David Winters (Trades, Portfolio)’ Wintergreen Fund (Trades, Portfolio) recently disclosed the fund closed its positions in Berkshire Hathaway Inc. (BRK.B, Financial), Sika AG (XSWX:SIK, Financial), Roche Holding AG (XSWX:ROG, Financial) and Frutarom Industries Ltd. (XTAE:FRUT, Financial) during the first quarter.
Berkshire Hathaway
The fund sold 100 Class B Berkshire Hathaway shares for an average price of $205.28 per share. Wintergreen pared its portfolio 0.01% with this transaction.
Berkshire CEO Warren Buffett (Trades, Portfolio) mentioned that after-tax earnings in the conglomerate’s insurance and railroad businesses increased from the prior-year quarter primarily due to a lower effective income tax rate. Lower property and casualty losses contributed to higher income for Berkshire’s insurance business, which includes Geico, Berkshire Hathaway Reinsurance Group and Berkshire Hathaway Primary Group.
GuruFocus ranks Berkshire’s business predictability four stars out of five. Despite this, Buffett’s conglomerate has several warning signs, including increased long-term debt and a price-sales ratio near a 10-year high of 2.31.
Several gurus, including Microsoft Corp. (MSFT, Financial) founder Bill Gates (Trades, Portfolio), trimmed their positions in Berkshire during the quarter.
Sika
Winters’ fund sold 1,867 shares of Sika for an average price of 8,622.13 Swiss francs ($8754.48) per share. The fund knocked 5.09% off its portfolio with this transaction. Based on GuruFocus estimates, Wintergreen gained approximately 163% on the investment.
Sika manufactures and sells a variety of chemical-based products primarily used for bonding and sealing. The company’s profitability ranks 8 out of 10 primarily due to expanding profit margins and a strong Piotroski F-score of 7. Sika’s operating margin is near a 10-year high of 14.34% and outperforms 76% of global competitors.
Although Sika has good profitability, the company is trading near its 10-year maximum price-book and price-sales valuations, suggesting possible overvaluation.
Frutarom Holdings
Wintergreen sold 8,109 shares of Frutarom Holdings for an average price of 92.22 Israeli shekels ($25.85) per share. The fund trimmed 0.26% off its portfolio with this transaction.
Frutarom manufactures and sells flavors, fragrances and ingredients used in the production of food and beverages. The company’s profitability ranks a strong 7 out of 10 primarily due to expanding operating margins and high returns on equity.
While the company’s price-book and price-sales ratios are near a two-year low, Frutarom still trades near a 10-year high and approximately 2.33 times its median price-sales value.
Roche Holding
The fund sold 2,930 shares of Roche Holding for an average price of 240.13 Swiss francs per share. Wintergreen pared its portfolio 0.25% with this transaction.
Roche manufactures and sells a variety of pharmaceutical products, especially those from acquired partners Genentech Inc. and Ventana Medical Systems Inc. GuruFocus lists five positive investing signs for Roche, including a strong Piotroski F-score of 7 and a dividend yield near a five-year high.
Despite a strong profitability rank of 7, Roche’s operating margin has contracted approximately 5.4% per year over the past five years.
See also
Wintergreen reduced its position in several companies during the quarter, including Union Pacific Corp. (UNP), Altria Group Inc. (MO) and Nestle SA (XSWX:NESN).
Disclosure: No positions.
