Jeff Auxier (Trades, Portfolio), leader of Auxier Asset Management, disclosed his third-quarter portfolio on Monday, listing three new positions.
On its website, the guru’s Oregon-based firm says it seeks to invest in “compelling, undervalued” companies that have consistent operating results, strong competitive advantages and robust balance sheets.
Based on these criteria, Auxier established positions in Caterpillar Inc. (CAT, Financial), Andersons Inc. (ANDE, Financial) and Nordstrom Inc. (JWN, Financial) during the quarter.
Caterpillar
The guru invested in 4,002 shares of Caterpillar for an average price of $141.45 per share, dedicating 0.12% of the equity portfolio to the holding.
The Illinois-based manufacturer of construction machinery and equipment has a market cap of $76.69 billion; its shares were trading around $123.53 on Tuesday with a price-earnings ratio of 20.22, a price-book ratio of 4.69 and a price-sales ratio of 1.43.
The Peter Lynch chart shows the stock is trading higher than its fair value, suggesting it is overpriced.
GuruFocus rated Caterpillar’s financial strength 5 out of 10. While the company has good interest coverage, the Altman Z-Score of 2.49 indicates it is under some fiscal pressure as a result of declining revenue per share. The company’s profitability and growth scored a 6 out of 10 rating. Although the operating margin is in decline, it still outperforms 76% of competitors. In addition, the high Piotroski F-Score of 8 implies healthy operating conditions. It also has a business predictability rank of one out of five stars, which, according to GuruFocus, means it sees its stock price gain an average of 1.1% per year.
Of the gurus invested in Caterpillar, Bill Gates (Trades, Portfolio)’ foundation has the largest position with 1.91% of outstanding shares. Other guru shareholders include PRIMECAP Management (Trades, Portfolio), Spiros Segalas (Trades, Portfolio), Pioneer Investments (Trades, Portfolio), Bill Nygren (Trades, Portfolio), Tom Gayner (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), Steven Cohen (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio) and Ray Dalio (Trades, Portfolio).
Andersons
After exiting a position in Andersons in the fourth quarter of 2017, Auxier established a new 5,815-share holding for an average price of $37.71 per share. He allocated 0.04% of the equity portfolio to the position.
The agricultural company, which is headquartered in Maumee, Ohio, has a $913.81 million market cap; its shares were trading around $32.36 on Tuesday with a price-earnings ratio of 10.44, a price-book ratio of 1.13 and a price-sales ratio of 0.29.
According to the Peter Lynch chart, the stock is undervalued.
As a result of issuing new long-term debt and recording a decline in revenue per share and operating income over the last several years, Andersons’ financial strength was rated 5 out of 10 by GuruFocus. In addition, the Altman Z-Score of 2.52 suggests it is experiencing some minor financial stress. The company’s profitability and growth scored a 4 out of 10 rating, driven by margins and returns that underperform industry peers, a moderate Piotroski F-Score of 5, which suggests operations are stable, and a one-star business predictability rank.
With 2.24% of outstanding shares, Jim Simons (Trades, Portfolio)’ Renaissance Technologies is the company’s largest guru shareholder. Pioneer, Richard Snow (Trades, Portfolio) and Barrow, Hanley, Mewhinney & Strauss are also shareholders.
Nordstrom
The investor picked up 3,749 shares of Nordstrom for an average price of $57.26 per share, giving it 0.04% space in the equity portfolio. Auxier previously sold out of the stock in the fourth quarter of 2016.
Based in Seattle, the department store chain has an $8.27 billion market cap; its shares were trading around $49.89 on Tuesday with a price-earnings ratio of 17.86, a price-book ratio of 6.87 and a price-sales ratio of 0.52.
Based on the Peter Lynch chart, the stock appears to be overvalued.
Nordstrom’s financial strength was rated 6 out of 10 by GuruFocus. Although the company has adequate interest coverage, the Altman Z-Score of 2.64 suggests it is under some fiscal pressure. The retailer’s profitability and growth scored a 7 out of 10 rating. While the operating margin is in decline, it still outperforms 65% of competitors. The company is also strengthened by a moderate Piotroski F-Score of 6 and a two-star business predictability rank. In addition to having consistent earnings and revenue growth, GuruFocus says companies with this rank typically see their stock prices gain an average of 6% per y ear.
Pioneer is the department store’s largest guru shareholder with 0.61% of outstanding shares. John Rogers (Trades, Portfolio), Smead Capital Management, Lee Ainslie (Trades, Portfolio), Simons, Greenblatt, David Dreman (Trades, Portfolio) and Murray Stahl (Trades, Portfolio) also have positions in the stock.
Additional trades
Auxier also added to many positions during the quarter, including Facebook Inc. (FB, Financial), Sally Beauty Holdings Inc. (SBH, Financial), AbbVie Inc. (ABBV, Financial), Gilead Sciences Inc. (GILD, Financial), British American Tobacco PLC (BTI, Financial), Arcos Dorados Holdings Inc. (ARCO, Financial) and Intel Corp. (INTC, Financial).
The guru’s equity portfolio, which is composed of 153 stocks, is largely invested in the health care, financial services and consumer defensive sectors. According to the firm’s website, the Auxier Focus Fund underperformed the S&P 500 Index in 2017 with a return of 17.71%. The index posted a 21.71% return.
Disclosure: No positions.
Read more here:
