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Sydnee Gatewood
Sydnee Gatewood
Articles (491) 

Robert Olstein’s Top 5 New Buys

Guru releases 4th-quarter portfolio

Olstein Capital Management founder Robert Olstein (Trades, Portfolio) released his portfolio for the final quarter of 2017 on Thursday, listing eight new positions.

To achieve long-term capital appreciation, the firm, according to its website, invests in undervalued companies that have good financial strength, a competitive edge and are able to generate free cash flow. The current portfolio of 110 stocks is largely composed of securities in the industrials, consumer cyclical, technology and financial services sectors.

According to its fact sheet, the Olstein All Cap Value Fund outperformed its benchmark, which is the Russell 3000 Value Index, in 2017 with a return of 13.29%.

Olstein’s top five new positions are Eaton Corp. PLC (NYSE:ETN), Henry Schein Inc. (NASDAQ:HSIC), Aptiv PLC (NYSE:APTV), Wells Fargo & Co. (NYSE:WFC) and DowDuPont Inc. (NYSE:DWDP).

Eaton Corp.

The guru invested in 70,000 shares of Eaton for an average price of $77.74 per share, giving it 0.7% portfolio space.

The Irish power management company has a market cap of $35.81 billion; its shares were trading around $80.86 on Friday with a price-earnings (P/E) ratio of 12.17, a price-book (P/B) ratio of 2.08 and a price-sales (P/S) ratio of 1.82.

The Peter Lynch chart below suggests the stock is undervalued as it is trading below its fair value.

1518130200075.png

GuruFocus rated Eaton’s financial strength 6 out of 10 and its profitability and growth 5 of 10. The company’s trailing dividend yield is 2.93% and its forward dividend yield is 2.90%. The dividend payout ratio is 37%.

Of the gurus invested in Eaton, Hotchkis & Wiley has the largest holding with 0.31% of outstanding shars. Other guru shareholders include Chris Davis (Trades, Portfolio), John Buckingham (Trades, Portfolio), Mario Gabelli (Trades, Portfolio), Murray Stahl (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio), David Dreman (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio).

Henry Schein

Having closed a position in Henry Schein in the fourth quarter of 2013, Olstein established a new holding of 68,160 shares for an average price of $73.99 per share. The trade had an impact of 0.61% on the portfolio.

The Melville, New York-based distributor of medical, dental and veterinary supplies has a market cap of $11.22 billion; its shares were trading around $71.51on Friday with a price-earnings ratio of 20.61, a price-book ratio of 3.73 and a price-sales ratio of 0.93.

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

1518131127783.png

Henry Schein’s financial strength was rated 6 out of 10 by GuruFocus. Its profitability and growth was rated 8 of 10. The company does not pay a dividend.

Steven Cohen (Trades, Portfolio) is the company’s largest guru shareholder with 0.54% of outstanding shares. Ken Fisher (Trades, Portfolio), Ron Baron (Trades, Portfolio), Gabelli, Jim Simons (Trades, Portfolio) and Jones are also shareholders.

Aptiv

Olstein purchased 49,500 shares of Aptiv for an average price of $83.71 per share, expanding the portfolio 0.53%.

The British auto parts company spun off of Delphi Technologies (NYSE:DLPH) in December 2017. It has a market cap of $23.73 billion; its shares were trading around $89.26 on Friday with a price-earnings ratio of 17.64, a price-book ratio of 7.19 and a price-sales ratio of 1.86.

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

1518132127925.png

GuruFocus rated Aptiv’s financial strength 6 out of 10 and its profitability and growth 7 of 10. The company’s trailing dividend yield is 1.18% and its forward dividend yield is 0.94%. The payout ratio is 30%.

During the quarter, Diamond Hill Capital (Trades, Portfolio) and Gabelli also established positions in the stock.

Wells Fargo

The guru bought 62,000 shares of Wells Fargo for an average price of $56.48 per share, giving it 0.48% portfolio space.

The San Francisco-based bank has a market cap of $275.01 billion; its shares were trading around $56.22 per share on Friday with a price-earnings ratio of 13.81, a price-book ratio of 1.51 and a price-sales ratio of 3.24.

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

1518189666471.png

GuruFocus rated Wells Fargo’s financial strength 4 out of 10 and its profitability and growth 5 of 10. The company’s trailing dividend yield is 2.79% and its forward dividend yield is 2.71%. The payout ratio is 40%.

Warren Buffett (Trades, Portfolio) is the bank’s largest guru shareholder with 9.49% of outstanding shares. Other gurus who hold the stock include Dodge & Cox, Barrow, Hanley, Mewhinney & Strauss, Davis, PRIMECAP Management (Trades, Portfolio), Hotchkis & Wiley, Tom Russo (Trades, Portfolio), the T Rowe Price Equity Income Fund (Trades, Portfolio), Bill Nygren (Trades, Portfolio) and Ruane Cunniff (Trades, Portfolio).

DowDuPont

Olstein invested in 50,000 shares of DowDuPont for an average price of $71.11 per share, expanding the portfolio 0.45%.

The Midland, Michigan-based chemicals producer is the product of a merger between Dow Chemical and DuPont, which closed at the end of August. The company has a market cap of $161.9 billion; its shares were trading around $69.19 on Friday with a price-earnings ratio of 43.52, a price-book ratio of 1.61 and a price-sales ratio of 1.59.

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

1518190523033.png

DowDuPont’s financial strength was rated 6 out of 10 by GuruFocus. Its profitability and growth was rated 5 of 10. The company’s trailing dividend yield is 2.58% and its forward dividend yield is 2.23%. The payout ratio is 91%.

Of the 27 gurus invested in DowDuPont, Barrow, Hanley, Mewhinney & Strauss has the largest holding with 0.8% of outstanding shares. Other guru shareholders include Larry Robbins (Trades, Portfolio), Daniel Loeb (Trades, Portfolio), Lee Ainslie (Trades, Portfolio), Cohen, Simons and Leon Cooperman (Trades, Portfolio).

Other trades

Olstein also established positions in Eastman Chemical Co. (NYSE:EMN), Kulicke & Soffa Industries Inc. (NASDAQ:KLIC) and Spartan Motors Inc. (NASDAQ:SPAR) during the quarter.

Disclosure: No positions.

About the author:

Sydnee Gatewood
I am an editorial assistant at GuruFocus. I have a BA in journalism and a MA in mass communications from Texas Tech University. I have lived in Texas most of my life, but also have roots in New Mexico and Colorado. Follow me on Twitter! @gurusydneeg

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