Scott Black (Trades, Portfolio), chief investment officer and chief compliance officer of Delphi Management Inc., disclosed on Monday that his top five buys for the second quarter were JPMorgan Chase & Co. (JPM, Financial), Principal Financial Group Inc. (PFG, Financial), Equinor ASA (EQNR, Financial), Whiting Petroleum Corp. (WLL, Financial) and Knoll Inc. (KNL, Financial).
As disciples of the Graham-Dodd school of value investing, Black and his team pursue a “proven, conservative strategy” that emphasizes the fundamental performance of underlying companies. The firm seeks investments under good management and meets “a set of rigorous quantitative criteria” internally developed by Black’s team. The manager’s top three sectors in terms of portfolio weight are consumer cyclical, technology and financial services.
JPMorgan
Black invested in 21,216 shares of JPMorgan for an average price of $109.74 per share. With this transaction, the investor increased his equity portfolio 1.5%.
New York-based JPMorgan said on Aug. 1 that net income for the quarter increased 18% year over year primarily due to higher net revenues and a lower tax rate. Net interest incomes of $13.5 billion increased 10%, driven predominantly by higher rates and loan growth.
JPMorgan’s net margin is near a 10-year high of 26.62% and outperforms 60% of global competitors. The bank reported a 14% return on equity and a 17% return on tangible equity: both metrics rank higher than approximately two-thirds of global banks.
Steven Cohen (Trades, Portfolio) also invested in JPMorgan during the quarter.
Principal Financial Group
Black invested in 37,449 shares of Principal Financial Group for an average price of $58.14 per share. The manager dedicated 1.34% of his equity portfolio to the position.
Des Moines, Iowa-based Principal Financial Group offers a wide range of financial products and services, including retirement, asset management and insurance. The company’s net margin is near a 10-year high of 17.92% and outperforms 83% of global competitors.
GuruFocus lists four positive investing signs for Principal Financial, including a dividend yield near a two-year high and a price-book ratio near a two-year low.
Equinor
Black invested in 80,862 shares of Equinor for an average price of $25.99 per share. The manager dedicated 1.32% of his equity portfolio to the position.
Formerly known as Statoil ASA, Equinor ASA produces and transports petroleum and petroleum-based products around the world. The Norwegian integrated energy company’s profitability ranks 5 out of 10: although the company’s operating margin of 21.75% outperforms 88% of global competitors, Equinor’s revenue and gross margins have declined over the past five years.
Whiting Petroleum
Black invested in 41,575 shares of Whiting Petroleum for an average price of $45.98 per share. The manager dedicated 1.27% of his equity portfolio to the position.
Denver-based Whiting Petroleum said on July 31 that production for the June quarter averaged 126,180 barrels of oil equivalent per day, resulting in a total production of 11.5 million barrels, the high end of the guidance released during the prior quarter. CEO Bradley Holly increased the full-year production guidance by 500,000 barrels from the prior quarter’s guidance range of 46.5 million to 47.2 million barrels.
Knoll
Black invested in 88,885 shares of Knoll for an average price of $20.51 per share. With this transaction, the guru increased his equity portfolio 1.24%.
Knoll designs and manufactures various furniture, textiles, leathers and dining chairs for home and office. The company’s profitability ranks 7 out of 10 on several factors, including expanding operating margins and a satisfactory Piotroski F-score of 6.
Disclosure: No positions.
