Delphi Management leader Scott Black (Trades, Portfolio) released his third-quarter portfolio on Nov. 13, listing five new positions.
A disciple of the Graham-Dodd school of value investing, the guru’s Boston-based firm takes long positions in companies that exhibit “a low absolute valuation” that are run by good management teams. According to its website, the firm contacts the management of every company it invests in.
Black established holdings in Huntington Bancshares Inc. (HBAN, Financial), Packaging Corp of America (PKG, Financial), Oshkosh Corp. (OSK, Financial), Nucor Corp. (NUE, Financial) and Commercial Vehicle Group Inc. (CVGI, Financial) during the quarter.
Huntington Bancshares
In his largest trade of the quarter, the guru invested in 127,085 shares of Huntington Bancshares for an average price of $15.64 per share, dedicating 1.22% of the equity portfolio to the position.
The Columbus, Ohio-based bank holding company has a market cap of $15.67 billion; its shares were trading around $14.76 on Tuesday with a price-earnings ratio of 11.53, a price-book ratio of 1.62 and a price-sales ratio of 3.78.
The Peter Lynch chart shows the stock is trading below its fair value, suggesting it is undervalued.
As a result of issuing roughly $1.5 billion in new long-term debt and recording a slowdown in revenue per share growth over the last 12 months, GuruFocus rated Huntington’s financial strength 3 out of 10. The company’s profitability and growth scored a 4 out of 10 rating despite having good margins and returns that outperform competitors. The company also has a business predictability rank of one out of five stars, which means it typically sees its stock price gain an average of 1.1% per year.
Of the gurus invested in Huntington Bancshares, Pioneer Investments (Trades, Portfolio) has the largest position with 0.96% of outstanding shares. Mario Gabelli (Trades, Portfolio), George Soros (Trades, Portfolio), Caxton Associates (Trades, Portfolio), Ray Dalio (Trades, Portfolio) and David Dreman (Trades, Portfolio) are also shareholders.
Packaging Corp of America
Having previously sold out of a position in Packaging Corp in the first quarter of 2015, the investor established a new 17,033-share holding for an average price of $112.78 per share. The trade had an impact of 1.20% on the equity portfolio.
The manufacturer of container board and corrugated products, which is headquartered in Lake Forest, Illinois, has a $9.05 billion market cap; its shares were trading around $95.79 on Tuesday with a price-earnings ratio of 11.32, a price-book ratio of 3.57 and a price-sales ratio of 1.29.
According to the Peter Lynch chart, the stock is undervalued.
Packaging Corp’s financial strength was rated 6 out of 10 by GuruFocus. In addition to having adequate interest coverage, the Altman Z-Score of 3.7 indicates the company is in good fiscal standing. The company’s profitability and growth scored a 9 out of 10 rating. Although the operating margin is in decline, it still outperforms 88% of industry peers. In addition, the company has a high Piotroski F-Score of 8, which suggests business conditions are healthy, and a three-star business predictability rank, which is on watch despite having consistent earnings and revenue growth. GuruFocus says companies with this rank typically see their stock prices gain an average of 11% per year.
With 1.01% of outstanding shares, First Eagle Investment (Trades, Portfolio) is the company’s largest guru shareholder. Pioneer, Robert Olstein (Trades, Portfolio), Chuck Royce (Trades, Portfolio) and Joel Greenblatt (Trades, Portfolio) also own the stock.
Oshkosh
Black picked up 16,319 shares of Oshkosh for an average price of $71.99 per share, allocating 0.75% of the equity portfolio to the holding. He previously exited a position in the stock in the first quarter of 2016.
The Wisconsin-based manufacturer of specialty trucks and military vehicles has a market cap of $4.92 billion; its shares were trading around $68.46 on Tuesday with a price-earnings ratio of 10.87, a price-book ratio of 1.98 and a price-sales ratio of 0.66.
Based on the Peter Lynch chart, the stock appears to be undervalued.
Oshkosh’s financial strength and profitability and growth were both rated 7 out of 10 by GuruFocus. In addition to having sufficient interest coverage, the Altman Z-Score of 3.81 suggests the company is in good fiscal health. The company is also supported by an expanding operating margin, good returns and a high Piotroski F-Score of 7, which indicates stable business conditions. The company also has a one-star business predictability rank.
Jim Simons (Trades, Portfolio)’ Renaissance Technologies has the largest position in the company with 0.42% of outstanding shares. Other gurus with positions in the company are Greenblatt, Mairs and Power (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio), Pioneer, Paul Tudor Jones (Trades, Portfolio), Caxton and Barrow, Hanley, Mewhinney & Strauss.
Nucor
After closing a position in Nucor in the third quarter of 2012, Black purchased a new 8,840-share holding for an average price of $64.02 per share. The trade had an impact of 0.36% on the equity portfolio.
Based in North Carolina, the steel producer has an $18.09 billion market cap; its shares were trading around $57.63 on Tuesday with a price-earnings ratio of 8.79, a price-book ratio of 1.86 and a price-sales ratio of 0.77.
The Peter Lynch chart suggests the stock is undervalued.
Supported by good interest coverage and a high Altman Z-Score of 4.46, GuruFocus rated Nucor’s financial strength 7 out of 10. The company’s profitability and growth scored a 6 out of 10 rating, boosted by an expanding operating margin, a high Piotroski F-Score of 8 and a one-star business predictability rank. GuruFocus also warns the company’s revenue per share has been in decline for the last five years.
Of the gurus invested in Nucor, Pioneer has the largest holding with 0.64% of outstanding shares. Other guru shareholders are the T Rowe Price Equity Income Fund (Trades, Portfolio), Dalio, Ken Fisher (Trades, Portfolio), Caxton, Jones, Dodge & Cox, Louis Moore Bacon (Trades, Portfolio), Lee Ainslie (Trades, Portfolio) and Greenblatt.
Commercial Vehicle Group
The guru bought 12,000 shares of Commercial Vehicle Group for an average price of $8.36 per share, giving it 0.07% space in the equity portfolio.
The New Albany, Ohio-based manufacturer of truck and auto parts has a market cap of $204.84 million; its shares were trading around $6.63 on Tuesday with a price-earnings ratio of 7.22, a price-book ratio of 1.91 and a price-sales ratio of 0.23.
According to the Peter Lynch chart, the stock is undervalued.
Commercial Vehicle Group’s financial strength was rated 6 out of 10 by GuruFocus. While it has insufficient interest coverage and seen a decline in revenue per share, the Altman Z-Score of 3.25 suggests the company is in good financial standing. The company’s profitability and growth did not fare as well, scoring a 5 out of 10 rating. While the operating margin is expanding, it only outperforms 56% of competitors. The company also has a moderate Piotroski F-Score of 6 and a one-star business predictability rank.
With 6.58% of outstanding shares, Royce is the company’s largest guru shareholder. Simons’ firm and Hotchkis & Wiley also hold the stock.
Additional trades
Black also added to several positions during the quarter: Bank of America Corp. (BAC, Financial), Hercules Capital Inc. (HTGC, Financial), Spectrum Brands Holdings Inc. (SPB, Financial), ON Semiconductor Corp. (ON, Financial), Wabash National Corp. (WNC, Financial), Knoll Inc. (KNL, Financial), Gulfport Energy Inc. (GPOR, Financial), The Interpublic Group of Companies Inc. (IPG) and Lennar Corp. (LEN).
The guru’s $156 million portfolio, which is composed of 86 stocks, is heavily invested in the consumer cyclical, financial services and technology sectors.
Disclosure: No positions.
Read more here:
