The IVA International Fund (Trades, Portfolio), part of International Value Advisers, listed 10 new positions in its portfolio for the final quarter of 2017, which was released last week.
Managed by Charles de Vaulx (Trades, Portfolio) and Charles de Lardemelle, the fund invests in a variety of securities and asset classes from around the world to achieve long-term growth of capital.
The fund’s top five new buys for the quarter were AIB Group PLC (LSE:AIBG, Financial), Schlumberger Ltd. (SLB, Financial), Promotora y Operadora de Infraestructura SAB de CV (MEX:PINFRA, Financial), Hyundai Elevator Co. Ltd. (XKRX:017800, Financial) and Criteo SA (CRTO, Financial).
AIB Group
The fund invested in 9.07 million shares of AIB Group for an average price of 5.25 euros ($6.47) per share, giving it 2.13% portfolio space.
The Irish bank, which went public last June, has a market cap of 14.09 billion euros; its shares closed at 5.2 euros on Thursday with a forward price-earnings ratio of 15.36 and a price-sales ratio of 9.50.
The Peter Lynch chart below shows the stock is trading slightly below its fair value, suggesting it is undervalued.
GuruFocus rated AIB’s financial strength 7 out of 10 as it has no debt, though its interest coverage does not meet Benjamin Graham’s threshold of 5. The company’s profitability and growth was rated 4 of 10. While its operating margin is in decline, it still outperforms 79% of competitors.
The International Fund holds 0.33% of the company’s outstanding shares.
Schlumberger
IVA purchased 689,199 shares of Schlumberger for an average price of $64.83 per share, expanding the portfolio 1.65%.
The Houston-based oilfield services company has a market cap of $94.94 billion; its shares were trading around $68.50 on Friday with a forward price-earnings ratio of 30.77, a price-book ratio of 2.58 and a price-sales ratio of 3.13.
According to the Peter Lynch chart below, the stock appears to be overpriced as it is trading higher than its fair value.
Schlumberger’s financial strength was rated 6 out of 10 by GuruFocus. Its interest coverage, which does not meet Graham’s standard, and Altman Z-Score of 2.64 suggest the company is under some financial stress. Its profitability and growth was rated 5 of 10 as its operating margin is declining. It also has a moderate Piotroski F-Score of 6 and a one-star business predictability rating.
With 3.55% of outstanding shares, Dodge & Cox is the company’s largest guru shareholder. Joel Greenblatt (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio) also established positions during the quarter. Other top guru shareholders include First Eagle Investment (Trades, Portfolio), Manning & Napier Advisors, PRIMECAP Management (Trades, Portfolio), Mairs and Power (Trades, Portfolio), David Rolfe (Trades, Portfolio) and Jeremy Grantham (Trades, Portfolio).
Promotora y Operadora de Infraestructura
The portfolio managers bought 1.7 million shares of Promotora y Operadora for an average price of 190.89 pesos ($10.28) per share. The trade had an impact of 0.62% on the portfolio.
The Mexican construction and infrastructure company has a market cap of 86.74 billion pesos; its shares closed at 187.35 pesos on Thursday with a price-earnings ratio of 18.51 and a price-book ratio of 2.64.
Hyundai Elevator
The fund invested in 326,572 shares of Hyundai Elevator for an average price of 53,141.9 won ($49.95) per share, giving it 0.59% portfolio space.
The South Korean company, which manufactures elevators, escalators and moving walkways, has a market cap of 1.58 trillion won; its shares closed at 64,100 won on Thursday with a price-earnings ratio of 6.74, a price-book ratio of 1.82 and a price-sales ratio of 0.95.
Based on the Peter Lynch chart below, the stock appears to be undervalued as it is trading lower than its fair value.
GuruFocus rated Hyundai Elevator’s financial strength 6 out of 10 as it has poor interest coverage and a low Altman Z-Score, which indicates the company is under some financial stress. Its profitability and growth was rated 4 of 10. While its operating margin is expanding, its Piotroski F-Score is a moderate 4.
The fund holds 0.59% of the company’s outstanding shares.
Criteo
IVA purchased 586,703 shares of Criteo for an average price of $35.85 per share, expanding the portfolio 0.54%.
The French internet advertising company has a market cap of $1.98 billion; its shares were trading around $30 on Friday with a price-earnings ratio of 22.40, a price-book ratio of 2.23 and a price-sales ratio of 0.89.
According to the Peter Lynch chart below, the stock is overpriced as it is trading above its fair value.
Criteo’s financial strength was rated 9 out of 10 as it has sufficient interest coverage and a high Altman Z-Score. Its profitability and growth was rated 7 of 10 as its operating margin is expanding and it has a moderate Piotroski F-Score of 5.
Of the gurus invested in Criteo, the Oakmark International Small Cap Fund has the largest holding with 3.78% of outstanding shares. Pioneer Investments (Trades, Portfolio) and Steven Cohen (Trades, Portfolio) are also shareholders.
Other trades
The fund’s other new buys for the quarter were Koninklijke Boskalis Westminster NV (XAMS:BOKA), Kimberly-Clark de Mexico SAB de CV (MEX:KIMBER A), WPP Aunz Ltd. (ASX:WPP), Kiwoom Securities Co. Ltd. (XKRX:039490) and Bollore SA (XPAR:BOLNV).
The current portfolio of 103 stocks is largely composed of securities in the industrials and consumer cyclical sectors. By region, European stocks make up the majority of the portfolio at 22.7%. According to its fact sheet, the fund underperformed its benchmark, the MSCI All Country World Index (ex-U.S.), in 2017 with a 16.98% return. The index returned 27.19%.
Disclosure: No positions.
