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James Li
James Li
Articles (704)  | Author's Website |

Lou Simpson Exits Liberty Global, Adds to 3 Holdings in 4th Quarter

Former CIO of Berkshire's Geico releases portfolio

Lou Simpson (Trades, Portfolio), manager of SQ Advisors LLC, disclosed this week he sold his Class C shares of Liberty Global PLC (NASDAQ:LBTYK) and increased his holdings of three companies during the fourth quarter: Sensata Technologies Holding PLC (NYSE:ST), Apple Inc. (NASDAQ:AAPL) and Charles Schwab Corp. (NYSE:SCHW).

Managing a portfolio of 10 stocks, the former chief investment officer of Berkshire Hathaway's (NYSE:BRK.A)(NYSE:BRK.B) Geico seeks long-term capital appreciation through a close perusing of company documents and meetings with top management. Instead of relying on Wall Street’s research, SQ Advisors does its own research to identify investing opportunities.

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Sold out: Liberty Global PLC Class C

Simpson sold 6,104,893 Class C shares of Liberty Global for an average price of $23.79 per share, trimming 5.30% off his equity portfolio.

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U.K.-based Liberty Global engages in making investments into international television and broadband companies. Through its subsidiaries, the company provides cable network services to a wide range of European countries.

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Weitz Partners fund manager Wallace Weitz (Trades, Portfolio) said in his shareholder letter that Liberty Global was one of his portfolio’s top detractors as ongoing company struggles in Belgium and Switzerland offset strong operating results in the U.K. According to GuruFocus, Liberty Global’s operating margin has declined approximately 6.70% per year over the past five years, a warning sign of declining profitability.

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GuruFocus ranks the company’s financial strength 4 out of 10 on several weak indicators, which include debt ratios that underperform over 83% of global competitors and an Altman Z-score that suggests possible bankruptcy within two years. Despite this, Liberty Global’s Piotroski F-score ranks a moderately strong 6 out of 9.

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Weitz, Mario Gabelli (Trades, Portfolio), First Eagle Investment (Trades, Portfolio) and Chris Davis (Trades, Portfolio) trimmed their holdings of Liberty Global during the quarter. Seth Klarman (Trades, Portfolio), on the other hand, kept buying shares: the Baupost Group manager added 18,973,925 shares, increasing the position 176.19%.

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Sensata Technologies

Simpson added 1,065,535 shares of Sensata Technologies for an average price of $45.16 per share, increasing the equity portfolio 1.82%.

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The Dutch scientific and technical instruments company produces sensors and controls for applications in automotive systems, thermal circuit breakers in aircraft and temperature control devices in electric motors. GuruFocus ranks the company’s profitability 9 out of 10 on several positive indicators, which include a Piotroski F-score of a perfect 9, consistent revenue growth and operating margins that have increased approximately 1% per year over the past five years.

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Apple

Simpson added 259,203 shares of Apple, Warren Buffett (TradesPortfolio)'s largest holding as of quarter-end, increasing the position 22.02%. Shares of the Cupertino, California-based company averaged $192.15 during the quarter; Simpson increased his equity portfolio 1.56% with this transaction.

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Oakmark Fund manager Bill Nygren (Trades, Portfolio) said in his quarterly letter he views Apple as a “more valuable integrated hardware, software and services company, which is both a growth company and a value stock.” GuruFocus ranks Apple’s profitability 8 out of 10 on several positive indicators: even though operating margins have declined over the past five years, the company's profit margins and returns are still outperforming over 96% of global competitors.

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Charles Schwab

Simpson added 467,066 shares of Charles Schwab for an average price of $45.02 per share, increasing the equity portfolio 0.74%.

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Charles Schwab provides retail brokerage, banking, retirement plans and other corporate brokerage services. GuruFocus ranks the company’s financial strength 3 out of 10 primarily due to an equity-to-asset ratio that underperforms 95% of global competitors. Other weak indicators include increasing long-term debt and higher asset growth compared to revenue growth.

Disclosure: No positions.

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About the author:

James Li
I am an editorial assistant and researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

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