1. How to use GuruFocus - Tutorials
  2. What Is in the GuruFocus Premium Membership?
  3. A DIY Guide on How to Invest Using Guru Strategies
James Li
James Li
Articles (895)  | Author's Website |

6 Seth Klarman Stocks With Low Price-Earnings Ratios

Stocks include Buffett's Synchrony Financial

According to current portfolio statistics, six Seth Klarman (Trades, Portfolio) holdings trading at low price-earnings ratios are Antero Resources Corp. (NYSE:AR), CBS Corp. (NYSE:CBS), Synchrony Financial (NYSE:SYF), Nexstar Media Group Inc. (NASDAQ:NXST), Bristol-Myers Squibb Co. (NYSE:BMY) and Sinclair Broadcast Group Inc. (NASDAQ:SBGI).

Klarman, manager of the Baupost Group, invests in a broad range of securities, including stocks, distressed debt, liquidations and foreign securities. The author of “Margin of Safety,” a book that can sell for over $1,000, cautions that investing is more than just producing absolute returns: Investing also includes considering the risks associated with returns. “Deal or No Deal” host Howie Mandel said in a June 12 CNBC interview that the game show is “all about risk versus reward”: high returns usually involve higher risk.

f4a38dc25cc00f8efaa1d7b259c6494f.png

As of quarter-end, Baupost’s $10.73 billion equity portfolio contains 30 stocks, including a new position in XPO Logistics Inc. (NYSE:XPO). The top three sectors in terms of portfolio weight are consumer cyclical, health care and technology with weights of 26.39%, 23% and 15.74%.

31da8851b0c05c33cd612b82c096fcfb.png

Antero Resources

Klarman owns 28,587,791 shares of Antero Resources, dedicating 1.47% of the equity portfolio to the stake. Shares opened at $2.84 on Wednesday, approximately 1.17 times its trailing-12-month earnings of $2.43 per diluted share.

665b016789e8b122a6870b15853161b0.png

The Denver-based company explores and produces natural gas in the U.S. and Canada. GuruFocus ranks the company’s financial strength 3.7 out of 10: Although it has a strong Piotroski F-score of 7, Antero’s interest coverage and debt ratios are underperforming over 67% of global competitors.

1326373368.png

Other gurus with large holdings in Antero include Glenn Greenberg (Trades, Portfolio) and Jeremy Grantham (Trades, Portfolio). “Magic Formula” developer Joel Greenblatt (Trades, Portfolio) and 2019 Value Conference Keynote Speaker Chuck Royce (Trades, Portfolio) established positions in Antero during the quarter.

a91589ae81337b4fcd36c4e51739c255.png

CBS

Klarman owns 10 million shares of CBS as of quarter-end, up 17.07% from the prior quarter. Shares of CBS, which averaged $49.51 during the second quarter, occupy 4.65% of the equity portfolio. CBS represents Klarman’s 10th-largest holding.

e8c399bcdf1c7840f042ace2ecbcd64a.png

The New York-based media conglomerate operates various platforms, including the CBS television network, Showtime and CBS Radio. GuruFocus ranks CBS’s profitability 8 out of 10 on several positive indicators, which include returns on assets outperforming 87.64% of global competitors and operating margins outperforming 77.24% of competitors despite declining approximately 1.9% per year on average over the past five years.

145973505.png

Other positive investing signs for CBS include a price-earnings ratio near a 10-year low of 5.03 and a price-sales ratio near a five-year low of 1.01.

Synchrony Financial

According to Aggregated Portfolio statistics, Klarman and Warren Buffett (Trades, Portfolio)’s Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B) have a combined weight of 3.34% in Synchrony Financial. Klarman’s 9,260,557 shares occupy 2.99% of Baupost’s equity portfolio, while Berkshire’s 20,803,000 shares represent just 0.35% of the conglomerate’s equity portfolio. Shares averaged $33.90 during the quarter.

b3b5fcc7911eba252876521bf1c32051.png

e445ac0740e338ba06dcbacfdfbe068a.png

The Stamford, Connecticut-based company offers private-label credit cards through three platforms: retail card, payment solutions and CareCredit. According to GuruFocus, Synchrony Financial’s equity-to-asset ratio of 0.14 underperforms 82.92% of global competitors. On the other hand, the company’s cash-to-debt ratio of 0.55 outperforms 64.14% of global credit service competitors.

1742298945.png

Synchrony Financial’s price-earnings ratio of 6.54 is near a five-year low of 6.

Read more here:

6 Metals and Mining Stocks Gurus Agree On

The Top Buffett-Munger Stock in Each GuruFocus Region

6 Retail Companies Gurus Broadly Own

Nexstar Media

Klarman owns 1,397,755 shares of Nexstar Media, dedicating 1.32% of the equity portfolio to the stake. Shares averaged $107.44 during the quarter.

a9e3810a6c28e48bae69f485a2178521.png

The Irving, Texas-based company operates two business segments, including a broadcasting segment that develops and operates television stations across the U.S. GuruFocus ranks the company’s profitability 9 out of 10 on several positive signs, which include a four-star business predictability rank and operating margins that are outperforming 85.86% of global competitors. Despite this, Nexstar Media’s financial strength ranks a poor 4 out of 10 on the heels of low interest coverage and debt ratios that underperform over 70% of global competitors.

2026227704.png

Nexstar’s price-earnings ratio of 11.79 outperforms 62.70% of global competitors.

Bristol-Myers

Klarman owns 13 million shares of Bristol-Myers, dedicating 5.50% of the equity portfolio to the position. The company represents Klarman’s seventh-largest holding as of quarter-end. Shares averaged $46.57 during the quarter.

8fc775b69c31ce3cd81cbd05950a13a7.png

The New York-based company discovers, develops and markets drugs for cardiovascular, oncology and immune disorders. GuruFocus ranks Bristol-Myers’ profitability 8 out of 10 on several positive signs, which include expanding profit margins and returns that outperform over 85% of global drug manufacturers.

1220764229.png

Bristol-Myers’ price-earnings ratio of 12.73 outperforms 76.24% of global competitors.

Sinclair

Klarman owns 549,423 shares of Sinclair, dedicating 0.27% of the equity portfolio to the position. Shares averaged $50.66 during the quarter.

8f75f2c4843d68c56a1f63b6c4f2bb79.png

The Hunt Valley, Maryland-based company owns, operates, programs and provides sales services to approximately 60 television stations in 38 states. GuruFocus ranks Sinclair’s financial strength 5 out of 10: Although the company has a solid Piotroski F-score of 6, the company’s debt ratios are underperforming over 74% of global competitors.

73782464.png

Sinclair’s price-earnings ratio of 13.05 outperforms 60% of global competitors.

Disclosure: No positions.

Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.

About the author:

James Li
I am an editorial 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!

Visit James Li's Website


Rating: 4.0/5 (1 vote)

Voters:

Comments

Please leave your comment:



Performances of the stocks mentioned by James Li


User Generated Screeners


pjmason14Momentum
pascal.van.garsseHigh FCF-M2
kosalmmuse6
kosalmmuseBest one1
DBrizanall 2019Feb26
kosalmmuseBest one
DBrizanall 2019Feb25
kosalmmuseNice
kosalmmusehan
MsDale*52-Week Low
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)