprise value of $12.01 billion. It has a price-earnings (P/E) ratio of 26.7 with a forward P/E of 23.5. Its price-book (P/B) ratio is 6.6, and its price-sales (P/S) ratio is 3.7.
GuruFocus ranked International Flavors & Fragrances' financial strength 6 of 10. Its Piotroski F-Score is 5, indicating a stable financial condition. Its Altman Z-Score is 5.5, placing it in the safe zone. Its Beneish M-Score of -2.5 indicates the company does not manipulate its earnings. The company’s cash-debt ratio of 0.4 is below the industry median of 0.82.
GuruFocus ranked the company’s profitability and growth 7 of 10. Its operating margin is 19.9% and its net margin is 13.7%. It has a return on equity (ROE) of 25.9% and a return on assets (ROA) of 10.7%, which rank above 89% and 82% of other companies in the industry.
The stock was trading for $139.33 Thursday; its fair value is $70.78 according to the DCF Calculator.
Coca-Cola
In Coca-Cola, the fund purchased 247,724 shares for an average price of $45.19 per share. The transaction had an impact of 1.5% on the portfolio.
Coca-Cola manufactures, distributes and markets nonalcoholic beverage concentrates and syrups. It was founded in 1919 and is headquartered in Atlanta. It has a market cap of $188.3 billion with an enterprise value of $211.5 billion. It has a P/E of 25.1, a forward P/E of 21.5, a P/B of 7.1 and a P/S of 4.4.
GuruFocus ranked Coca-Cola’s financial strength 6 of 10. Its Piotroski F-Score is 6, indicating a stable financial condition. Its Altman Z-Score is 3.6, placing it in the safe zone. Its Beneish M-Score of -2.6 indicates the company does not manipulate its earnings. The company’s cash to debt ratio of 0.5 is below the industry median of 0.7.
GuruFocus ranked the company’s profitability and growth 7 of 10. Its operating margin is 20.6%, and its net margin is 17.6%. It has a ROE of 28.9% and a ROA of 8.24%, which rank above 90% and 68% of other companies in the industry.
The stock was trading for $43.63 Thursday; its fair value is $19.84 according to the DCF Calculator.
Sanofi
The fund sold out of Sanofi, selling 157,921 shares for an average price of 72.67 euros ($81.91) per share. The sale had an impact of -1.9% on the portfolio.
Sanofi is a French health care company engaged in researching, developing, manufacturing and marketing health care products. The company was founded in 1994 and is headquartered in Paris. It has a market cap of 90.6 billion euros with an enterprise value of 101.8 billion euros. It has a P/E of 22.5, a forward P/E of 12.5, a P/B of 1.7 and a P/S of 2.7.
GuruFocus ranked the company’s financial strength 6 of 10. Its Piotroski F-Score is 7, indicating a healthy financial condition. Its Altman Z-Score is 1.87, placing it in the grey zone. Its Beneish M-Score of -2.73 indicates the company does not manipulate its earnings. Sanofi’s cash-debt ratio of 0.4 is below the industry median of 3.15.
GuruFocus ranked Sanofi’s profitability and growth 6 of 10. Its operating margin is 14.6%, and its net margin is 12.3%. It has a ROE of 7.5% and a ROA of 4.2%, which rank above 52% and 54% of other companies in the industry.
The stock was trading for 70.4 euros Thursday; its fair value is 33.92 euros according to the DCF Calculator.
Vanguard Health Care Fund (Trades, Portfolio) is the largest shareholder in Sanofi among the gurus.
3M
The fund sold out of 3M, selling 45,470 shares for an average price of $168.64 per share. The sale had an impact of -1.13% on the portfolio.
3M is a manufacturing company whose products include vinyl, polyester and foil among others. The company was incorporated in 1929 and is headquartered in Minnesota. It has a market cap of $108.3 billion with an enterprise value of $117.3 billion. It has a P/E of 22.9, a forward P/E of 2.3, a P/B of 9.12 and a P/S of 3.7.
GuruFocus ranked the company’s financial strength 6 of 10. Its Piotroski F-Score is 7, indicating a healthy financial condition. Its Altman Z-Score is 6.4, placing it in the safe zone. Its Beneish M-Score of -2.6 indicates the company is not a manipulator of its earnings. 3M’s cash to debt ratio of 0.16 is below the industry median of 1.1.
GuruFocus ranked 3M’s profitability and growth 9 of 10. Its operating margin is 23.4%, and its net margin is 16.3%. It has ROE of 40.4% and ROA of 14.9%, which rank above 97% and 94% of other companies in the industry.
The stock was trading for $179.13 Thursday; its fair value is $87.71 according to the DCF Calculator.
Disclosure: I do not own stock in any companies mentioned in the article.
Start a free 7-day trial of Premium Membership to GuruFocus.
