Charles Brandes (Trades, Portfolio), leader of Brandes Investment Partners, disclosed this week he took a 7.59% stake in Banco Lationamericano de Comercio Exterior SA (BLX, Financial) on June 29.
As a follower of Benjamin Graham’s value investing style, Brandes’ San Diego-based investment firm takes positions in securities that are undervalued and have attractive total return potential.
According to GuruFocus real-time picks, Brandes picked up 3 million shares of the Latin American bank for an average price of $24.61 per share, dedicating 1.55% of his portfolio to the position.
The bank, which is headquartered in Panama, has a market cap of $988.64 million; its shares were trading around $25 on Friday, up 0.5%, with a price-earnings ratio of 13.49, a price-book ratio of 0.93 and a price-sales ratio of 7.52.
The Peter Lynch chart below shows the stock is trading slightly below its fair value, suggesting it is undervalued.
According to the median price-book chart, however, the stock is trading above its historical average. GuruFocus notes the company’s price-book ratio is currently near a two-year low.
The bank’s book value per share has also increased over the last several years, from $22.27 in 2013 to $26.45 in 2017.
GuruFocus rated Banco Latinoamericano’s financial strength 4 out of 10 and its profitability and growth 3 out of 10. While the company’s margins and returns are strong, GuruFocus data shows its revenue per share has been declining for the past several years. In 2015, the bank reported annual revenue of $168.57 million, or $4.31 per share. In fiscal 2017, revenue had fallen significantly to $138.8 million, or $3.53 per share.
In addition, while the company’s debt load has decreased in recent years, from $1.8 billion in 2015 to $1.1 billion in 2017, it is at around the same level it was 10 years ago. In 2008, it recorded $1.2 billion in debt.
Brandes is the only guru invested in the stock.
Portfolio
The guru’s $4.6 billion portfolio, which is composed of 138 holdings, is largely invested in the financial services sector, followed by health care.
Other notable financial stocks he owns include Citigroup Inc. (C, Financial), Bank of America Corp. (BAC, Financial), Bank of New York Mellon Corp. (BK, Financial), Wells Fargo & Co. (WFC, Financial) and PNC Financial Services Group Inc. (PNC, Financial).
According to GuruFocus, Brandes’ U.S. Value Equity Fund underperformed the S&P 500 in 2017 with a return of 14.96%. The index posted a 21.71% return.
Disclosure: No positions.
