Causeway Capital Management’s Sarah Ketterer (Trades, Portfolio) acquired 13 new holdings in the third quarter. Her top four new holdings are CSX Corp. (CSX, Financial), CSRA Inc. (CSRA, Financial), Signet Jewelers (SIG, Financial) and VeriFone Systems Inc. (PAY, Financial).
Ketterer is the CEO and fundamental portfolio manager at Causeway. She is a contrarian value investor, responsible for investment research across all sectors as well as managing the firm’s fundamental and absolute returns strategies. She is a co-founder of the firm, which was established in June 2001.
In CSX, Ketterer purchased 5,100,746 shares for an average price of $28.37 per share. The transaction expanded the portfolio by 3.4%.
CSX is a Florida-based holding company focused on real estate and railways. It has a market cap of $32.14 billion with an enterprise value of $41.9 billion. It has a price-earnings (P/E) ratio of 19.04, a forward P/E of 17.5, a price-book (P/B) ratio of 2.7 and a price-sales (P/S) ratio of 3.1.
GuruFocus ranked the company’s financial strength 4 of 10. The Piotroski F-Score of 6 and Altman Z-Score of 1.9 suggest the company is in stable condition with minor financial stress. The company’s return on invested capital (ROIC) outperforms its weighted average cost of capital (WACC), meaning it is creating value as it grows. The company’s cash-debt ratio of 0.07 is below the industry median of 0.34.
GuruFocus ranked CSX’s profitability and growth 8 of 10. It has an operating margin of 29.4% and a net margin of 15.9%. Its return on equity (ROE) and return on assets (ROA) outperform 80% and 70% of other companies in the global railroads industry. Its return on capital (ROC) outperforms 56% of competitors.
With her purchase, Ketterer became the company’s largest shareholder among the gurus with 0.54% of outstanding shares, which is 3.4% of her total assets managed. In total, 14 gurus hold positions in the company.
The DCF Calculator gives the stock a fair value of $31.25; it was trading at $34.28 on Tuesday.
In CSRA, the guru purchased 4,523,786 shares for an average price of $25.81 per share. The transaction expanded the portfolio by 2.6%.
The Virginia-based information technology services company has a market cap of $5.2 billion with an enterprise value of $7.9 billion. It has a P/E of 45.6, a P/B of 29.7 and a P/S of 1.1.
GuruFocus ranked the company’s financial strength 4 of 10. It has an Altman Z-Score of 1.82, indicating it has minor financial stress. The cash-debt ratio and interest coverage ratio fall far below the industry median.
GuruFocus ranked the CSRA’s profitability and growth 4 of 10. It has an operating margin of 7.6% and a net margin of 2.4%. The ROE and ROC outperform 84% and 67% of other companies in the global IT services industry. The ROA underperforms 51% of competitors.
Jana Partners (Trades, Portfolio) is the largest shareholder of CSRA among the gurus with 2.9% of outstanding shares, which is 2.3% of its total assets managed. In all, eight other gurus hold positions in the company.
The DCF Calculator gives the stock a fair value of $7.49; it was trading at $31.76 on Tuesday.
In Signet Jewelers, Ketterer purchased 1,418,450 shares for an average price of $84.56 per share. The transaction expanded the portfolio by 2.3%.
The specialty jewelry retailer has a market cap of $6.9 billion with an enterprise value of $8.4 billion. It has a P/E of 14.12, a forward P/E of 10.6, a P/B of 2.4 and a P/S of 1.12.
GuruFocus ranked the company’s financial strength 6 of 10. It has a high Piotroski F-Score of 8 and Altman Z-Score of 4.1, which suggest the company is in a healthy financial condition. Its ROIC outperforms its WACC so value is being created as the company grows. The cash-debt ratio of 0.08 is below the industry median of 0.9.
GuruFocus ranked Signet’s profitability and growth 8 of 10. It has an operating margin of 11.6% and a net margin of 7.8%. Its ROE and ROA outperform 80% and 79% of other companies in the global luxury goods industry. Its ROC outperforms 61% of competitors.
With her purchase, Ketterer dethroned Steven Cohen (Trades, Portfolio) as Signet’s largest shareholder among the gurus with 1.9% of outstanding shares, which is 2.3% of her total assets managed. In total, 12 gurus hold positions in the jeweler.
The DCF Calculator gives the stock a fair value of $69.99; it was trading at $92.86 on Tuesday.
In VeriFone Systems, the guru purchased 6,524,812 shares for an average price of $18.17 per share. The transaction expanded the portfolio by 2.2%
The electronic payment solutions provider has a market cap of $1.9 billion with an enterprise value of $2.7 billion. It has a P/E of 58.9, a forward P/E of 9.6, a P/B of 2.3 and a P/S of 0.9.
GuruFocus ranked the company’s financial strength 4 of 10. The Piotroski F-Score of 6 and Altman Z-Score of 1.2 suggest that while the company is financially stable, it does show signs of stress. The company's ROIC underperforms its WACC, therefore destroying value. The cash-debt ratio of 0.2 is below the industry median of 1.13.
GuruFocus ranked VeriFone’s profitability and growth 7 of 10. It has an operating margin of 3.3% and a net margin of 1.6%. The ROE and ROA underperform 63% and 66% of other companies in the global business equipment industry. In contrast, its ROC outperforms 71% of competitors.
Ketterer is now the company’s largest shareholder among the gurus with 5.9% of outstanding shares, which is 2.2% of her total assets managed. In all, 8 gurus hold a position in VeriFone.
The DCF Calculator gives the stock a fair value of $3.1; it was trading at $17.17 on Tuesday.
To see Ketterer’s current positions and other new holdings for the quarter, visit her portfolio.
Disclosure: I do not own stock in any companies mentioned in the article.
Start a free 7-day trial of Premium Membership to GuruFocus.
