(GuruFocus, August 5, 2009) Investment Guru, Chairman and CIO of Dreman Value Management David Dreman had an interview with CNBC. Key points he made:
Here is the CNBC video:
On July 23, 2009.. GuruFocus reported on David Dreman's last quarter's buy and sell activities
Does he mean it when he says he likes those stocks? Following is a brief survey of the companies mentioned and his holding history:
1. Apache Corporation (APA)
Apache Corporation is an independent energy company that explores for develops and produces natural gas crude oil and natural gas liquids. In North America Apache's exploration and production interests are focused on the Gulf of Mexico the Anadarko Basin the Permian Basin the Gulf Coast and the Western Sedimentary Basin of Canada. Outside of North America Apache has exploration and production interests offshore Western Australia and in Egypt and exploration interests in Poland and offshore The People's Republic of China. Apache Corp. has a market cap of $29.2 billion; its shares were traded at around $87.12 with a P/E ratio of 14.6 and P/S ratio of 2.3. The dividend yield of Apache Corp. stocks is 0.7%. Apache Corp. had an annual average earning growth of 24.7% over the past 10 years. GuruFocus rated Apache Corp. the business predictability rank of 4.5-star.
Dreman has been trading in and out of APA in the past five years. He started to own APA in 4Q04 with only 117,640 shares, and gradually increased to 5.4 million shares by 2Q07. The he sold down to 2.5 million shares by 1Q09 and less than half a million shares by June 30, 2009. It is hard to understand he is changing minds on the stock so quickly.
2. Anadarko Petroleum Corporation (APC)
Anadarko Petroleum Corporation is one of the world's largest independentoil and gas exploration and production companies. Majority of the company'stotal proved reserves are located in the U.S. primarily in the mid-continent (Kansas Oklahoma and Texas) area offshore in the Gulf of Mexico and in Alaska. Most of the company's production is domestic and the remainder is from Algeria. The company also owns and operates gas gathering systems in its U.S. core producing areas. Anadarko Petroleum Corp. has a market cap of $24.88 billion; its shares were traded at around $49.84 with a P/E ratio of 16.7 and P/S ratio of 1.6. The dividend yield of Anadarko Petroleum Corp. stocks is 0.7%. Anadarko Petroleum Corp. had an annual average earning growth of 28% over the past 10 years. GuruFocus rated Anadarko Petroleum Corp. the business predictability rank of 3.5-star.
Dreman's holding in APC almost mirrors that of APA. He started a small position of 701,070 shares in 1Q05 and increased to 8.7 million shares through 2Q07. Then he started to sell down and by 2Q09, he had only 905,008 shares on his book. Unless he has changed his mind again after June 30, 2009, I am having difficulty in understanding why he go on national television recommending the stock. Oh, well, only time will tell.
3. BHPÂ Billiton (BHP)
BHP Billiton is a leader in the global natural resources industry. The Group has high-value and industry-leading positions in aluminium metallurgical coal thermal coal copper ferro-alloys iron ore and titanium minerals and also has substantial interests in oil gas nickel diamonds and silver. BHP Billiton Ltd. has a market cap of $109.53 billion; its shares were traded at around $65.23 with and P/S ratio of 1.9. The dividend yield of BHP Billiton Ltd. stocks is 2.5%. BHP Billiton Ltd. had an annual average earning growth of 51.8% over the past 10 years.
Dreman started a small position in BHP in 4Q07 and by 4Q08, he owned a peak position of 3.1 million shares. He has been selling in the past two weeks, and by June 30, 2009, he had only 473,874 shares. Again, I found it hard to reconcile what he said with what he did.
4. PNC Financial (PNC)
The PNC Financial Services Group Inc. is one of the nation's largest diversified financial services organizations providing regional banking corporate banking real estate finance asset-based lending wealth management asset management and global fund services. (Company Press Release) The PNC Financial Services Group Inc. has a market cap of $18.35 billion; its shares were traded at around $41.22 with a P/E ratio of 17.2 and P/S ratio of 2.6. The dividend yield of The PNC Financial Services Group Inc. stocks is 1%. The PNC Financial Services Group Inc. had an annual average earning growth of 0.7% over the past 10 years.
In the peak time of 3Q07, Dreman had more than 5 million shares. On June 30, 2009, he had a little over 0.4 million shares.
