Michael Price Invests Heavily in Financial Sector in 2nd Quarter

Guru releases quarterly portfolio

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Sep 06, 2017
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MFP Investors founder

Michael Price (Trades, Portfolio) established 14 new positions in the second quarter, of which five were financial services companies.

Managing a portfolio of 120 stocks, Price invests in out-of-favor, small-cap companies that are of good value. With a portfolio weight of 28.7%, most of his holdings are in the financial services sector.

Price established positions in Genworth MI Canada Inc. (

GMICF, Financial), First Bank (FRBA, Financial), Fifth Street Finance Corp. (FSC, Financial), PCSB Financial Corp. (PCSB, Financial) and Pacific Premier Bancorp Inc. (PPBI, Financial).

Genworth MI Canada

Price purchased 272,500 shares of Genworth MI Canada for an average price of $25.27 per share, giving it 0.97% portfolio space.

The specialty insurance company has a market cap of $2.63 billion; its shares were trading around $28.78 on Wednesday with a price-earnings (P/E) ratio of 6.72, a price-book (P/B) ratio of 0.86 and a price-sales (P/S) ratio of 3.55.

The Peter Lynch chart below shows the stock is trading below its fair value.

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The Canadian company reported its second-quarter results on Aug. 1. It posted net operating income of $126 million, which increased 28% year over year, and EPS of $1.36.

GuruFocus ranked the company’s financial strength 6 of 10 and its profitability and growth 5 of 10. Genworth pays a quarterly dividend of 44 cents per share. It has grown its dividend at a rate of 9.8% per year over the past five years.

With 0.3% of outstanding shares, Price is the only guru invested in the company.

First Bank

Price bought a 200,100-share position in First Bank for an average price of $12.25 per share, expanding the portfolio 0.3%.

The bank has a market cap of $181.69 million; its shares were trading around $12.15 on Wednesday with a P/E ratio of 19.83, a P/B ratio of 1.55 and a P/S ratio of 16.23.

According to the Peter Lynch chart below, the stock is trading above its fair value.

1504710986541.png

The New Jersey-based company reported its performance for the second quarter on July 24. It posted revenue of $9.1 million, a 26.1% increase from the prior-year quarter, and EPS of 15 cents.

GuruFocus ranked the company’s financial strength 4 of 10 and its profitability and growth 4 of 10. First Bank’s trailing dividend yield is 0.5% and its forward dividend yield is 0.65%. The dividend payout ratio is 6%.

With his purchase, Price became the company’s largest guru shareholder with 1.33% of outstanding shares.

Jim Simons (Trades, Portfolio) is also a shareholder.

Fifth Street

The investor established a 1,000-share holding of Fifth Street Finance for an average price of $4.25 per share. The trade had an impact of 0.06% on the portfolio.

The credit services company has a market cap of $780.92 million; its shares were trading around $5.54 on Wednesday with a forward P/E ratio of 10.58, a P/B ratio of 0.78 and a P/S ratio of 5.24.

Based on the Peter Lynch chart below, the stock appears to be trading above its fair value.

1504711715656.png

The Connecticut-based company reported its second-quarter results on Aug. 9. It posted net investment income of $19.4 million, or 14 cents per share. It also closed $188.1 million of new investments during the quarter.

GuruFocus ranked the company’s financial strength 6 of 10 and its profitability and growth 3 of 10. The company’s trailing dividend yield is 7.28% and its forward dividend yield is 9.09%.

Among the gurus invested in Fifth Street,

Howard Marks (Trades, Portfolio) has the largest position with 19.19% of outstanding shares. Hotchkis & Wiley, Chuck Royce (Trades, Portfolio), First Eagle Investment (Trades, Portfolio) and Manning & Napier Advisors Inc. also own the stock.

PCSB Financial

Price purchased 20,000 shares of PCSB Financial for an average price of $16.85 per share, allocating it 0.04% portfolio space.

The bank holding company has a market cap of $311.35 million; its shares were trading around $17.14 on Wednesday with a forward P/E ratio of 60.98, a P/B ratio of 1.11 and a P/S ratio of 7.42.

According to the Peter Lynch chart below, the stock is trading above its fair value.

1504713069066.png

The New York-based company reported its fourth quarter and fiscal 2017 results on Aug. 3. It posted a net loss of $1.8 million for the quarter and net income of $3.2 million for the year.

GuruFocus ranked the company’s financial strength 6 of 10 and its profitability and growth 4 of 10. The company does not pay a dividend.

Among the gurus invested in PCSB, Royce has the largest holding with 0.58% of outstanding shares.

Pacific Premier Bancorp

Price bought 8,675 shares of Pacific Premier for an average price of $35.98 per share, expanding the portfolio 0.04%.

The bank company has a market cap of $1.36 billion; its shares were trading around $33.8 on Wednesday with a P/E ratio of 23.42, a P/B ratio of 1.42 and a P/S ratio of 5.09.

Based on the Peter Lynch chart below, the stock appears to be trading slightly above its fair value.

1504714025779.png

The California-based company reported its second-quarter results on July 25. It posted net income of $14.2 million, a 49% increase from the prior-year quarter, and EPS of 35 cents.

GuruFocus ranked the company’s financial strength 6 of 10 and its profitability and growth 5 of 10. Pacific Premier does not pay a dividend.

Simons is the company’s largest guru shareholder with 0.14% of outstanding shares.

Other new positions Price established during the quarter include Papa Murphy’s Holdings Inc. (

FRSH, Financial), Babcock & Wilcox Enterprises Inc. (BW, Financial), XPO Logistics Inc. (XPO, Financial), Alphabet Inc. (GOOGL, Financial) and Pandora Media Inc. (P, Financial).

Disclosure: I do not own any stocks mentioned.

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