1. How to use GuruFocus - Tutorials
  2. What Is in the GuruFocus Premium Membership?
  3. A DIY Guide on How to Invest Using Guru Strategies
Sydnee Gatewood
Sydnee Gatewood
Articles (533) 

John Rogers Cuts Ties With Contango

Guru adds to two other holdings

July 12, 2018 | About:

Ariel Investments founder John Rogers (Trades, Portfolio) disclosed this week that he exited his stake in Contango Oil & Gas Co. (MCF) and boosted his positions in Edgewater Technology Inc. (NASDAQ:EDGW) and Strattec Security Corp. (NASDAQ:STRT) on June 30.

Relying on a long-term approach, Rogers and his team pick a concentrated number of small and medium-sized companies that are undervalued. The firm also looks for high barriers to entry, sustainable competitive advantages and predictable fundamentals.

Contango

According to GuruFocus real-time picks, the guru sold 4.19 million shares of Contango for an average price of $5.68 per share. The trade had an impact of -0.17% on the portfolio.

GuruFocus estimates he has lost 81% on the investment since the first quarter of 2012.

The Houston-based oil and gas producer has a market cap of $161.42 million; its shares were trading around $6.31 on Thursday, up 0.32%, with a price-book ratio of 0.72 and a price-sales ratio of 1.96.

The price-sales chart below shows the stock is trading below its historical average.

1036622815.png

GuruFocus rated Contango’s financial strength 4 out of 10 as its Altman Z-Score of 0.77 indicates it is at risk of going bankrupt. GuruFocus also notes that revenue per share has been declining for the past several years, from $14.51 in 2014 to $3.18 in 2017.

1157655095.png

The company’s profitability and growth scored a 5 out of 10 rating. While its operating margin is negative and underperforming 68% of competitors, the Piotroski F-Score of 5 implies operations are stable. Contango also has a business predictability rating of one out of five stars. According to GuruFocus, companies that have this rating typically gain 1.1% per year on average.

No gurus currently hold the stock, as Jim Simons (Trades, Portfolio) and Howard Marks (Trades, Portfolio) recently closed their positions as well.

Edgewater Technology

Rogers increased his Edgewater Technology holding by 22%, buying 503,110 shares for an average price of $5.42 per share. He now holds roughly 2.8 million shares, which represent 0.17% of his portfolio.

a92d164592c4ee55d4ba1faab57b5f13.png

GuruFocus estimates he has gained 11% on the investment since the first quarter of 2013.

The information technology consulting company, which is headquartered in Massachusetts, has a market cap of $81.9 million; its shares were trading around $5.60 on Thursday, down 1.58%, with a price-book ratio of 1.54 and a price-sales ratio of 0.73.

According to the price-sales chart below, the stock is trading near its historical average.

194745761.png

Edgewater’s financial strength was rated 7 out of 10 by GuruFocus. While the company has no debt, its Altman Z-Score of 2.5 indicates it is under some financial pressure as it revenue per share has declined in recent years. The company’s Sloan ratio also implies poor earnings quality.

The company’s profitability and growth did not fare as well, scoring 4 out of 10, as its operating margin, which is negative, underperforms 70% of industry peers. In addition, the Piotroski F-Score of 2 indicates poor business operations. It also has a one-star business predictability rating, which is on watch, meaning its business or industry fundamentals may soon change.

With 19.38% of outstanding shares, Rogers is the company’s largest guru shareholder. Mario Gabelli (Trades, Portfolio) and Simons also own the stock.

Strattec Security

The investor expanded his position in Strattec by 17.99%, purchasing 56,700 shares for an average price of $30.55 per share. He now holds 371,796 shares, representing 0.13% of his portfolio.

7d87f565a7f019b2c214c2b29531dab8.png

GuruFocus estimates he has lost 22% on the investment since the first quarter of 2016.

Headquartered in Wisconsin, the manufacturer of lock systems for automobiles has a market cap of $113.41 million; its shares were trading around $30.58 on Thursday, down 0.08%, with a price-earnings ratio of 11.21, a price-book ratio of 0.70 and a price-sales ratio of 0.26.

Based on the Peter Lynch chart below, the stock appears to be undervalued since it is trading below its fair value.

822132925.png

Strattec Security’s financial strength was rated 7 out of 10 by GuruFocus. While the company has issued $37 million in new long-term debt over the past several years, it is still at a manageable level. In addition, the Altman Z-Score of 3.49 indicates it is financially strong.

The company’s profitability and growth was rated 6 out of 10. While the operating margin has been declining over the past several years, the Piotroski F-Score of 5 implies business conditions are stable. Strattec also has a one-star business predictability rating.

Of the gurus invested in Strattec, Rogers has the largest position. Gabelli, Simons and Chuck Royce (Trades, Portfolio) are also shareholders.

Performance

Rogers’ portfolio is largely invested in the financial services sector, followed by consumer cyclical and industrials stocks.

According to the firm’s website, the Ariel Fund has returned 3.05% year to date. In comparison, the S&P 500 has posted a 2.65% return over the same period.

Disclosure: No positions.

About the author:

Sydnee Gatewood
I am an editorial assistant at GuruFocus. I have a BA in journalism and a MA in mass communications from Texas Tech University. I have lived in Texas most of my life, but also have roots in New Mexico and Colorado. Follow me on Twitter! @gurusydneeg

Rating: 0.0/5 (0 votes)

Comments

Please leave your comment:


Performances of the stocks mentioned by Sydnee Gatewood


User Generated Screeners


Yamil BerardTepper's Leisure
jtepper2GrowthHighROC
gluon71gm-buylist-4
gluon71gm-buylist-3
DBrizancdn 18Jul2018 1249p
DBrizancdn 18Jul2018 1248p
HOLKLSUTop 20 Group 2018 All Sectors
DBrizancdn 18Jul2018 1219p
averacjrgood beta in up market
Nightdoc2S&P 500 quality
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GF Chat

{{numOfNotice}}
FEEDBACK