5. Wells Fargo & Company (WFC)
Wells Fargo & Company is a diversified financial services company providing banking insurance investments mortgage and consumer finance services through stores its Internet site and other distribution channels across North America as well as internationally. (Company Press Release) Wells Fargo & Company has a market cap of $131.83 billion; its shares were traded at around $28.02 with a P/E ratio of 31.4 and P/S ratio of 2.5. The dividend yield of Wells Fargo & Company stocks is 0.8%. Wells Fargo & Company had an annual average earning growth of 10.8% over the past 10 years. GuruFocus rated Wells Fargo & Company the business predictability rank of 4-star.
Dreman increased his holding in 1Q09 from 929,000 shares to over 6.5 million shares, only to see he sold down to 1.2 million shares.
6. J.P. Morgan Chase & Co. (JPM)
J.P. Morgan Chase & Co. is a leading global financial services firm. The firm is a leader in investment banking asset management private banking private equity custody and transaction services and retail and middle market financial services. A component of the Dow Jones Industrial Average JPMorgan Chase is headquartered in New York and serves more than 30 million consumer customers and the world's most prominent corporate institutional and government clients. JPMorgan Chase & Co. has a market cap of $162.99 billion; its shares were traded at around $41.78 with a P/E ratio of 107.1 and P/S ratio of 2.4. The dividend yield of JPMorgan Chase & Co. stocks is 0.5%.
Dreman was not as agressive with JPM as with WFC. He held 4.1 million shares of JPM at the end of 4Q08, 3.7 million shares at 1Q09, and 757,331 million shares as of June 30, 2009.
Conclusion
Notice I have reserved from commenting further on what David Dreman said on the TV does not match what he did for the last three financial stocks.At GuruFocus, we focus onwhat the Investment Gurus say and what they do. Rarely we see such a discrepancy in the two. On time will tell what exactly is going on with what Dreman meant when he said he was bullish on this stocks.
GuruFocus keeps track of the investment moves of Investment Gurus such as Warren Buffett and David Dreman . More information is available to Premium Member. If you are not a premium member, click here to sign up or upgrade. 7-Day Free Trial is available.Â
1. There will be major inflation in store, interest rates are to reach 10 to 12 percent in 2 to 4 years.
2. Market will go down some and be volatile, but market will go up much higher over the next 3 to 5 years.
3. Dreman advises investors to buy oil, naturual resources and exploration developer stocks; and to buy real estate.
4. Specifically, he named Apache (APA, Financial), Anadarko (APC, Financial), and BHP (BHP, Financial) as oil and resources play
5. He also like financials such as PNC Financial (PNC, Financial), Wells Fargo (WFC, Financial) and JPMorgan Chase (JPM, Financial) for they are survivors and financials go up with inflations.
Here is the CNBC video:
On July 23, 2009.. GuruFocus reported on David Dreman's last quarter's buy and sell activities
Does he mean it when he says he likes those stocks? Following is a brief survey of the companies mentioned and his holding history:
1. Apache Corporation (APA)
Apache Corporation is an independent energy company that explores for develops and produces natural gas crude oil and natural gas liquids. In North America Apache's exploration and production interests are focused on the Gulf of Mexico the Anadarko Basin the Permian Basin the Gulf Coast and the Western Sedimentary Basin of Canada. Outside of North America Apache has exploration and production interests offshore Western Australia and in Egypt and exploration interests in Poland and offshore The People's Republic of China. Apache Corp. has a market cap of $29.2 billion; its shares were traded at around $87.12 with a P/E ratio of 14.6 and P/S ratio of 2.3. The dividend yield of Apache Corp. stocks is 0.7%. Apache Corp. had an annual average earning growth of 24.7% over the past 10 years. GuruFocus rated Apache Corp. the business predictability rank of 4.5-star.
Dreman has been trading in and out of APA in the past five years. He started to own APA in 4Q04 with only 117,640 shares, and gradually increased to 5.4 million shares by 2Q07. The he sold down to 2.5 million shares by 1Q09 and less than half a million shares by June 30, 2009. It is hard to understand he is changing minds on the stock so quickly.
2. Anadarko Petroleum Corporation (APC)
Anadarko Petroleum Corporation is one of the world's largest independentoil and gas exploration and production companies. Majority of the company'stotal proved reserves are located in the U.S. primarily in the mid-continent (Kansas Oklahoma and Texas) area offshore in the Gulf of Mexico and in Alaska. Most of the company's production is domestic and the remainder is from Algeria. The company also owns and operates gas gathering systems in its U.S. core producing areas. Anadarko Petroleum Corp. has a market cap of $24.88 billion; its shares were traded at around $49.84 with a P/E ratio of 16.7 and P/S ratio of 1.6. The dividend yield of Anadarko Petroleum Corp. stocks is 0.7%. Anadarko Petroleum Corp. had an annual average earning growth of 28% over the past 10 years. GuruFocus rated Anadarko Petroleum Corp. the business predictability rank of 3.5-star.
