Murray Stahl (Trades, Portfolio)’s Horizon Kinetics initiated four major ownership positions in the first quarter of the year, all of which have reported estimated gains of up to 26%.
In all, the guru established a total of 27 new positions in a portfolio of 505 stocks worth more than $3.4 billion. The gains are estimates calculated by GuruFocus based on quarterly information that is updated daily.
Horizon Kinetics’ top position was in Balchem Corp. (BCPC), a global chemical nutrient producer’s that has a five-star business predictability rating on GuruFocus, flagging a company whose stock price has climbed, on average, 12% a year over the last five years.
Balchem, which has triggered an estimated gain of 26%, grabbed a portfolio space of 0.16%.
Nebraska-based Boston Omaha Corp. (BOMN, Financial) represented another top position, filling 0.03% portfolio space. Boston Omaha runs outdoor billboards, surety insurance and brokerage activities and investments in real estate management. Its stock has jumped an estimated 3% since Horizon Kinetics initiated the position in the first quarter, according to GuruFocus.
The company is struggling to make a profit after three years of operations. It filed its initial public offering last year, pricing about 6.54 million shares at $13 per share. The offering was valued at $97.75 million.
Broadridge Financial Solutions Inc. (BR, Financial), a provider of technology solutions for banks and broker-dealers, was the guru investor’s third-largest holding among the new buys for the quarter. It has gained an estimated 20%.
Other newcomers to the portfolio included a handful of closed-ended funds and the stock of Bel Fuse Inc. (BELFB, Financial), International Business Machines (IBM, Financial) and IBERIABANK Corp. (IBKC, Financial)
Stahl co-founded Horizon Kinetics over two decades ago in New York City. Almost 40% of the portfolio is invested in real estate while 30% is invested in consumer cyclical and financial services. Lesser positions are in industrials (9.9%) and exchange-traded funds (5.2%).
In regard to performance, the Horizon Asset Core Value portfolio returned 10% in 2017 and 8.6% in 2016. That compared to 21.71% and 11.98% for the S&P 500, respectively.
Balchem Corp.
The New York-based company develops and sells chemical-based ingredients for the food and pharmaceutical industries. It has four segments, including human nutrition and health, animal nutrition and health, specialty products and industrial products. It describes itself as a global leader in the manufacture of a chemical that is used as a nutrient for poultry and swine production animals.
Horizon Kinetics purchased more than 67,000 shares for an average purchase price of $78.71 a share.
In Friday trading, the company’s shares stood at $99.26, down 0.1%. In three years, the stock has jumped 68%. Year to date, it is up 22%. Balchem Corp. is trading above its historical value, based on the median-price sales chart provided by GuruFocus.
The stock is trading at 34 times earnings, which is lower than 68% of companies in the Global Chemicals Industry. It has a price-book ratio of 5.04 times, which is lower than 70% of its same-sector peers. The price-sales ratio is 5.22 times, which is lower than 85% of its peers. Balchem Corp. pays a small dividend yield of 0.42%, which is lower than 89% of its peers.
The company last reported earnings per share of $2.91 on trailing 12-month revenue of $618 million. Analysts estimate it will bring in $673 million in revenues on earnings of $3.19 per share, as of December 2019. The company has a Piotroski F-Score of 6, which indicates stable operations.
While Baltech reported 15% in annualized earnings growth over 10 years, GuruFocus identified two severe warning signs. The company’s operating margins have been in decline since 2013. In 2017, the margin stood at 16% compared to 19% four years ago. Its asset growth has exceeded its revenue growth rate over the past five years, indicating the company may be getting less efficient.
Other key indicators show a healthy growth in revenues and net income.
Balchem has a market cap of $3 billion. It has a financial strength rating of 7 out of 10 and a profitability and growth rating of 8 of 10, according to GuruFocus.
Gurus who own the stock include Chuck Royce (Trades, Portfolio) and Jim Simons (Trades, Portfolio).
Boston Omaha
The company engages in advertising, insurance and real estate. A total of more than 40,000 shares were purchased for an average price of $23 a share.
Boston Omaha has ownership of multiple advertising billboards in Florida, Georgia, Wisconsin and Alabama as well as investments in several real estate companies. Last June, estimates showed it owned 532 billboard structures with more than 900 spots, including digital displays.
In trading late Friday afternoon, Boston Omaha stock stood at just over $24 a share, up 0.96%. In the last 12 months, Boston Omaha’s stock has gained 24%. Year to date, it has dropped 19% in value. Boston Omaha is trading above its historical value, based on the median-price sales chart provided by GuruFocus.
GuruFocus identified one severe warning sign. That is, a Sloan ratio that signals poor quality of earnings. The company struggled to turn a profit last year. Boston Omaha’s earnings before income, taxes, depreciation and amortization (EBITDA) stood at -$1.02 per share in March.
Boston Omaha’s price-book ratio stood at 1.87 times, or lower than 63% of its peers, and its price-sales ratio stood at 29.66 times, lower than 90% of its peers in the Global Conglomerates sector.
The company has a market cap of $518 million.
GuruFocus ranks it 8 out of 10 in financial strength, largely because it has no debt. It ranked Boston Omaha 2 out of 10 in profitability and growth.
Broadridge Financial Solutions Inc.
The New York-based company has produced an estimated gain of 20% for the guru since Horizon Kinetics purchased shares for an average price of $99 a share.
Shares sold for $119.20 in late afternoon trading on Friday, representing an increase of 0.36%.
In just three years, the stock of Broadridge Financial has increased 127%. Year to date, it is up 31%.
Broadridge Financial is trading above its historical value, based on the median-price sales chart provided by GuruFocus.
It is trading at 25.18 times earnings and has a price-book ratio of 12.40 times and a price-sales ratio of 12.04 times. All three metrics are lower than the majority of its peers. Also, its Piotroski F-score is ranked 7, which signals healthy business operations.
Broadridge Financial offers a yield in dividend of 1.19%.
Analysts estimate earnings of $4.82 on revenue of $4.5 billion in June 2020. The trailing 12-month earnings were reported at $3.39 per share on revenue of $4.3 billion.
In profits, the company reported an average annualized growth of 6.5% over the last 10 years.
In revenue, the company reported $4 billion in June 2017, up from $2.9 billion the prior year. In net income, it reported $327 million versus $308 million over the same two-year period. It reported long-term debt of $1.2 billion, compared to $1.1 billion in the prior year. Free cash flow was $312 million, compared to $362 million in the prior year.
Broadridge Financial has a market cap of $14 billion.
The company has a financial strength rating of 6 out of 10 and a profitability and growth rating of 8 of 10.
Gurus who hold the stock include Jeremy Grantham (Trades, Portfolio), Mario Gabelli (Trades, Portfolio), Pioneer Investments (Trades, Portfolio), Diamond Hill Capital (Trades, Portfolio) and Jim Simons (Trades, Portfolio).
