The FPA Capital Fund (Trades, Portfolio), once run by famed investor Robert Rodriguez, announced Thursday that it added five fresh positions to its portfolio during the first quarter.
Current FPA Fund portfolio manager Arik Ahitov purchased: MKS Instruments Inc. (MKSI, Financial), Ryder System Inc. (R, Financial), Vail Resorts Inc. (MTN, Financial), Valmont Industries Inc. (VMI, Financial) and Cheesecake Factory Inc. (CAKE, Financial). He sold only one stock, Rowan Companies PLC (RDC, Financial), and reduced 12 others. The portfolio ended the quarter with 26 positions valued around $191 million.
The largest sectors represented in the portfolio were: energy at 25.43%, technology at 24.79% and industrials at 17.09%.
The FPA Fund employs an absolute value approach. It focuses on small- and mid-cap companies, keeping a concentrated portfolio with a long-term focus of typically around seven years.
In a first-quarter letter, Ahitov described his investment activity:
“As the market sold off during the 4Q 2018, we put cash to work in stocks we know well and initiated positions in a few new opportunities where we were waiting for the right price. However in 1Q 2019, the Russell 2500 rallied 15.82% and the Fund was up 15.89% during that period. We looked to capture some of these gains by selling stocks into the rally and again building up the Fund’s cash levels for the next correction. This is how you would expect us to act during a downturn and rally scenario and we would be happy to do the same thing again and again. Put most succinctly, buy low, sell high is what we are trying to do.”
New buys
MKS Instruments Inc. (MKSI, Financial)
FPA Capital purchased 60,036 shares of MKS Instruments, giving it 2.93% portfolio weight. The stock’s first-quarter share price averaged $80.
MKS Instruments Inc. has a market cap of $5.45 billion; its shares were traded around $100.46 Thursday with a price-earnings ratio of 14.04 and price-sales ratio of 2.68. The trailing 12-month dividend yield of MKS Instruments Inc. stocks is 0.79%. The forward dividend yield of MKS Instruments Inc. stocks is 0.79%. MKS Instruments Inc. had an annual average earnings growth of 49.10% over the past five years.
Ryder System Inc. (R, Financial)
FPA Capital purchased 69,335 shares of Ryder Systems, giving it 2.25% portfolio weight. The stock’s first-quarter share price averaged $58.
Ryder System Inc. has a market cap of $3.49 billion; its shares were traded around $65.57 Thursday with a price-earnings ratio of 12.72 and price-sales ratio of 0.42. The trailing 12-month dividend yield of Ryder System Inc. stocks is 3.26%. The forward dividend yield of Ryder System Inc. stocks is 3.29%. Ryder System Inc had an annual average earnings growth of 5.10% over the past 10 years. GuruFocus rated Ryder System Inc. the business predictability rank of 5-star.
Vail Resorts Inc. (MTN, Financial)
The fund purchased 17,027 shares of Vail Resorts, giving it 1.94% portfolio weight. The stock’s first-quarter share price averaged $204.
Vail Resorts Inc. has a market cap of $8.43 billion; its shares were traded around $209.47 with a price-earnings ratio of 32.41 and price-sales ratio of 4.07. The trailing 12-month dividend yield of Vail Resorts Inc. stocks is 2.96%. The forward dividend yield of Vail Resorts Inc. stocks is 3.33%. Vail Resorts Inc. had an annual average earnings growth of 10.40% over the past 10 years.
Valmont Industries Inc. (VMI, Financial)
The fund purchased 25,971 shares of Valmont Industries Inc., giving it 1.77% portfolio weight. The stock’s first-quarter share price averaged $129.
Valmont Industries Inc. has a market cap of $2.89 billion; its shares were traded around $131.62 Thursday with a price-earnings ratio of 20.33 and price-sales ratio of 1.08. The trailing 12-month dividend yield of Valmont Industries Inc. stocks is 1.14%. The forward dividend yield of Valmont Industries Inc. stocks is 1.14%. Valmont Industries Inc. had an annual average earnings growth of 3.10% over the past 10 years.
Cheesecake Factory Inc. (CAKE, Financial)
The fund purchased 61,252 shares of Cheesecake Factory, giving it 1.57% portfolio weight. The stock’s first-quarter share price averaged $46.
Cheesecake Factory Inc. has a market cap of $2.12 billion; its shares were traded around $47.03 Thursday with a price-earnings ratio of 22.11 and price-sales ratio of 0.96. The trailing 12-month dividend yield of Cheesecake Factory Inc. stocks is 2.73%. The forward dividend yield of Cheesecake Factory Inc. stocks is 2.86%. Cheesecake Factory Inc had an annual average earnings growth of 9.10% over the past 10 years. GuruFocus rated Cheesecake Factory Inc. the business predictability rank of 3.5-star.
See FPA Capital’s portfolio here.
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