Contrarian value investor David Dreman (Trades, Portfolio) disclosed on Wednesday that his firm, Dreman Asset Management, established 15 new positions during the quarter. The top 3 positions based on portfolio impact are SPDR S&P Bank (KBE, Financial), SPDR Select Sector Fund – Financial (XLF, Financial) and Real Estate Select Sector SPDR Fund (XLRE).
SPDR S&P Bank
Dreman invested in 863,925 shares of SPDR S&P Bank for an average price of $49.69. The transaction represents 18.76% of the guru’s portfolio.
The State Street Global Advisors website mentions that the SPDR S&P Bank exchange-traded fund seeks to provide exposure to companies in various financial services industries including asset management, diversified banks and regional banks. Top asset management companies include BlackRock Inc. (BLK, Financial) and Bank of New York Mellon Corp. (BK, Financial) according to the industry overview page. Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial) CEO Warren Buffett (Trades, Portfolio) owns approximately 60.8 million shares of the latter.
SPDR Select Sector Fund – Financial
Dreman invested in 306,000 shares of SPDR Select Sector Fund – Financial for an average price of $28.79. The transaction represents 3.82% of the guru’s portfolio.
The SPDR Select Sector Fund – Financial seeks to provide exposure to diversified financial services companies according to State Street Global Advisors. With a cyclically adjusted price-earnings ratio of 26, the financial services sector is relatively undervalued compared to the entire Standard & Poor’s 500 index, which has a Shiller price-earnings ratio of 31.1 as of May 3.
Real Estate Select Sector SPDR Fund
Dreman invested in 42,576 shares of the Real Estate Select Sector SPDR Fund for an average price of $31.04. The transaction increased the guru’s portfolio 0.6%.
Unlike XLF, which seeks to provide exposure to a wide variety of financial services industries, XLRE seeks to provide exposure to just real estate services companies and REITs according to State Street Global Advisors. Such companies include CBRE Group Inc. (CBRE, Financial), a company in which Dreman invested in 12,848 shares for an average price of $45.50 during the quarter. Other top real estate services companies include CoStar Group Inc. (CSGP, Financial) and Zillow Group Inc. (ZG, Financial) according to the industry overview page.
The real estate sector has a Shiller price-earnings ratio of 46.80, suggesting that the sector is relatively overvalued compared to the S&P 500.
See also
Dreman’s top buys also include Apache Corp. (APA, Financial) and ConocoPhillips (COP, Financial). You can view the guru’s trades here.
GuruFocus recently launched detailed industry overview pages that describe the historical trend for various valuation and quality ratios, including the price-sales ratio and the return on equity.
Disclosure: No positions.
