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James Li
James Li
Articles (1538) 

Brandes Investments' Top 5 Position Boosts in 1st Quarter

Graham disciple's top buys include additions to 2 airlines

Brandes Investment Partners, founded by Charles Brandes (Trades, Portfolio), disclosed last week its top five position boosts in the first quarter were Flex Ltd. (NASDAQ:FLEX), Embraer SA (NYSE:ERJ), CVS Health Corp. (NYSE:CVS), Copa Holdings SA (NYSE:CPA) and Cemex SAB de CV (NYSE:CX).

According to the firm’s website, Brandes Investments applies the value investing discipline pioneered by Benjamin Graham, the father of value investing. The firm seeks attractively priced securities around the globe, investing in companies that are trading at a discount to estimated fundamental value.


As of quarter-end, the 137-stock equity portfolio had large exposure to financial services and health care, with the former occupying 22.26% of the portfolio and the latter representing 20.80%. Technology represents the third-largest sector with a 13.94% equity portfolio weight.



The firm added 5,723,542 shares of Flex, increasing the position 150.30% and the equity portfolio 1.33%. Shares averaged $9.46 during the quarter.


The Singapore-based company provides comprehensive electronics design, manufacturing and product services to global electronics and technology companies. GuruFocus ranks the company’s financial strength 6 out of 10 on several weak indicators, which include a low Piotroski F-score of 3 and a Beneish M-score that suggests possible earnings manipulation.


Richard Pzena (Trades, Portfolio)’s Pzena Investment Management Inc. (NYSE:PZN) also increased its holding of Flex during the quarter.


The firm added 2,054,130 shares of Embraer, increasing the equity portfolio 0.92%. Shares averaged $20.82 during the quarter.


The Brazilian regional aircraft manufacturer focuses on aircraft with fewer than 130 seats, business jets and defense and security products and services. GuruFocus ranks the company’s financial strength 5 out of 10 on several moderately severe warning signs, which include an Altman Z-score that suggests possible financial distress and debt ratios that underperform over 77% of global competitors. Despite this, Embraer’s Piotroski F-score is still a modestly strong 5 out of 9.



The firm added 690,164 shares of CVS, increasing the position 1,109.64% and the equity portfolio 0.86%.


GuruFocus ranks the Woonsocket, Rhode Island-based retail pharmacy chain’s financial strength 5 out of 10: Although the company’s equity-to-asset ratio of 0.27 outperforms 55% of global competitors, CVS’s Altman Z-score of 1.55 suggests possible financial distress. The company’s Piotroski F-score of 4 suggests moderately poor business operations. Despite this, CVS’s profitability ranks 6 out of 10 as its return on equity outperforms 65.38% of global competitors.


Leon Cooperman (Trades, Portfolio) and Mario Gabelli (Trades, Portfolio), two gurus that shared their perspectives on the ongoing U.S.-China trade war, both own shares of CVS.


The firm added 222,189 shares of Copa, increasing the holding 50.32% and the equity portfolio 0.42%.


The Panama-based airline provides passenger and cargo services across its two operating subsidiaries, Copa Airlines and Copa Columbia. GuruFocus ranks the airline’s profitability 6 out of 10: Even though the company has a weak Piotroski F-score of 3, Copa’s operating margin of 12.46% is outperforming 90% of global competitors. Additionally, the airline’s 2.08% return on assets outperforms 70.67% of global airlines.


The firm added 3,346,999 shares of Cemex, increasing the equity portfolio 0.36%. Shares averaged $5.01 during the quarter.


The Mexican building materials company manufactures and sells ready-mix concrete, cement and aggregates around the world. GuruFocus ranks Cemex’s profitability 7 out of 10 on several positive signs, which include expanding profit margins and a three-year revenue growth rate that outperforms 78.24% of global competitors. Despite this, Cemex’s financial strength ranks a poor 4 out of 10 on weak signs like a Piotroski F-score of 2 and debt ratios underperforming over 87% of global competitors.

Disclosure: No positions.

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