Brandes Investment Partners, the firm founded by Charles Brandes (Trades, Portfolio), disclosed in a quarterly filing that its top five buys for the third quarter were Cemex SAB de CV (CX, Financial), Halliburton Co. (HAL, Financial), Takeda Pharmaceutical Co. Ltd. (TAK, Financial), Netgear Inc. (NTGR, Financial) and United Therapeutics Corp. (UTHR, Financial). Additionally, the firm disclosed this week it trimmed its holding of Avadel Pharmaceuticals PLC (AVDL, Financial) according to GuruFocus Real-Time Picks, a Premium feature.
The firm follows investment teachings from Benjamin Graham: Brandes Investment Partners seeks out-of-favor companies that are trading at discounts to intrinsic value and holds them until the market recognizes the companies’ true worth.
As of quarter-end, the firm’s $3.87 billion equity portfolio contains 138 stocks, of which 11 are new positions. The top three sectors in terms of portfolio weight are financial services, health care and industrials.
Real-time Sell: Avadel
Brandes Investment Partners disclosed on Nov. 29 a stake of 4,440,050 shares in Avadel, down 1,742,786 shares or 28.19% from the third quarter-end holding of 6,182,836 shares. The shares traded around $6.35 that day.
The Dublin, Ireland-based drug company develops and commercializes branded pharmaceutical products, including controlled-release therapeutic products based on its proprietary drug delivery technologies in the U.S. According to GuruFocus, Avadel’s cash-to-debt ratio of 0.58 underperforms 60.85% of global competitors, suggesting low financial strength.
Cemex
Brandes Investment Partners added 9,324,366 shares of Cemex, increasing the stake 14.6% and the equity portfolio 0.95%. Shares averaged $3.67 during the quarter.
GuruFocus ranks the Mexican cement company’s profitability 6 out of 10: Even though net margins are underperforming 52.38% of global competitors, Cemex’s operating margin has increased approximately 4.20% per year on average over the past five years and is outperforming 61.52% of global building materials companies.
Halliburton
Brandes Investment Partners added 1,186,284 shares of Halliburton, increasing the stake 75.69% and the equity portfolio 0.58%. Shares averaged $20.70 during the quarter.
GuruFocus ranks the Houston-based energy company’s profitability 6 out of 10 on the heels of operating margins outperforming 62.91% of global competitors despite contracting approximately 9.30% per year on average over the past five years.
Other gurus with holdings in Halliburton include Sarah Ketterer (Trades, Portfolio) and Dodge & Cox.
Takeda
The firm added 499,819 shares of Takeda, increasing the holding 37.21% and the equity portfolio 0.22%. Shares averaged $17.29 during the quarter.
GuruFocus ranks the Japanese drug manufacturer’s profitability 5 out of 10: Although the company’s return on equity underperforms just 58.51% of global competitors, Takeda’s operating margin is underperforming 62.27% of global drug manufacturers. Despite this, it has a solid Piotroski F-score of 5 out of 9.
Netgear
The firm added 185,356 shares of Netgear, increasing the position 26.92% and the equity portfolio 0.15%. Shares averaged $31.37 during the quarter.
The San Jose, California-based company provides networking solutions through three business segments: Arlo, connected home and SMB. GuruFocus ranks Netgear’s financial strength 8 out of 10 on several positive investing signs, which include robust interest coverage and a debt-to-equity ratio that outperforms 80.94% of global competitors.
United Therapeutics
Brandes Investment Partners added 74,963 shares of United Therapeutics, increasing the holding 33.74% and the equity portfolio 0.15%. Shares averaged $80.58 during the quarter.
The Silver Spring, Maryland-based biotech company develops drugs for pulmonary arterial hypertension, a rare and progressive disease marked by abnormally high blood pressure in the arteries. According to GuruFocus, United Therapeutics’ cash-to-debt and debt-to-equity ratios are underperforming over 73% of global competitors, suggesting low financial strength.
Disclosure: No positions.
Read more here:
- John Paulson’s Top 5 Buys in the 3rd Quarter
- Stanley Druckenmiller’s Top 4 Buys in the 3rd Quarter
- Wallace Weitz’s Major Consumer Cyclical Holdings
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