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James Li
James Li
Articles (464)  | Author's Website |

Chris Davis’ Top 3 Buys of the 1st Quarter

Guru releases quarterly portfolio

Chris Davis (Trades, Portfolio), portfolio manager of Davis Financial Fund, disclosed on Monday he initiated 13 new positions during the first quarter. The guru’s three top new positions are Shire PLC (NASDAQ:SHPG), Bank of N.T. Butterfield & Son Ltd. (NYSE:NTB) and iQiyi Inc. (NASDAQ:IQ).

Shire

Davis invested in 1,860,234 shares of Shire for an average price of $137.68 per share. The manager dedicated 1.20% of his portfolio to this transaction.

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On May 8, Shire and Takeda Pharmaceutical Co. Ltd. (TKPYY)(TSE:4502) agreed to a recommended offer in which Takeda will acquire the Irish biotech company’s shares for $30.33 in cash and either 0.839 New Takeda shares or 1.678 American Depository Shares per Shire share.

The companies’ CEOs discussed strategic synergies of this merger in Shire’s current report filing with the Securities and Exchange Commission. Shire CEO Flemming Ornskov, M.D., M.P.H., said the Takeda merger enables the company to “improve the lives of even more patients globally with rare and highly specialized conditions.” The combined company expects to provide targeted treatments in gastroenterology, neuroscience and oncology, according to Takeda CEO Christophe Weber.

Shire has a profitability rank of 8 despite having three red flags, including contracting profit margins. The company’s operating margin outperforms 85% of global competitors even though margins have declined approximately 6.8% over the past five years.

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During the quarter, Cobas Asset Management portfolio manager Francisco Garcia Paramés invested in 298,750 shares of Shire (LSE:SHP) for an average price of 33.03 pounds.

Bank of N.T. Butterfield & Son

Davis invested in 2,344,364 shares of Bank of N.T. Butterfield & Son for an average price of $42.64 per share. With this transaction, the manager increased his portfolio 0.46%.

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Bank of N.T. Butterfield operates in six global regions, including the Bahamas, Switzerland and the U.K. The company has three medium warning signs: Bank of N.T. Butterfield’s price, price-book ratio and price-sales ratio are all near a two-year high.

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iQiyi

Davis invested in 2,850,400 shares of iQiyi for an average price of $15.55 per share. With this transaction, the manager increased his portfolio 0.19%.

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The Beijing-based online entertainment company said on April 26 that revenues for the quarter ending March 31 increased 57% year over year, driven by “significant growth” in both advertising services and membership services, according to CEO Yu Gong. The company’s recent international public offering increased brand recognition and collaboration among global partners and artists.

Bestinfond (Trades, Portfolio) initiated a 992,011-share position in iQiyi during the quarter.

See also

Davis’ top buys also include positions in Oaktree Asset Management LLC (NYSE:OAK), Qorvo Inc. (NASDAQ:QRVO) and Equinix Inc. (NASDAQ:EQIX).

Disclosure: No positions.

About the author:

James Li
I am an editorial assistant and researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

Visit James Li's Website


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