The Causeway International Value (Trades, Portfolio) Fund disclosed this week it established five new positions during the third quarter.
Managed by Sarah Ketterer (Trades, Portfolio)’s Los Angeles-based firm, the fund invests in foreign companies with market caps that exceed $1 billion in order to achieve long-term capital growth.
Based on these criteria, the fund started positions in Deutsche Post AG (XTER:DPW, Financial), Fanuc Corp. (TSE:6954, Financial), SK Innovation Co. Ltd. (XKRX:096770, Financial), Akbank TAS (IST:AKBNK, Financial) and A.P. Moller Maersk A/S (OCSE:MAERSK B) during the quarter.
Deutsche Post
Having previously closed a position in Deutsche Post in the third quarter of 2013, the fund opened a new 2.3 million-share stake for an average price of 30.16 euros ($34.15) per share, giving it 1.01% space in the equity portfolio.
The German postal service has a market cap of 31.4 billion euros; its shares closed at 25.28 euros on Tuesday with a price-earnings ratio of 12.51, a price-book ratio of 2.60 and a price-sales ratio of 0.54.
The Peter Lynch chart shows the stock is trading below its fair value, suggesting it is undervalued.
GuruFocus rated Deutsche Post’s financial strength 5 out of 10. Although the company has issued new long-term debt, it is at a manageable level due to adequate interest coverage. The Altman Z-Score of 2.28, however, indicates the company is under some financial pressure as it has seen a slowdown in revenue per share growth over the last 12 months.
The shipping company’s profitability and growth scored a 6 out of 10 rating, driven by operating margin expansion, good returns and a moderate Piotroski F-Score of 5, which suggests business conditions are stable. 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.
With its purchase of 0.19% of outstanding shares, Causeway became Deutsche Post’s largest guru shareholder. The Invesco European Growth Fund (Trades, Portfolio) also has a position in the stock.
Fanuc
Causeway invested in 352,700 shares of Fanuc for an average price of 21,640.5 yen ($191.10) per share, allocating 0.81% of the equity portfolio to the holding. The fund previously sold out of the stock in the first quarter of 2013.
The Japanese manufacturer of robotic and automation systems has a market cap of 3.3 trillion yen; its shares closed at 17,020 yen on Tuesday with a price-earnings ratio of 18.55, a price-book ratio of 2.21 and a price-sales ratio of 4.56.
According to the Peter Lynch chart, the stock is overvalued.
Fanuc’s financial strength was rated a perfect 10 out of 10 by GuruFocus. In addition to having no long-term debt and comfortable interest coverage, the Altman Z-Score of 11.12 suggests the company is in good fiscal standing. The company’s profitability and growth scored an 8 out of 10 rating. Although the operating margin is in decline, it still outperforms a majority of competitors. It is also supported by good returns, consistent earnings and revenue growth, a moderate Piotroski F-Score of 6 and a 2.5-star business predictability rank. GuruFocus says companies with this rank typically see their stock prices gain an average of 7.3% per year.
Of the gurus invested in Fanuc, Causeway has the largest position with 0.18% of outstanding shares. Charles de Vaulx (Trades, Portfolio), the IVA International Fund (Trades, Portfolio) and the T. Rowe Price Japan Fund (Trades, Portfolio) are also shareholders.
SK Innovation
The International Value Fund picked up 142,041 shares of SK Innovation for an average price of 195,915 won ($174.16) per share, dedicating 0.34% of the equity portfolio to the position.
The South Korean producer and refiner of petroleum products has a market cap of 15.94 trillion won; its shares closed at 181,500 won on Tuesday with a price-earnings ratio of 9.78, a price-book ratio of 0.90 and a price-sales ratio of 0.31.
Based on the Peter Lynch chart, the stock appears to be undervalued.
SK Innovation’s financial strength was rated 7 out of 10 by GuruFocus. The company has adequate interest coverage and the Altman Z-Score of 2.99 indicates it is financially stable. The company’s profitability and growth did not fare as well, scoring a 3 out of 10 rating. While margins outperform industry peers, the company has seen a decline in revenue per share over the last five years. It also has a moderate Piotroski F-Score of 4 and a one-star business predictability rank.
The fund holds 0.16% of the company’s outstanding shares.
Akbank
The fund purchased 20.9 million shares of Akbank for an average price of 6.46 lira ($1.21) per share. The stake was given 0.29% space in the equity portfolio.
The Turkish bank has a market cap of 26.76 billion lira; its shares closed at 6.69 lira on Tuesday with a price-earnings ratio of 4.26, a price-book ratio of 0.65 and a price-sales ratio of 1.55.
The Peter Lynch chart suggests the stock is undervalued.
Akbank’s financial strength and profitability and growth were both rated 4 out of 10 by GuruFocus. The company has been weighed down by issuing approximately 4.3 billion lira in new long-term debt over the last three years. Regardless, it is supported by margins and returns that outperform roughly 85% of competitors. The bank also has a one-star business predictability rank.
Causeway holds 0.52% of the company’s outstanding shares.
A.P. Moller Maersk
In its smallest new purchase of the quarter, the fund bought 7,764 Class B shares of Maersk for an average price of 8,830.88 krone ($1,343.84) per share. The trade had an impact of 0.13% on the equity portfolio.
The Danish transportation and logistics company has a market cap of 194.07 billion krone; its shares closed at 8,854 krone on Tuesday with a price-earnings ratio of 20.12, a price-book ratio of 0.83 and a price-sales ratio of 0.80.
According to the Peter Lynch chart, the stock is overvalued.
GuruFocus rated Maersk’s financial strength 6 out of 10. Although the company has issued roughly $24.2 billion in new long-term debt over the last three years, it is at a manageable level as a result of adequate interest coverage. The Altman Z-Score of 2.12, however, suggests the company is under some fiscal stress. The company’s profitability and growth scored a 5 out of 10 rating, supported by an operating margin that outperforms 70% of industry peers, a moderate Piotroski F-Score of 6 and a one-star business predictability rank.
With 0.12% of outstanding shares, Bestinfond (Trades, Portfolio) is the company’s largest guru shareholder. Causeway holds 0.04%.
Additional trades
During the quarter, the fund also added to several holdings, including Cie Financiere Richemont SA (XSWX:CFR), UniCredit SpA (MIL:UCG), SSE PLC (LSE:SSE), Basf SE (XTER:BAS) and Prudential PLC (LSE:PRU).
Causeway’s $8.19 billion equity portfolio is composed of 57 stocks. It is largely invested in the financial services and industrials sectors. As of Sept. 30, the fund has posted a return of -11.7%. The MSCI EAFE has returned -8.9% over that same period.
Disclosure: No positions.
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