Steven Romick (Trades, Portfolio), managing partner of the FPA Crescent Fund, announced this week that he started two new positions and made substantial increases to stakes in three others in the second quarter.
Romick is a value investor who buys securities for less than he thinks they are worth but has said he has “never been easy to label” because his fund holds “broad flexibility” and a “conservative mandate.”
“Buying growing businesses with an adequate margin of safety is just as much a value investment as buying, say, a financial firm at a discount to tangible book value or a holding company at a discount to readily ascertainable net asset value,” he said in his second-quarter letter. “We’ve held all three types of investments in our portfolio over the past decade.”
The FPA Crescent Fund’s portfolio listed 51 stocks with a value of $12.07 billion at the end of the third quarter. The largest sector represented is financial services at 34.81% of stocks, followed by technology at 30.93%.
Romick also holds short positions and corporate bonds, overseeing $16.6 billion in assets overall. Geographically, 80% of the portfolio was allocated to North America, 18.8% to Europe and 0.8% to the Pacific Basin at the end of the second quarter.
His third-quarter buys were Mohawk Industries Inc. (MHK, Financial) and The Royal Bank of Scotland Group Plc (LSE:RBS, Financial). He made triple-digit increases to stakes in JD.com Inc. (JD, Financial), HeidelbergCement AG (XTER:HEI, Financial) and Broadcom Inc. (AVGO, Financial).
New buys
Mohawk Industries Inc. (MHK, Financial)
Romick purchased 1,254,287 shares of Mohawk Industries, giving it 2.01% portfolio space. The stock’s third-quarter share price averaged $196.
Mohawk Industries Inc. has a market cap of $12 billion; its shares were traded around $160.81 Wednesday with a price-earnings ratio of 13.16 and price-sales ratio of 1.23. Mohawk Industries Inc. had an annual average earnings growth of 21% over the past five years.
The Royal Bank of Scotland Group Plc (LSE:RBS, Financial)
Romick purchased 34,560,896 shares of The Royal Bank of Scotland Group Plc, giving it 1.03% portfolio space. The stock’s third-quarter share price averaged £2 per share.
The Royal Bank of Scotland Group Plc has a market cap of ÂŁ29.61 billion; its shares were traded around ÂŁ2.46 with a price-earnings ratio of 41 and price-sales ratio of 2.28. The trailing 12-month dividend yield of The Royal Bank of Scotland Group Plc stocks is 0.81%. The forward dividend yield of The Royal Bank of Scotland Group Plc stocks is 1.63%.
Adds
Romick increased his position in JD.com Inc. (JD, Financial) by 369.38%, buying 4,906,474 shares, for a total of 6,234,764. The stock’s price averaged $33 in the third quarter. The holding represented 1.49% of the portfolio.
JD.com Inc. has a market cap of $32.74 billion; its shares were traded around $22.95 with a price-sales ratio of 0.52.
HeidelbergCement AG (XTER:HEI, Financial)
Romick increased his position in HeidelbergCement AG by 177.02%, buying 1,662,407 shares for a total holding of 2,601,524 shares. The holding represented 1.86% of the portfolio. The stock’s third-quarter share price averaged 70 euro per share.
HeidelbergCement AG has a market cap of 12.64 billion euro; its shares were traded around 64.30 euro with a price-earnings ratio of 12.57 and price-sales ratio of 0.73. The trailing 12-month dividend yield of HeidelbergCement AG stocks is 2.98%. The forward dividend yield of HeidelbergCement AG stocks is 2.98%. HeidelbergCement AG had an annual average earnings growth of 4.3% over the past five years.
Broadcom Inc. (AVGO, Financial)
Romick increased his position in Broadcom Inc. by 113.5%, buying 842,695 shares for a total holding of 1,585,095 shares. The holding represented 1.19% of the portfolio. The holding’s third quarter share price averaged $224.
Broadcom Inc. has a market cap of $95.99 billion; its shares were traded around $232.18 with a price-earnings ratio of 8.64 and price-sales ratio of 4.96. The trailing 12-month dividend yield of Broadcom Inc stocks is 3.01%. The forward dividend yield of Broadcom Inc. stocks is 2.90%. Broadcom Inc had an annual average earnings growth of 35.8% over the past 10 years. GuruFocus rated Broadcom Inc. the business predictability rank of 3-star.
See Steven Romick (Trades, Portfolio)’s portfolio here.
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