Francisco Garcàa Paramés (Trades, Portfolio), founder and leader of Spanish investment firm Cobas Asset Management, disclosed seven new positions in his fourth-quarter 2018 portfolio, which was released last week.
Prior to founding Cobas in 2017, Paramés built his reputation managing the Bestinfond (Trades, Portfolio) portfolio at Bestinver. His 24-year track record of high performance rankings made him one of Europe’s top asset managers. Known as “Spain’s Warren Buffett (Trades, Portfolio),” he follows the Berkshire Hathaway (BRK.A)(BRK.B) CEO’s approach to value investing within the framework of the Austrian business cycle theory.
The guru’s top five new buys for the quarter were Maire Tecnimont SpA (MIL:MT, Financial), Prosegur Cash SA (XMAD:CASH, Financial), Mota-Engil (XLIS:EGL, Financial), Scorpio Tankers Inc. (STNG, Financial) and Sonae SGPS SA (XLIS:SON, Financial).
Maire Tecnimont
Having previously closed a position in Maire Tecnimont in the third quarter of 2017, the investor established a new 2.08 million-share holding for an average price of 3.48 euros ($3.98) per share. The trade had an impact of 0.95% on the equity portfolio.
The Italian engineering and construction company has a market cap of 1.15 billion euros; its shares closed at 3.5 euros on Friday with a price-earnings ratio of 13.46, a price-book ratio of 4.06 and a price-sales ratio of 0.59.
The Peter Lynch chart shows the stock is trading below its fair value, suggesting it is undervalued.
GuruFocus rated Maire Tecnimont’s financial strength 5 out of 10. Although the company has issued 29.17 million euros 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 0.94, however, warns the company is at risk of bankruptcy. The company’s profitability and growth scored a 4 out of 10 rating, weighed down by weak margins and a moderate Piotroski F-Score of 4, which suggests operations are stable. The company also has a business predictability rank of one out of five stars, which is on watch as a result of declining revenue per share. According to GuruFocus, companies with this rank typically see their stocks gain an average of 1.1% per year.
Paramés holds 0.63% of the Maire Tecnimont’s outstanding shares.
Prosegur Cash
The guru invested in 2.3 million shares of Prosegur Cash for an average price of 1.79 euros per share, dedicating 0.63% of the equity portfolio to the stake.
The Spanish payment services company, which offers money transport, cash management, courier, ATM outsourcing and other related services, has a market cap of 3.03 billion euros; its shares closed at 2.02 euros on Friday with a price-earnings ratio of 15.54, a price-book ratio of 10.63 and a price-sales ratio of 1.83.
According to the Peter Lynch chart, the stock is trading close to its fair value.
Driven by comfortable interest coverage and a high Altman Z-Score of 3.64, GuruFocus rated Prosegur Cash’s financial strength 6 out of 10. The company’s profitability and growth did not fare as well, scoring a 4 out of 10 rating despite having strong margins and returns that outperform competitors.
Paramés holds 0.15% of the company’s outstanding shares.
Mota-Engil
Paramés picked up 2.7 million shares of Mota-Engil for an average price of 1.7 euros per share, allocating 0.61% of the equity portfolio to the stake.
The Portuguese construction company has a market cap of 451.36 million euros; its shares closed at 1.93 euros on Friday with a price-earnings ratio of 96.50, a price-book ratio of 1.98 and a price-sales ratio of 0.17.
Based on the Peter Lynch chart, the stock appears to be overvalued.
Mota-Engil’s financial strength and profitability and growth were both rated 4 out of 10 by GuruFocus. In addition to having poor interest coverage, the Altman Z-Score of 0.82 warns the company is at risk of going bankrupt since it has seen a decline in revenue per share over the last five years. Although the operating margin is in decline, however, it still outperforms 58% of industry peers. The company is also impacted by weak returns and a moderate Piotroski F-Score of 5. It also has a one-star business predictability rank.
With 1.44% of outstanding shares, azValor Iberia FI (Trades, Portfolio) is the company’s largest guru shareholder. Paramés holds 1.15%.
Scorpio Tankers
The investor purchased 250,947 shares of Scorpio Tankers for an average price of $18.58 per share, giving the holding 0.55% space in the equity portfolio.
Based in Monaco, the transportation and logistics company, which ships refined petroleum products, has a $953.88 million market cap; its shares were trading around $18.49 on Monday with a price-book ratio of 0.39 and a price-sales ratio of 1.
The chart shows the stock is trading below both its median price-book and price-sales ratios.
GuruFocus rated Scorpio’s financial strength 4 out of 10. Weighed down by debt, the Altman Z-Score of 0.13 warns the company is in danger of bankruptcy. In addition, the revenue per share has declined over the last 12 months. The company’s profitability and growth fared a bit better with a 6 out of 10 rating. While its margins and returns are negative and the Piotroski F-Score is a low 3, which suggests poor operating conditions, the company has a one-star business predictability rank.
With 0.82% of outstanding shares, Bestinfond (Trades, Portfolio) is the company’s largest guru shareholder. Arnold Schneider (Trades, Portfolio), Steven Cohen (Trades, Portfolio), Chuck Royce (Trades, Portfolio) and Louis Moore Bacon (Trades, Portfolio) also have positions in the stock.
Sonae SGPS
After selling out of Sonae in the first quarter of 2018, Paramés established a new 4.7 million-share stake for an average price of 0.84 euros per share. The trade expanded the equity portfolio 0.54%.
The Portuguese conglomerate, which has a diversified portfolio of businesses in retail, financial services, technology and telecommunications, has a market cap of 1.75 billion euros. Its shares closed at 0.93 euros on Friday with a price-earnings ratio of 4.23, a price-book ratio of 0.49 and a price-sales ratio of 0.26.
According to the Peter Lynch chart, the stock is undervalued.
Sonae’s financial strength was rated 5 out of 10 by GuruFocus. Although the company has issued approximately 304.02 million euros in new long-term debt over the last three years, it is at a manageable level due to sufficient interest coverage. Regardless, the Altman Z-Score of 1.04 warns the company is in financial distress and could go bankrupt. The company’s profitability and growth scored a 6 out of 10 rating. While its margins are in decline, they still outperform over half of industry peers. Sonae also has decent returns, a moderate Piotroski F-Score of 6 and a one-star business predictability rank.
Paramés holds 0.25% of the company’s outstanding shares.
Additional trades
During the quarter, the Spanish investor also established positions in London-based engineering company Subsea 7 SA (OSL:SUBC, Financial) and Cyprus-based miner Atalaya Mining PLC (LSE:ATYM).
The $707 million equity portfolio, which is composed of 69 stocks, is largely invested in the industrials sector.
In May, Paramés, along with investing legends Mario Gabelli (Trades, Portfolio) and Chuck Royce (Trades, Portfolio), will be speaking at the 2019 GuruFocus Value Conference in Omaha, Nebraska. The conference will be held at the DoubleTree by Hilton Hotel Omaha Downtown on May 2 and 3. To view the full list of speakers, get more information or register, click here.
Disclosure: No positions.
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