Robert Olstein (Trades, Portfolio), chairman and chief investment officer of Olstein Funds, disclosed on Wednesday five new positions for the second quarter: Walt Disney Co. (DIS, Financial), Generac Holdings Inc. (GNRC, Financial), Goldman Sachs Group Inc. (GS, Financial), Lam Research Corp. (LRCX, Financial) and Home BancShares Inc. (HOMB, Financial).
Olstein invests in companies using a “defense first” approach: the guru selects companies that generate enough cash flow to sustain the business, avoid aggressive accounting practices and demonstrate strong balance sheet fundamentals. Olstein’s top four sectors in terms of portfolio weight are industrials, consumer discretionary, technology and financial services.
Walt Disney
Olstein invested in 84,500 shares of Walt Disney for an average price of $102.31 per share. The guru dedicated 1.17% of the equity portfolio to the position.
Burbank, California-based Disney said on Tuesday that earnings for the June quarter were $1.95, up 44 cents or 29% from the prior-year quarter. Net revenues increased 7%: strong revenue growth in broadcasting and studio entertainment offset declines in consumer products and interactive media.
CEO Bob Iger said he is “more enthusiastic” about the merger with Twenty-First Century Fox Inc. (FOXA, Financial)(FOX, Financial), which earned “overwhelming support” from shareholders on July 27. GuruFocus ranks Disney’s profitability 8 out of 10 as the company’s profit margins and returns are near 10-year highs and outperforming 89% of global competitors.
David Carlson (Trades, Portfolio) and Markel Corp. (MKL, Financial) co-CEO Tom Gayner (Trades, Portfolio) also invested in Disney during the quarter.
Generac Holdings
Olstein invested in 135,000 shares of Generac Holdings for an average price of $48.51 per share. With this transaction, the guru increased his equity portfolio 0.93%.
Generac Holdings designs and manufacturers power generation equipment for the residential, light commercial, industrial and construction markets. The company’s profitability ranks 8 out of 10 primarily due to returns on equity and Joel Greenblatt (Trades, Portfolio) returns on capital outperforming 95% and 87% of global competitors. Even though operating margins have declined approximately 8.4% over the past five years, Generac Holdings’ margins still rank higher than 84% of global diversified industrial companies.
Goldman Sachs
Olstein invested in 17,000 shares of Goldman Sachs for an average price of $238.67 per share. The transaction increased the equity portfolio 0.5%.
Goldman Sachs offers a wide variety of investment banking operations, including institutional client services and investment management. GuruFocus ranks the company’s financial strength 4 out of 10 on debt ratios that underperform 95% of global competitors. According to the warning signs screener, Goldman Sachs has issued over $60.6 billion in long-term debt over the past three years.
Lam Research
Olstein invested in 20,000 shares of Lam Research for an average price of $192.52 per share. With this transaction, the guru increased his equity portfolio 0.46%.
Lam Research develops and sells semiconductor processing systems for the fabrication of integrated circuits. The company’s profitability ranks 9 out of 10 on several positive investing signs, including expanding operating margins, a strong Piotroski F-score of 8 and a dividend yield near a two-year high.
CEO Martin Anstice said on July 26 that Lam’s second-quarter results “confirmed 2018 as the strongest year of [the company’s] history,” with over $11 billion in revenue, approximately $18 in earnings per share and $2.7 billion in cash flow from operations. The company’s net profit margin, return on equity and three-year revenue growth rate all outperform over 84% of global competitors, suggesting strong growth potential compared to peers.
Home BancShares
Olstein invested in 63,200 shares of Home BancShares for an average price of $23.13 per share. The guru increased his equity portfolio 0.19% with this transaction.
GuruFocus lists three positive investing signs for Home BancShares: a price-book ratio near a five-year low, a price-sales ratio near a three-year low and a dividend yield near a 10-year high.
Disclosure: No positions.
