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James Li
James Li
Articles (727)  | Author's Website |

Steven Romick Sells Short Volkswagen in 3rd Quarter

Guru starts two new positions, including one in auto industry

FPA Crescent Fund manager Steven Romick (Trades, Portfolio) seeks long-term capital appreciation through long and short equity positions. During the third quarter, Romick invested in Porsche Automobil Holding SE (XTER:PAH3)(POAHY) and Axalta Coating Systems Inc. (NYSE:AXTA). The guru also sold short Volkswagen AG (XTER:VOW3)(VLKAY) and reduced his short position in Tencent Holdings Inc. (HKSE:00700)(TCEHY).

Porsche and Volkswagen

Romick invested in 1,562,200 shares of Porsche and sold short 578,602 shares of Volkswagen. During the quarter, Porsche’s share price averaged 50.62 euros ($59.51) while Volkswagen stock averaged 133.97 euros per share.

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Volkswagen delivered strong financial results during the first half of the year, according to the company’s semiannual report. The German auto manufacturer delivered 5,155,591 autos to global customers, up approximately 0.8% from the number of deliveries in the first half of 2016. Strong growth in the following brands contributed to the increase in deliveries: SEAT, Bentley, Scania and Porsche. Despite this, declining Audi deliveries offset the strong growth in other brands.

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Axalta Coating

Romick added 2,157,651 shares of Axalta for an average price of $30.28. With this transaction, the guru increased his portfolio 0.63%.

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The Philadelphia-based coating company expects net sales growth of 7% to 8% for the full year, including acquisition contributions between 6% and 7%. Chief Financial Officer Robert Bryant said that even though uneven customer demands led to shortfalls during the first half of the year, the company can still deliver the revised full-year targets through strategic business restructuring initiatives.

Tencent Holdings

Romick purchased 5,801,700 shares of Tencent for an average price of 315.34 Hong Kong dollars ($40.40) per share, reducing his short position by approximately 20%. The guru increased his portfolio 8.66% with this transaction.

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China-based Tencent offers popular social networking platforms like WeChat (Weixin in Chinese) and QQ. The company has a high profitability rank of 9, with profit margins and returns outperforming over 92% of global competitors.

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Disclosure: I do not have positions in the stocks mentioned.

About the author:

James Li
I am an editorial assistant and researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

Visit James Li's Website


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