Causeway Capital Management leader Sarah Ketterer (Trades, Portfolio) released her portfolio for the final quarter of 2017 on Wednesday, disclosing she opened four new positions.
The firm, which Ketterer founded in 2001 with Harry Hartford, notes on it its website it seeks to achieve superior risk-adjusted returns by investing in mispriced equities in both developed and emerging markets. The current portfolio of 92 stocks is largely composed of equities in the technology sector.
The guru investor established positions in three stocks and one exchange-traded fund during the quarter: FirstEnergy Corp. (FE, Financial), Credicorp Ltd. (BAP, Financial), Autohome Inc. (ATHM, Financial) and the iShares MSCI Emerging Index Fund (EEM, Financial).
FirstEnergy
Ketterer invested in 2.18 million shares of FirstEnergy for an average price of $32.47 per share, giving it 0.71% portfolio space.
The Akron, Ohio-based utility company has a market cap of $14.59 billion; its shares were trading around $32.79 on Friday with a forward price-earnings (P/E) ratio of 12.95, a price-book (P/B) ratio of 2.28 and a price-sales (P/S) ratio of 1.04.
The Peter Lynch chart below shows the stock is trading above its fair value, indicating it is overpriced.
FirstEnergy’s financial strength was rated 3 out of 10 by GuruFocus. The company’s large debt burden and low Altman Z-score of -0.13 suggest it is in financial distress, with the possibility of facing bankruptcy in the near future. Its profitability and growth is rated 4 of 10 due to weak operating margins, a moderate Piotroski F-score of 4 and a low business predictability rating of one star.
Of the gurus invested in FirstEnergy, Jim Simons (Trades, Portfolio) has the largest position with 2.11% of outstanding shares. NWQ Managers (Trades, Portfolio) and Pioneer Investments (Trades, Portfolio) also established stakes during the quarter, while Ray Dalio (Trades, Portfolio) added to his holdings.
Credicorp
Having previously closed a position in Credicorp in the first quarter of 2016, Ketterer established a new holding of 114,800 shares for an average price of $207.28 per share, expanding the portfolio 0.25%.
The Peru-based insurance company has a market cap of $21 billion; its shares were trading around $222.50 on Friday with a price-earnings ratio of 16.64, a price-book ratio of 3.12 and a price-sales ratio of 4.81.
According to the Peter Lynch chart below, the stock appears to be overpriced as it is trading above its fair value.
Despite having sufficient interest coverage, the company’s financial strength is rated 4 out of 10 as its revenue per share growth has been slowing down over the past 12 months. GuruFocus rated its profitability and growth 6 of 10 as its operating margins are expanding and it has a perfect business predictability rating of five stars.
With 1.37% of outstanding shares, Ken Fisher (Trades, Portfolio) is Credicorp’s largest guru shareholder. Caxton Associates (Trades, Portfolio) also established a position in the stock during the quarter, while Jeremy Grantham (Trades, Portfolio) and Pioneer Investments added to their holdings.
Autohome
The investor purchased 78,600 shares of Autohome for an average price of $60.45 per share, impacting the portfolio by 0.05%.
The Chinese online auto dealer and advertising platform has a market cap of $10.04 billion; its shares were trading around $84.62 on Friday with a price-earnings ratio of 41.05, a price-book ratio of 8.44 and a price-sales ratio of 10.49.
Based on the Peter Lynch chart below, the stock appears to be overpriced as it is trading above its fair value.
As Autohome has no debt and has a high Altman Z-score, GuruFocus rated its financial strength 9 out of 10. Despite the fact its operating margins have declined over the past five years and it has a moderate Piotoroski F-score of 4, the company’s profitability and growth is rated 8 of 10.
Simons is the company’s largest guru shareholder with 0.55% of outstanding shares. Pioneer Investments and Caxton Associates also own the stock.
iShares MSCI Emerging Index Fund
After exiting a position in the Emerging Markets Index ETF in the first quarter, Ketterer started a new position of 757,931 units for an average price of $46.30 per unit. The trade had an impact of 0.38% on the portfolio.
According to Bloomberg, the ETF tracks the performance of the MSCI TR Emerging Markets Index and holds the stocks of mid- and large-cap companies in emerging markets. With a market cap of $43.98 billion, it was trading around $49.66 on Friday with a price-earnings ratio of 15.31 and a price-book ratio of 1.85.
The ETF’s 14-day relative strength index is 54.96, which suggests it is neither overbought nor oversold. Other gurus who currently are invested in the ETF include Leon Cooperman (Trades, Portfolio), Jeff Ubben (Trades, Portfolio), Carl Icahn (Trades, Portfolio) and Richard Snow (Trades, Portfolio).
Other trades
During the fourth quarter, Ketterer also added to many positions, including Canadian Imperial Bank of Commerce (CM, Financial), Flowserve Corp. (FLS, Financial), Halliburton Corp. (HAL, Financial) and Gildan Activewear Inc. (GIL, Financial), among others.
She did not exit any holdings, but did trim quite a few, including Encana Corp. (ECA, Financial), Citigroup Inc. (C, Financial), JD.com Inc. (JD, Financial) and Qualcomm Inc. (QCOM, Financial), among others.
You can view her portfolio here.
Disclosure: No positions.
