Hotchkis & Wiley disclosed on Tuesday its top two buys for fourth-quarter 2017 are PepsiCo Inc. (PEP, Financial) and Mondelez International Inc. (MDLZ, Financial).
The firm invested in 2,184,100 shares of PepsiCo for an average price of $114.16 per share and 3,563,500 shares of Mondelez for an average price of $41.97 per share.
PepsiCo
PepsiCo’s profitability ranks 6 out of 10: while the company’s operating margin outperforms 82% of global competitors, its three-year revenue growth rate of 0.50% ranks lower than 66% of global beverage companies.
PepsiCo CEO Indra Nooyi said that despite dynamic retail environment changes, the company still delivered solid results in 2017, including core constant currency earnings growth of 9% for the year. The CEO announced a 15% annualized dividend increase for June, reflecting management confidence in the growth prospects of PepsiCo’s business. This increase represents the company’s 46th consecutive annual dividend increase.
Mondelez
Mondelez, known for products like Oreos and Chips Ahoy, said fourth-quarter net revenues increased 2.9% year over year, driven primarily by a 2.4% increase in organic revenues. While full-year net revenues slightly declined from the prior year, Mondelez’s operating margin reached 13.54%, up 3.60% from the prior year and ranking higher than 79% of global competitors.
Ken Fisher (Trades, Portfolio) purchased 1,473 Mondelez shares during the quarter, boosting the position 15.13%.
Firm’s other top buys
Alleghany Corp. (Y, Financial), Casa Systems Inc. (CASA, Financial) and Luther Burbank Corp. (LBC, Financial) represent Hotchkis & Wiley’s next three top buys. The firm invested in 28,310 shares of Alleghany for an average price of $570.26 per share, 600,000 shares of Casa Systems for an average price of $15.46 per share and 700,000 shares of Luther Burbank for an average price of $12.04 per share.
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Disclosure: I do not have positions in the stocks mentioned.
