Pzena Investment Management leader Richard Pzena (Trades, Portfolio) released his fourth-quarter portfolio last week, disclosing he opened nine new positions.
According to the firm’s website, Pzena and his team use a classic value approach to invest in good businesses that are currently underperforming their historical earnings power. The current portfolio of 156 stocks is largely made up of securities in the financial services sector.
The guru’s top five buys for the quarter were Mednax Inc. (MD, Financial), Steelcase Inc. (SCS, Financial), China Mobile Ltd. (CHL, Financial), Biogen Inc. (BIIB, Financial) and Celgene Corp. (CELG, Financial).
Mednax
Pzena invested in 962,030 shares of Mednax for an average price of $47.14 per share, giving it 0.25% portfolio space.
The Florida-based company, which provides a variety of health care and physician services, has a market cap of $5.05 billion; its shares were trading around $53.94 on Monday with a price-earnings (P/E) ratio of 15.68, a price-book (P/B) ratio of 1.65 and a price-sales (P/S) ratio of 1.49.
The Peter Lynch chart below shows the stock is trading close to its fair value.
GuruFocus rated Mednax’s financial strength 5 out of 10 and its profitability and growth 8 out of 10. The company does not pay a dividend.
Of the gurus invested in Mednax, Paul Singer (Trades, Portfolio)’s Elliott Associates, L.P. has the largest position with 1.38% of outstanding shares. Steven Cohen (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), First Pacific Advisors (Trades, Portfolio) and David Dreman (Trades, Portfolio) are also shareholders.
Steelcase
The investor bought 491,144 shares of Steelcase for an average price of $14.68 per share, expanding the portfolio 0.04%.
The Grand Rapids, Michigan-based furniture company has a market cap of $1.61 billion; its shares were trading around $13.86 on Monday with a price-earnings ratio of 15.62, a price-book ratio of 1.98 and a price-sales ratio of 0.53.
According to the Peter Lynch chart below, the stock is trading close to its fair value.
Steelcase’s financial strength was rated 7 out of 10 by GuruFocus. Its profitability and growth was rated 8 of 10. The company’s trailing and forward dividend yields are both 3.67%. The dividend payout ratio is 56%.
With 1.25% of outstanding shares, Chuck Royce (Trades, Portfolio) is Steelcase’s largest shareholder among the gurus. Paul Tudor Jones (Trades, Portfolio), Jim Simons (Trades, Portfolio) and Dreman also own the stock.
China Mobile
Pzena purchased 20,500 shares of China Mobile for an average price of $50.32 per share. The trade has an impact of 0.01% on the portfolio.
The Chinese telecommunications company has a market cap of $193.65 billion; its shares were trading around $47.57 on Monday with a price-earnings ratio of 12.04, a price-book ratio of 1.30 and a price-sales ratio of 1.90.
Based on the Peter Lynch chart below, the stock appears to be undervalued as it is trading below its fair value.
China Mobile’s financial strength was rated 8 out of 10 by GuruFocus. Its profitability and growth was rated 7 of 10. The company’s trailing dividend yield is 3.83% and its forward dividend yield is 5.83%. The payout ratio is 44%.
Of the 12 gurus with positions in China Mobile, the Matthews Pacific Tiger Fund (Trades, Portfolio) has the largest holding with 0.08% of outstanding shares. Other guru shareholders include Simons, Sarah Ketterer (Trades, Portfolio), Charles Brandes (Trades, Portfolio), John Rogers (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio), First Eagle Investment (Trades, Portfolio), Mario Gabelli (Trades, Portfolio), Greenblatt, Dreman and Ken Fisher (Trades, Portfolio).
Biogen
Having previously exited a position in Biogen in the second quarter of 2017, Pzena established a new holding of 931 shares for an average price of $320.78 per share.
The Cambridge, Massachusetts-based biotechnology company has a market cap of $67.89 billion; its shares were trading around $320.90 on Monday with a price-earnings ratio of 26.88, a price-book ratio of 5.38 and a price-sales ratio of 5.56.
The Peter Lynch chart below suggests the stock is overpriced as it is trading above its fair value.
GuruFocus rated Biogen’s financial strength 7 out of 10 and its profitability and growth 9 of 10. The company does not pay a dividend.
Of the 28 gurus invested in Biogen, PRIMECAP Management (Trades, Portfolio) has the largest position with 7.19% of outstanding shares. Other guru shareholders include the Vanguard Health Care Fund (Trades, Portfolio), Frank Sands (Trades, Portfolio), Cohen, Richard Snow (Trades, Portfolio), Simons and Fisher.
Celgene
The guru invested in 2,371 shares of Celgene for an average price of $113.03 per share.
The Summit, New Jersey-based biotech company has a market cap of $69.13 billion; its shares were trading around $92.20 on Monday with a price-earnings ratio of 25.67, a price-book ratio of 10.46 and a price-sales ratio of 5.71.
According to the Peter Lynch chart below, the stock is overpriced as it is trading above its fair value.
Celgene’s financial strength was rated 5 out of 10 by GuruFocus. Its profitability and growth was rated 9 of 10. The company does not pay a dividend.
With 0.43% of outstanding shares, Spiros Segalas (Trades, Portfolio) is the company’s largest guru shareholder. Pioneer Investments (Trades, Portfolio), David Rolfe (Trades, Portfolio), Simons, the Eaton Vance Worldwide Health Sciences Fund (Trades, Portfolio), Stanley Druckenmiller (Trades, Portfolio), Julian Robertson (Trades, Portfolio), Ray Dalio (Trades, Portfolio) and several others also own the stock.
Other buys
Pzena also established positions in General Motors Co. (GM, Financial), the iShares Russell 2000 Value (IWN, Financial), Old Republic International Corp. (ORI, Financial) and The Priceline Group Inc. (PCLN, Financial) during the quarter.
Disclosure: No positions.