Dreman's holding in APC almost mirrors that of APA. He started a small position of 701,070 shares in 1Q05 and increased to 8.7 million shares through 2Q07. Then he started to sell down and by 2Q09, he had only 905,008 shares on his book. Unless he has changed his mind again after June 30, 2009, I am having difficulty in understanding why he go on national television recommending the stock. Oh, well, only time will tell.
3. BHPÂ Billiton (BHP)
BHP Billiton is a leader in the global natural resources industry. The Group has high-value and industry-leading positions in aluminium metallurgical coal thermal coal copper ferro-alloys iron ore and titanium minerals and also has substantial interests in oil gas nickel diamonds and silver. BHP Billiton Ltd. has a market cap of $109.53 billion; its shares were traded at around $65.23 with and P/S ratio of 1.9. The dividend yield of BHP Billiton Ltd. stocks is 2.5%. BHP Billiton Ltd. had an annual average earning growth of 51.8% over the past 10 years.
Dreman started a small position in BHP in 4Q07 and by 4Q08, he owned a peak position of 3.1 million shares. He has been selling in the past two weeks, and by June 30, 2009, he had only 473,874 shares. Again, I found it hard to reconcile what he said with what he did.
4. PNC Financial (PNC)
The PNC Financial Services Group Inc. is one of the nation's largest diversified financial services organizations providing regional banking corporate banking real estate finance asset-based lending wealth management asset management and global fund services. (Company Press Release) The PNC Financial Services Group Inc. has a market cap of $18.35 billion; its shares were traded at around $41.22 with a P/E ratio of 17.2 and P/S ratio of 2.6. The dividend yield of The PNC Financial Services Group Inc. stocks is 1%. The PNC Financial Services Group Inc. had an annual average earning growth of 0.7% over the past 10 years.
In the peak time of 3Q07, Dreman had more than 5 million shares. On June 30, 2009, he had a little over 0.4 million shares.
5. Wells Fargo & Company (WFC)
Wells Fargo & Company is a diversified financial services company providing banking insurance investments mortgage and consumer finance services through stores its Internet site and other distribution channels across North America as well as internationally. (Company Press Release) Wells Fargo & Company has a market cap of $131.83 billion; its shares were traded at around $28.02 with a P/E ratio of 31.4 and P/S ratio of 2.5. The dividend yield of Wells Fargo & Company stocks is 0.8%. Wells Fargo & Company had an annual average earning growth of 10.8% over the past 10 years. GuruFocus rated Wells Fargo & Company the business predictability rank of 4-star.
Dreman increased his holding in 1Q09 from 929,000 shares to over 6.5 million shares, only to see he sold down to 1.2 million shares.
6. J.P. Morgan Chase & Co. (JPM)
J.P. Morgan Chase & Co. is a leading global financial services firm. The firm is a leader in investment banking asset management private banking private equity custody and transaction services and retail and middle market financial services. A component of the Dow Jones Industrial Average JPMorgan Chase is headquartered in New York and serves more than 30 million consumer customers and the world's most prominent corporate institutional and government clients. JPMorgan Chase & Co. has a market cap of $162.99 billion; its shares were traded at around $41.78 with a P/E ratio of 107.1 and P/S ratio of 2.4. The dividend yield of JPMorgan Chase & Co. stocks is 0.5%.
Dreman was not as agressive with JPM as with WFC. He held 4.1 million shares of JPM at the end of 4Q08, 3.7 million shares at 1Q09, and 757,331 million shares as of June 30, 2009.
Conclusion
Notice I have reserved from commenting further on what David Dreman said on the TV does not match what he did for the last three financial stocks.At GuruFocus, we focus onwhat the Investment Gurus say and what they do. Rarely we see such a discrepancy in the two. On time will tell what exactly is going on with what Dreman meant when he said he was bullish on this stocks.
GuruFocus keeps track of the investment moves of Investment Gurus such as Warren Buffett and David Dreman . More information is available to Premium Member. If you are not a premium member, click here to sign up or upgrade. 7-Day Free Trial is available.Â
