Causeway Capital Management leader Sarah Ketterer (Trades, Portfolio) disclosed two new holdings when she released her third-quarter portfolio this week.
According to its website, the Los Angeles-based firm, which Ketterer founded in 2001 with Harry Hartford, seeks to achieve superior risk-adjusted returns by investing in mispriced equities in both developed and emerging markets.
Based on these criteria, the guru established positions in RPC Inc. (RES, Financial) and the Vanguard FTSE All-World except U.S. Small-Cap Exchange-Traded Fund (VSS, Financial) during the quarter.
RPC
Ketterer invested in 6.4 million shares of RPC for an average price of $14.70 per share, dedicating 1% of the equity portfolio to the stake.
The Atlanta-based company, which provides oilfield services and equipment, has a $2.79 billion market cap; its shares were trading around $13 on Thursday with a price-earnings ratio of 12.72, a price-book ratio of 2.84 and a price-sales ratio of 1.56.
The Peter Lynch chart shows the stock is trading slightly below its fair value, suggesting it is undervalued.
Supported by healthy interest coverage as a result of no debt, GuruFocus rated RPC’s financial strength 9 out of 10. In addition, the Altman Z-Score of 10.31 indicates the company is financially sound.
Despite recording a decline in revenue per share over the last five years, the company’s profitability and growth scored a 6 out of 10 rating as a result of good margins and returns, a high Piotroski F-Score of 8, which implies operations are strong, and a business predictability rank of one out of five stars. According to GuruFocus, companies with this rank typically see their stock prices gain an average of 1.1% per year.
With her purchase of 2.98% of outstanding shares, Ketterer became the company’s largest guru shareholder. Mario Gabelli (Trades, Portfolio), Chuck Royce (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), Ken Fisher (Trades, Portfolio), Pioneer Investments (Trades, Portfolio), Leucadia National (Trades, Portfolio) and Murray Stahl (Trades, Portfolio) also own the stock.
Vanguard FTSE All-World
Having previously closed a position in the ETF in the second quarter, Ketterer opened a new 8,400-unit holding for an average price of $114.04 per unit. The investor allocated 0.01% of the equity portfolio to the position.
The ETF, which tracks the performance of the FTSE Global Small Cap ex. U.S. Index, has a market cap of $5.01 billion; it was trading around $100.96 on Thursday with a price-earnings ratio of 14.54 and a price-book ratio of 1.51.
The 14-day relative strength index is 40.04, suggesting it is neither overbought nor oversold.
Additional trades
During the quarter, Ketterer also removed several holdings from the equity portfolio, including UnitedHealth Group Inc. (UNH, Financial), KB Financial Group Inc. (KB, Financial), Shinhan Financial Group Co. Ltd. (SHG, Financial), Andeavor (ANDV, Financial), JA Solar Holdings Co Ltd. (JASO, Financial), VeriFone Systems Inc. (PAY, Financial) and PDC Energy Inc. (PDCE, Financial)
The guru’s $9.95 billion portfolio, which is composed of 88 stocks, is largely invested in the technology sector. Year to date, the International Value Fund is underperforming its benchmark with a return of –4.6%. The MSCI EAFE has posted a -1% return as of Sept. 30.
Disclosure: No positions.
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