The fund initiated top positions in the Manhattan-based real estate investment trust SL Green Realty Corp. (SLG, Financial), the West Coast airliner Alaska Air Group Inc. (ALK, Financial) and Kansas' largest electrical provider, Evergy Inc. (EVRG, Financial). It also started a smaller position in U.S. wireless carrier AT&T Inc. (T, Financial).
The fund held a total of 102 stocks for a quarter-over-quarter turnover of 4%. The majority of the equities are in financial services, which make up 26% of the portfolio. Another 12.4% of the portfolio is in health care, 11.2% in energy, 10% in technology, 8% industrials, 7.9% and 7% in consumer cyclical and consumer defensive. A total of 6% of the portfolio is in basic materials, while the remainder is in utilities, communication services, exchange-traded funds and real estate.
John D. Linehan succeeded Brian Rogers as manager of the fund in 2015. Linehan joined the firm in 1998.
Daily year-to-date return as of June 30 is 1.32% while the three-month return was reported at 1.79%, according to the T. Rowe Price website. The fund’s gross expense ratio is 0.65% and its net expense ratio is 0.65%.
The 2017 calendar year total return was 16.18%. That compared to the S&P 500’s 21.71% over the same period of time. In 2016, the fund returned 19.28%, compared to the S&P’s 11.99%.
T. Rowe’s estimated return on the stock was reported at a rate of 34% since shares were bought for an average price of $38 a share in late 2015.
The stock was valued at $56.43 a share, kissing a 52-week high of $56.50 a share, in Tuesday trading.
SLG Green Realty
The REIT derives its revenue from tenant rents, escalations and reimbursement as Manhattan’s largest property owner and landlord with about 48 million square feet of wholly-owned and joint venture office space.
The company has additional property exposure through its 2.1 million square feet of well-located retail space.
T. Rowe bought 1.2 million shares of SL Green Realty in the second quarter at an average price of $97.60 a share. The estimated gain on the investment was 3%. The shares sit in 0.62% of the portfolio.
Among REITs, it pays among the lowest dividend yields of its industry at 3.18%. The rate is 94% lower than more than 950 of its peers.
In Tuesday trading, it stood at $101.30 a share, or down 0.65%. It is trading at 53 times price-earnings, which is lower than 97% of companies in the Global REIT-Office industry space. The industry median is 15 times. It is trading 55 times forward earnings. It has a price-book ratio of 1.46 times, lower than its 78% of peers, and price-sales ratio of 7.11 times, higher than 53% of its peers.
In a screen search, the company popped up a distressed Altman Z-Score. It also has seen revenue per share decline and mounting debt. Over the last three years, it has issued more than $651 million in debt.
SL Green Realty has a financial strength rating of 4 out of 10 and a profitability and growth rating of 7 out of 10. The company has market cap of $8.89 billion.
It reported $1.88 in earnings per share on revenue of $1.4 billion in the trailing 12 months.
The stock traded on Tuesday above its historical value based on GuruFocus’ median price-sales chart.
Alaska Air Group Inc.
Alaska Air Group operates an airline network in the United States, Canada, Mexico and other regions. With two subsidiaries, Alaska Airlines and Horizon Air, it has established an expansive network, with the majority of revenue generated by transporting passengers.
The majority of its business is conducted in the northwestern part of the United States. Its Seattle hub accounts for approximately half of total passengers.
A total of $1.6 million shares were purchased at an average price of $61.94 a share. The shares sit in 0.49% of the portfolio and have produced an estimated 0% return.
The stock stood at $61.70 a share in Tuesday afternoon trading, up 0.47%. The GuruFocus median price-sales chart shows it is trading above historical values. Year to date, the stock is down 18%.
GuruFocus ranks it 6 out of 10 in financial strength and 8 of 10 in profitability and growth. The screener identified only one severe warning sign with the airline. That is, its assets are growing at a faster pace than its revenue, which could signal a drop in efficiency.
However, the company has high markings on a series of important metrics, including consistent revenue per share growth, a strong dividend yield of 2.01%, expanding operating margins and price-book and price-sales ratios that are close to three- to five-year lows.
It is trading at 8.14 times earnings and 12.99 times forward earnings. Its price-earnings ratio is ranked higher than 71% of companies in the Global Airlines Industry, which is highly competitive.
The company has a market cap of $7.62 billion.
The company is the largest electric utility in Kansas, providing generation, transmission and distribution services to more than 700,000 customers in the central and northeastern regions of the state.
T. Rowe purchased a total of 1.7 million shares of the company at an average price of $53.33 a share. It sits in 0.48% of the portfolio. The investment has reported an estimated 5% return.
In trading, the utility was up 0.11% to $56.06 a share, not too far from its 52-week high of $57.44.
The Peter Lynch chart suggested that the stock is overpriced because it is trading above the Peter Lynch earnings line.
It is trading at 24.81 times price-earnings, which is lower than 67% of its competitors, and 21.60 times forward earnings, which is lower than 75% of peers. Its price-book ratio is 2.05 and its price-sales ratio is 3.08 times.
The company has two severe warning signs that affect its overall rankings on the GuruFocus screener. Its revenue per share has declined while it has continued to issue new debt over the years. Its debt stands at $337 million over three years.
It reported earnings of $2.27 per share on $2.598 million in revenue for the trailing 12 months. Revenue stood at approximately $2.68 billion with net income at $324 million.
The company has a market cap of $15 billion. It has a financial strength rating of 4 out of 10 and a profitability and growth rating of 5 out of 10, based on GuruFocus' data analysis.