Keeley Asset Management Corp (Trades, Portfolio) gained 12 new holdings in the third quarter. The top four new holdings are Ensign Group Inc. (ENSG, Financial), The Howard Hughes Corp. (HHC, Financial), City Office REIT Inc. (CIO, Financial) and Plantronics Inc. (PLT, Financial).
John Keeley founded the firm in 1982, where he served as president and portfolio manager until his death in 2015. The investment team uses bottom-up analysis to find underappreciated and neglected companies that are fundamentally strong.
The Chicago-based firm purchased 1,874,204 shares of Ensign for an average price of $20.29 per share. The transaction had an impact of 1.6% on the portfolio.
Ensign provides skilled nursing and rehabilitative care through assisted living facilities, home health, hospice and other care facilities. The California-based company has a market cap of $1.1 billion and an enterprise value of $1.23 billion. It has a price-earnings (P/E) ratio of 25.3, a forward P/E of 13.2, a price-book (P/B) ratio of 2.6 and a price-sales (P/S) ratio of 0.7.
GuruFocus ranked the company’s financial strength 7 of 10. The Piotroski F-Score of 4 and Altman Z-Score of 4.2 indicate the company is in stable financial condition. The company’s return on invested capital (ROIC) outperforms its weighted average cost of capital (WACC) which means the company is creating value as it grows. The cash-debt ratio of 0.28 is just below the industry median of 0.3.
GuruFocus ranked Ensign’s profitability and growth 6 of 10. It has an operating margin of 5.1% and a net margin of 2.8%. The return on equity (ROE) and return on assets (ROA) outperform 56% and 60% of other companies in the global long-term care industry. The return on capital (ROC) outperforms 55% of competitors.
Keeley Asset Management is Ensign’s largest shareholder among the gurus with 3.7% of outstanding shares, which is 1.6% of its total assets managed. Chuck Royce (Trades, Portfolio) is the only other guru who holds a position.
The DCF Calculator gives the stock a fair value of $9.2; it was trading at $21.86 on Friday.
Keeley purchased 82,686 shares of Howard Hughes for an average price of $116.41 per share. The transaction had an impact of 0.4% on the portfolio.
Howard Hughes is involved in real estate. The Texas-based company has a market cap of $4.3 billion and an enterprise value of $6.5 billion. It has a P/E of 30, a forward P/E of 19.3, a P/B of 1.8 and a P/S of 4.5.
GuruFocus ranked the company’s financial strength 4 of 10. The Piotroski F-Score of 6 and Altman Z-Score of 0.9 suggest the company is stable but does have some financial stress. As the company grows, value is being destroyed because the ROIC underperforms the WACC. The cash-debt ratio of 0.2 is below the industry median of 0.4.
GuruFocus ranked Howard Hughes’ profitability and growth 8 of 10. It has an operating margin of 17.02% and a net margin of 18.8%. The ROE and ROA outperform 55% of other companies in the global real estate – general industry. In contrast, the ROC underperforms 64% of competitors.
Bill Ackman (Trades, Portfolio) is the company’s largest shareholder among the gurus with 8.9% of outstanding shares, which is 7.5% of his total assets managed. In total, eight gurus hold Howard Hughes.
The DCF Calculator gives the stock a fair value of $38.85; it was trading at $109.03 on Friday.
The firm acquired a 155,055-share stake of City Office REIT for an average price of $13.16 per share. The transaction had an impact of 0.08% on the portfolio.
City Office is a fairly newly organized company (as of 2013) that acquires, owns and operates office properties. The real estate company has a market cap of $301.8 million and an enterprise value of $592.5 million. The Vancouver-based company has a P/B of 1.9 and a P/S of 2.9.
GuruFocus ranked City Office’s financial strength 3 of 10. The Piotroski F-Score of 5 and Altman Z-Score of 0.7 imply the company is stable but does have financial stress. The cash-debt ratio of 0.04 is slightly below the industry median of 0.06.
GuruFocus ranked the company’s profitability and growth 6 of 10. It has an operating margin of 1.2% and a net margin of 1.3%. The ROE and ROA underperform 82% and 83% of other companies in the global REIT- office industry. The ROC underperforms 73% of competitors. However, based on historical performance, the returns are outperforming across the board.
Jim Simons (Trades, Portfolio) is the company’s largest shareholder among the gurus with 2.4% of outstanding shares, which is 0.01% of his total assets managed.
The DCF Calculator gives the stock a fair value of $-3; it was trading at $12.24 on Friday.
Keeley purchased a 34,630-share stake of Plantronics for an average price of $49.17 per share. The transaction had an impact of 0.08% on the portfolio.
Plantronics produces audio communications equipment. The California-based electronics company has a market cap of $1.8 billion and an enterprise value of $1.87 billion. It has a P/E of 25.3, a forward P/E of 17.5, a P/B of 5.5 and a P/S of 2.1.
GuruFocus ranked the company’s financial strength 5 of 10. The Piotroski F-Score of 5 and Altman Z-Score of 4.04 suggest the company is financially stable. The company creates value as it grows because the ROIC outperforms the WACC. The cash-debt ratio of 0.8 is below the industry median of 2.3.
GuruFocus ranked Plantronics’ profitability and growth 7 of 10. It has an operating margin of 12.3% and a net margin of 8.02%. The ROE and ROA outperform 90% and 81% of other companies in the global communication equipment industry. The ROC outperforms 81% of competitors.
PRIMECAP Management (Trades, Portfolio) is the company’s largest shareholder among the gurus with 14.8% of outstanding shares, which is 0.3% of its total assets managed. In total, eight gurus hold Plantronics.
The DCF Calculator gives the stock a fair value of $28.46; it was trading at $54.2 on Friday.
Health care stocks have a 5.2% weight on the portfolio. Real estate has a 14.4% weight and technology stocks have an 8.2% weight.
Disclosure: I do not own stock in any companies mentioned in the article.
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