Andreas Halvorsen (Trades, Portfolio), founder and chief investment officer of Viking Global Investors, disclosed this week his firm established a 5.5% stake in Berry Global Group Inc. (BERY, Financial) on Oct. 12.
A protégé of Tiger Management founder Julian Robertson (Trades, Portfolio), Halvorsen’s Greenwich, Connecticut-based firm picks stocks based on its understanding of the business’ fundamentals, management team and cyclical and secular industry trends.
According to GuruFocus real-time picks, Halvorsen’s Viking invested in 7.19 million shares of the Evansville, Indiana-based company for an average price of $43.09 per share, allocating 1.74% of the equity portfolio to the position.
The company, which manufactures plastic packaging products, has a $5.38 billion market cap; its shares were trading around $40.84 on Tuesday with a price-earnings ratio of 11.74, a price-book ratio of 4.03 and a price-sales ratio of 0.72. GuruFocus noted the price-earnings ratio is near a 10-year low and the price-book and price-sales ratios are near three-year lows.
The Peter Lynch chart suggests the stock is undervalued since it is trading below its fair value.
On Aug. 3, Berry Global posted third-quarter adjusted earnings of 96 cents per share on $2.1 billion in revenue. Later that month, the company announced it had completed the acquisition of Laddawn Inc., which produces blown polyethylene bags and films.
It will report fourth-quarter results in November.
Weighed down by poor interest coverage and $5.6 billion in long-term debt, GuruFocus rated Berry Global’s financial strength 4 out of 10. In addition, the Altman Z-Score of 1.82 indicates the company is under some fiscal pressure.
Supported by an expanding operating margin, good returns and a high Piotroski F-Score of 7, which suggests business conditions are stable, the company’s profitability and growth scored a 7 out of 10 rating.
With its purchase, Halvorsen’s firm became the company’s largest guru shareholder. Ron Baron (Trades, Portfolio), Jim Simons (Trades, Portfolio)’ Renaissance Technologies, Steven Cohen (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio) also own the stock.
The guru's $17.47 billion portfolio, which is composed of 60 holdings, is largely invested in the technology sector, followed by health care and industrials. His five largest holdings as of the second quarter were United Technologies Corp. (UTX, Financial), Facebook Inc. (FB, Financial), Microsoft Corp. (MSFT, Financial), Anthem Inc. (ANTM, Financial) and General Electric Co. (GE, Financial).
In 2017, Halvorsen was ranked the eighth-highest-earning hedge fund manager in the world, recording $26 billion in net gains since inception.
Disclosure: No positions.
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