Charles de Vaulx (Trades, Portfolio), chief investment officer of International Value Advisors, disclosed this week the IVA Worldwide Fund’s top five buys for the second quarter included a new holding in Sina Corp. (SINA, Financial) and increased bets in four existing positions: Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial), Cie Financiere Richemont SA (XSWX:CFR, Financial), Qurate Retail Inc. (QRTEA, Financial) and Koninklijke Boskalis Westminster NV (XAMS:BOKA, Financial).
De Vaulx employs a value-oriented approach and seeks investments containing one or more of the following characteristics: high financial strength, temporarily-distressed earnings and entrenched franchises. The manager said in his quarterly letter that the Worldwide Fund returned 2.07% for the three-month period, underperforming the MSCI All Country Index benchmark return of 3.61% for the same period.
The fund manager said while the Worldwide Fund’s performance in April and June were in line with the benchmark, the performance in May underperformed the benchmark during a month where investors grappled with slowing economic growth and multi-front trade tensions. Despite this, de Vaulx still believes such price drops are “only temporary” and is “happy to hold onto” the positions. The fund manager also said the securities that appear cheap most likely have “warts” like high cyclicality or weak businesses. Due to this, de Vaulx remains “cautions and patient” with his investing.
As of quarter-end, the $3.85 billion equity portfolio’s top three sectors are consumer cyclical, financial services and industrials with weights of 23.05%, 21.41% and 19.90%.
Sina
De Vaulx purchased 472,356 shares of Sina, giving the position 0.53% equity portfolio weight. Shares averaged $52.40 during the quarter.
The Beijing-based company operates Weibo, a social media platform that resembles that of Twitter Inc. (TWTR, Financial). GuruFocus ranks Sina’s financial strength 5 out of 10: debt ratios are underperforming over 60% of global competitors.
Berkshire Hathaway
De Vaulx added 95,140 Class B shares of Berkshire Hathaway, increasing the holding 54.74% and the equity portfolio 0.53%. Class B shares of Warren Buffett (Trades, Portfolio)’s conglomerate averaged $206.89 during the quarter.
The Omaha, Nebraska-based conglomerate owns several insurance businesses, including Geico, General Re, Berkshire Hathaway Reinsurance Group and Berkshire Hathaway Primary Group. According to GuruFocus, Berkshire Hathaway’s equity-to-asset ratio of 0.50 outperforms 94.01% of global competitors.
According to Top 10 Holdings statistics, a Premium feature, Berkshire’s Class A shares represent De Vaulx’s largest position as of quarter-end with 5.38% equity portfolio weight. Class A shares averaged $310,848.53 during the quarter.
Pershing Square investor Bill Ackman (Trades, Portfolio) purchased 3,512,997 Class B shares of Berkshire, giving the stake 11.16% equity portfolio weight.
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Cie Financiere Richemont SA
De Vaulx added 270,062 shares of Cie Financiere Richemont SA, increasing the position 15.08% and the equity portfolio 0.59%. Shares averaged 75.46 francs ($76.85) during the quarter.
The Geneva, Switzerland-based company operates several luxury brands, including Cartier, Vacheron Constantin, Piaget and Jaeger LeCoultre. GuruFocus ranks Richemont’s financial strength and profitability 7 out of 10 on several positive indicators, which include a strong Altman Z-score of 4.15, consistent revenue growth and operating margins that are outperforming 86.09% of global competitors despite contracting 10.80% per year on average over the past five years.
Qurate
De Vaulx added 1,234,282 shares of Qurate, increasing the stake 55.47% and the equity portfolio 0.40%. Shares averaged $14.69 during the quarter.
The Englewood, Colorado-based company operates several retail brands, which include QVC, HSN, Zulily, Ballard Designs, Frontgate, Garnet Hill and Grandin Road. GuruFocus ranks Qurate’s profitability 6 out of 10: Although the company’s three-year revenue growth rate and operating margin outperform over 74% of global competitors, its net margin and return on equity underperform over 50% of global specialty retail companies.
Koninklijke Boskalis Westminster NV
De Vaulx added 276,625 shares of Koninklijke Boskalis Westminster NV, increasing the position 10.16% and the equity portfolio 0.17%. Shares averaged 22.06 euros ($24.43) during the quarter.
The Dutch offshore energy company offers dredging and maritime services. GuruFocus ranks Koninklijke Boskalis Westminster’s financial strength 7 out of 10 on several positive indicators, which include debt ratios outperforming 74.30% of global competitors despite low interest coverage and Altman Z-scores.
Disclosure: No positions.
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