Acclaimed investor Chuck Akre (Trades, Portfolio)'s Akre Capital Management squeezed a sizeable gain from a position in CSX Corp. (CSX, Financial) before a final push to dump shares of the nation’s third-largest railroad company.
The firm posted a gain of 35% on a total of over 40,000 shares it began purchasing in the second quarter of 2015. The firm pulled out after numerous setbacks at CSX, which hit a crescendo in the final months of the year, including the sudden departure of top brass, the death of its CEO and employee lawsuits. Investors’ worries grew as the turmoil unfolded.
This month, the Jacksonville, Florida-based company announced over 6,000 job cuts in the next three years. That’s after cuts to 4,600 positions last year.
Akre's firm held 40,695 shares in the second quarter of 2015, purchasing them at an average price of $34.75 a share.
Then, the firm began slowly reducing its position each year. Shares hit a low of $24 a share in the first quarter of 2016, and climbed to under $46 a share in the first quarter of 2017.
Akre Capital sold out of its final 4,899 shares for an average price of $45 a share. The change is reflected in its fourth-quarter portfolio.
Guru investors Joel Greenblatt (Trades, Portfolio) and Ken Fisher (Trades, Portfolio) also thought it was the right time to reduce their positions in CSX stock.
But others seized on the opportunity to buy. Gurus Steve Mandel (Trades, Portfolio) and David Tepper (Trades, Portfolio) opened positions in the struggling company in the fourth quarter. Mandel, for example, purchased 11 million shares, which sit in 3.2% portfolio space.
CSX Corp.
In Monday trading, the company with a market cap of $51 billion was priced at under $58 a share, down 0.6%. Its stock price has jumped 20% over the last 12 months. Year to date, it is up 2%.
Its price-earnings ratio is 9.62 versus an industry median of 10.57. Its price-book ratio is 3.50 versus an industry median of 1.24. Its price-sales ratio is 4.64 versus an industry median of 4.64. Its dividend yield is 1.42% versus an industry median of 2.18%, and its dividend payout ratio is 0.13% versus the industry median of 0.34%.
GuruFocus ranks it 5 out of 10 in financial strength and 7 out of 10 in profitability and growth.
Monro Inc.
Akre and his team, who run a $7 billion portfolio, didn’t kick off any new positions in the fourth quarter.
But they sold out on the stock of one other company, Monro Inc. (MNRO, Financial), which was founded in New York almost six decades ago. Monro operates chain stores that provide automotive undercar repair and tire services.
The firm began buying the stock in 2013 and, at one point, held as much as 1.5 million shares in the fourth quarter of 2014. Back then, shares were valued at an average price of $53 a share. Shares dipped in value in the third quarter of last year, selling at the average price of $46.77 a share.
The firm posted a gain of 11% when it sold out for an average price of $46.88 a share in the fourth quarter.
GuruFocus ranks Monro 6 out of 10 in financial strength and 7 out of 10 in profitability and growth. The company’s price-earnings ratio is 32.40 versus the median of 16.43. Its price-book ratio is 2.92 versus the median of 1.63. Its price-sales ratio is 1.68 versus the median of 0.85. It has a four-star ranking in the business predictability index, which means its average stock gain is almost 10% a year. The company has shown a steady revenue and earnings growth.
In Monday afternoon trading, the company with a $1.8 billion market cap was trading at $54.10 a share, down 0.82%. The company’s stock price has gained 38% in the last five years. Year to date, it is down 7%.
