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Yamil Berard
Yamil Berard
Articles (192) 

Jeff Auxier's Top Trades in 1st Quarter

'The big profits go to the intelligent, careful and patient investor, not to the reckless and overeager speculator,' he reminds shareholders

Guru investor Jeff Auxier (Trades, Portfolio)’s firm, Auxier Asset Management, initiated three new positions in the early months of the year.

The Oregon-based firm made its largest buy in the world’s largest courier express system, FedEx Corp (NYSE:FDX). Auxier also bought shares of software developer Adobe Systems Inc. (NASDAQ:ADBE) and Lloyds Banking Group PLC (NYSE:LYG), the fourth-largest bank by asset-size in the United Kingdom.

His top three sells were Bioverativ Inc. (NASDAQ:BIVV), Enbridge Inc. (NYSE:ENB) and Vitamin Shoppe Inc. (VSI)

The guru has a total of 150 stocks in a portfolio valued at $499 million.

He placed more than 64% of his portfolio in the health care, consumer defensive and financial services sectors. He has the remainder of his portfolio in technology, consumer cyclical, industrials, basic materials and energy stocks.

In his most recent commentary, the value investor reminded shareholders to maintain their trust in a fundamental strategy that works. He pointed out that negative headlines about stocks often make for good buying opportunities. He gave his purchase of FedEx shares as one example.

To drive home his point, he quoted investor J. Paul Getty of the 1930s. “The big profits go to the intelligent, careful and patient investor, not to the reckless and overeager speculator. The seasoned investor buys his stocks when they are priced low, holds them for the long-pull rise and takes in-between dips and slumps in stride.”

FedEx Corp.

Auxier purchased 5,500 shares for an average price of $252.93 per share. The holding sits in about 0.26% of the portfolio. The investment has produced an estimated loss of 2%. The guru hasn’t purchased shares in the company since the first quarter of 2012. He sold in the third quarter of the same year for about $89 a share.

The stock of the largest courier express delivery system in the world, similar to peers in the transportation business, has dropped in value because of fears over global trade wars. That has made it an attractive buy, Auxier said in a recent letter to shareholders.

FedEx was trading at $248.67 a share, up 0.63% at market close on Thursday. Year to date, the stock is flat. It has increased 40% over three years. It has seen average annualized earnings grow 7.6% over the last decade.

Revenue for the company continues to grow. Its net income has managed to increase as well. Revenue in 2017 stood at $64 billion, while net income was $3 billion. FedEx, however, has seen operating margins drop to 8.35% from 21% a decade ago. It reported $15 billion in long-term debt, after reporting $7.2 billion in 2015.

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The company has a market cap of $67 billion and is rated 6 out of 10 in financial strength and 6 out of 10 in profitability and growth.

Adobe Systems Inc.

The Photoshop creator represents 0.04% of the portfolio. A holding of 957 shares was purchased at an average price of $203 a share. The investment has produced an estimated gain of 17%.

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Adobe stood at under $237 a share at market close on Thursday. It was down 0.23%.

It trades at nearly 63 times earnings and 36 times forward earnings. It has a price-book ratio of 13.50 and a price-sales ratio of 15.37. Both ratios are much lower than its peers in the same sector. It has a return on equity of 23% and a return on capital of 266%.

Analysts are forecasting the company to tap $11.8 billion in revenue in 2020, compared to $8.8 billion in 2018. Annualized average earnings growth was reported at 5% over 10 years.

The Photoshop maker has a financial strength rating of 7 out of 10 and a profitability and growth rating of 9 out of 10.

Lloyds Banking Group PLC

The banking agency has over 2,000 branches throughout the United Kingdom and more than 75,000 employees.

The bank has undergone a heavy restructuring since the financial crisis of 2008, and has struggled to get back on its feet. In addition, it took a dive when the Brexit referendum was passed in the summer of 2016. It was purchased for about $3.87 a share. About 43,000 shares now sit in 0.03% portfolio space. The guru has posted an estimated loss of 8% on the investment so far.

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Shares closed at $3.58 per share, up 0.7%, on Thursday. The 52-week range is $2.36 to $4.21 a share. The bank has a price-book ratio of 1 and a price-sales ratio of 1.41. Both ratios are at least 72% higher than more than 1,600 peer-sector banks among European regional banks.

The company has a dividend yield of 4.65%.

In interest income, the bank has seen increases to $21 billion from $20 billion in the prior year. In net interest income, however, it stands at about $14.6 billion, up from $11.5 billion a year ago. The bank’s net interest income has mostly zigzagged over the last five years. Over the last decade, it has mostly stayed in the range of $12 billion to $16 billion.

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Lloyds has a market cap of $65 billion with a financial strength rating of 4 out of 10 and a profitability and growth rating of 2 of 10.


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