Hotchkis & Wiley Trims Corning, Microsoft, Exits HP

Firm's largest trades in the 3rd quarter

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Dec 05, 2016
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HOTCHKIS & WILEY was formed in Los Angeles in 1980 and has focused exclusively on finding and owning undervalued companies that have a significant potential for appreciation. During the third quarter the guru’s largest sells were the following:

The firm reduced its stake in Corning Inc. (GLW) by 31.63% with an impact of -1.24% on the portfolio.

The company is engaged in manufacturing of specialty glass and ceramics. Its segments are Display Technologies, Optical Communications, Environmental Technologies, Specialty Materials and Life Sciences. Third-quarter GAAP earnings per share grew 73% from the same quarter of a year before, and core earnings per share increased 24%.

GuruFocus gives the stock a profitability and growth rating of 7 out of 10. The return on equity (ROE) of 11.96% and return on assets (ROA) of 8.10% are outperforming 75% of the companies in the Global Electronic Components industry. Financial strength has a rating of 6 out of 10 with cash to debt of 1.23 that is below the industry median of 1.40.

The largest shareholder among the gurus is Dodge & Cox with 3.83% of outstanding shares followed by HOTCHKIS & WILEY with 3.22%, PRIMECAP Management (Trades, Portfolio) with 1.97%, Charles Brandes (Trades, Portfolio) with 0.68%, Donald Yacktman (Trades, Portfolio) with 0.33%, Mairs and Power (Trades, Portfolio) with 0.3%, Yacktman Fund (Trades, Portfolio) with 0.27% and Richard Pzena (Trades, Portfolio) with 0.18%.

The guru reduced its shares in Microsoft Corp. (MSFT) by 17.61% with an impact of -0.59% on the portfolio.

The company is engaged in designing, manufacturing and selling devices and online advertising. Its products include operating systems for computing devices, servers, phones and other devices. During the first quarter the company returned $6.6 billion to shareholders in the form of share repurchases and dividends and reported an 8% increase in its quarterly dividend to 39 cents per share.

GuruFocus gives the stock a profitability and growth rating of 7 out of 10. The ROE of 22.30% and ROA of 8.80% are outperforming 77% of the companies in the Global Software - Infrastructure industry. Financial strength has a rating of 6 out of 10 with cash to debt of 1.83 that is above the industry median of 6.46.

PRIMECAP Management is the largest shareholder among the gurus with 0.73% of outstanding shares followed by Dodge & Cox with 0.57%, Jeff Ubben (Trades, Portfolio) with 0.5%, First Eagle Investment (Trades, Portfolio) with 0.3%, Barrow, Hanley, Mewhinney & Strauss with 0.3%, Ken Fisher (Trades, Portfolio) with 0.24% and Jeremy Grantham (Trades, Portfolio) with 0.22%.

The guru sold out of HP Inc. (HPQ) with an impact of -0.53% on the portfolio.

The company provides products, technologies, software, solutions and services to individual consumers, small- and medium-sized businesses including customers in the government, health and education sectors. Fourth-quarter GAAP net revenue decreased 6% year over year, and GAAP net earnings from continuing operations decreased 28%.

GuruFocus gives the stock a profitability and growth rating of 4 out of 10. The ROE of 121.66% and ROA of 5.83% are outperforming 71% of the companies in the Global Computer Systems industry. Financial strength has a rating of 5 out of 10 with cash to debt of 0.92 that is below the industry median of 1.40.

The largest shareholder among the gurus is Dodge & Cox with 9.89% of outstanding shares followed by PRIMECAP Management with 3.61%, Pzena with 1.01%, Donald Yacktman with 0.13% and Yacktman Fund with 0.12%.

The guru reduced its stake in Cummins Inc. (CMI) by 18.49% with an impact of -0.52% on the portfolio.

The company designs, manufactures, distributes and services diesel and natural gas engines, electric power generation systems and engine-related component products. During the third quarter revenues decreased 9% from the same quarter of the prior year.

GuruFocus gives the stock a profitability and growth rating of 7 out of 10. Its ROE of 16.41% and ROA of 7.75% are outperforming 81% of the companies in the Global Diversified Industrials industry. Financial strength has a rating of 7 out of 10 with cash to debt of 0.77 that is a few below the industry median of 0.91.

HOTCHKIS & WILEY is the largest shareholder among the gurus with 2.82% of outstanding shares followed by Bill Nygren (Trades, Portfolio) with 1.62%, First Eagle Investment with 1.14%, T Rowe Price Equity Income Fund (Trades, Portfolio) with 0.64% and Joel Greenblatt (Trades, Portfolio) with 0.16%.

The firm reduced its stake in Honda Motor Co. Ltd. ADRĂ‚ (HMC) by 37.80% with an impact of -0.38% on the portfolio.

The company develops, produces and manufactures motor products including small general-purpose engines and scooters and specialty sports cars. The company operates in Japan, North America, Europe, Asia and other regions. Second-quarter operating profit increased 38.4% year over year, and operating margin was 39.8% compared to 34.1% in the same quarter of a year before.

GuruFocus gives the stock a profitability and growth rating of 7 out of 10. The ROE of 5.59% and ROA of 2.14% are underperforming 65% of the companies in the Global Auto Manufacturers industry. Financial strength has a rating of 6 out of 10 with cash to debt of 0.29 that is below the industry median of 0.51.

The largest shareholder among the gurus is Dodge & Cox with 0.32% of outstanding shares followed by Brandes with 0.23% and Jim Simons (Trades, Portfolio) with 0.2%.

The guru reduced its stake in Humana Inc. (HUM) by 45.33% with an impact of -0.34% on the portfolio.

It is a health care company that offers insurance products and health and wellness services. Its segments include Retail, Employer Group and Healthcare Services.

GuruFocus gives the stock a profitability and growth rating of 7 out of 10. The ROE of 10.27% and ROA of 4.13% are outperforming 59% of the companies in the Global Health Care Plans industry. Financial strength has a rating of 7 out of 10 with cash to debt of 1.58 that is a few above the industry median of 1.36.

Larry Robbins (Trades, Portfolio) is the largest shareholder among the gurus with 6.39% of outstanding shares followed by Daniel Loeb (Trades, Portfolio) with 0.94%, Simons with 0.61%, Grantham with 0.44%, Andreas Halvorsen (Trades, Portfolio) with 0.43% and Pioneer Investments (Trades, Portfolio) with 0.37%.

The guru reduced its stake in Bank of America Corp. (BAC) by 42.72% with an impact of -0.26% on the portfolio.

It is a bank holding and a financial holding company. Through its subsidiaries, it provides banking and nonbanking financial services and products throughout the U.S. and in selected international markets. Third quarter revenue increased 3%, and net income grew 7%. The company reported a growth of 8% for earnings per share.

GuruFocus gives the stock a profitability and growth rating of 4 out of 10. The ROE of 5.16% and ROA of 0.70% are underperforming 73% of the companies in the Global Banks - Global industry. Financial strength has a rating of 5 out of 10 with cash to debt of 0.60 that is below the industry median of 1.98.

The largest shareholder among the gurus is Dodge & Cox with 2.26% of outstanding shares followed by Barrow, Hanley, Mewhinney & Strauss with 0.79%, Fisher with 0.35%, First Pacific Advisors (Trades, Portfolio) with 0.33%, Nygren with 0.33%, Pzena with 0.28% and Halvorsen with 0.25%.

Disclosure: I do not own any shares of any stocks mentioned in this article.

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