The Oakmark International Fund released its first-quarter portfolio update, revealing that its top five trades included the closure of its positions in Credit Suisse Group AG (XSWX:CSGN, Financial) and Koninklijke Phillips NV (XAMS:PHIA, Financial) and a reduction to its holding of Adidas AG (XTER:ADS, Financial). The fund also boosted its positions in Roche Holding AG (XSWX:ROG, Financial) and Fresenius Medical Care AG & Co. KGaA (XTER:FME, Financial).
Managed by David Herro (Trades, Portfolio), the fund seeks long-term capital appreciation by investing in international stocks that have positive free cash flows, strong management teams and the potential to increase shareholder value over time.
As of March, the fund’s $20.20 billion equity portfolio contains 64 stocks with a quarterly turnover ratio of 6%. The top four sectors in terms of weight are consumer cyclical, industrials, financial services and technology, representing 25.14%, 17.41%, 17.04% and 10.25% of the equity portfolio.
Investors should be aware that portfolio updates for mutual funds do not necessarily provide a complete picture of a guru’s holdings. The data is sourced from the quarterly updates on the website of the fund(s) in question. This usually consists of long equity positions in U.S. and foreign stocks. All numbers are as of the quarter’s end only; it is possible the guru may have already made changes to the positions after the quarter ended. However, even this limited data can provide valuable information.
Credit Suisse
The fund sold all 66,522,197 shares of Credit Suisse (XSWX:CSGN, Financial) during the first quarter, trimming 1.09% of its equity portfolio.
Although shares of Credit Suisse averaged 2.55 Swiss francs ($2.82) during the first quarter, shares of Credit Suisse ceased trading on Monday following the bank’s merger with UBS Group AG (UBS)(XSWX:UBSG).
According to the press release, shareholders will receive one share of UBS Group stock for every 22.48 shares of Credit Suisse stock. UBS Group will manage both UBS and Credit Suisse banks, though both banks will still operate their own branches and subsidiaries.
Koninklijke Phillips
The fund sold all 8,986,222 shares of Koninklijke Phillips (XAMS:PHIA, Financial), trimming 0.74% of its equity portfolio. Shares averaged 15.64 euros ($16.87) during the first quarter.
GuruFocus’ GF Value Line labeled the Dutch medical diagnostics and research company a possible value trap based on its low price-to-GF-Value ratio of 0.46 as of Tuesday and poor ranks for financial strength and growth.
The company’s low financial strength is driven by several warning signs, which include a weak Altman Z-score of 1.37, a low Piotroski F-score of 2 out of 9 and a cash-to-debt ratio that underperforms more than 88% of global competitors.
Koninklijke Phillips has a GF Score of 66 out of 100 based on a momentum rank of 9 out of 10, a profitability rank of 6 out of 10, a GF Value rank of 4 out of 10, a growth rank of 3 out of 10 and a financial strength rank of 2 out of 10.
Adidas
The fund sold 803,900 shares of Adidas (XTER:ADS, Financial), reducing the position by 25.18% and its equity portfolio by 0.60%. Shares averaged 144.89 euros during the first quarter.
GuruFocus’ GF Value Line labeled the German sportswear giant a possible value trap based on its low price-to-GF Value ratio of 0.62 as of Tuesday and poor ranks for financial strength and growth.
Adidas’ growth ranks just 4 out of 10 on the back of trailing three-year earnings decline rates underperforming more than 90% of global competitors despite future estimated earnings growth rates outperforming over 94% of global apparel manufacturing companies.
Despite having low ranks for financial strength and growth, Adidas’ GF Score of 79 out of 100 is driven by a momentum rank of 9 out of 10, a GF Value rank of 8 out of 10 and a profitability rank of 7 out of 10.
Roche Holding
The fund added 532,900 shares of Roche Holding (XSWX:ROG, Financial), expanding the position by 159.74% and its equity portfolio by 0.75%.
Shares of Roche averaged 278.23 Swiss francs during the first quarter; the stock is modestly undervalued based on its price-to-GF Value ratio of 0.88 as of Tuesday.
The Swiss pharmaceutical company has a GF Score of 88 out of 100 based on a rank of 10 out of 10 for profitability and GF Value, a growth rank of 7 out of 10, a financial strength rank of 6 out of 10 and a momentum rank of 4 out of 10.
Roche’s high profitability rank is driven by several positive investing signs, which include 10 years of positive net income over the past decade and an operating margin that has increased by approximately 3% per year on average over the past five years and is outperforming more than 93% of global competitors.
Fresenius Medical Care
The fund purchased 2,967,453 shares of Fresenius Medical Care (XTER:FME, Financial), boosting the position by 45.59% and its equity portfolio by 0.62%. Shares averaged 35.70 euros during the first quarter.
GuruFocus’ GF Value Line labeled the German kidney dialysis company a possible value trap based on its low price-to-GF Value ratio of 0.63 as of Tuesday and poor financial strength rank of 4 out of 10.
The company’s low financial strength is driven by several warning signs, which include a low Altman Z-score of 1.56 and an interest coverage ratio that underperforms more than 72% of global competitors.
Despite having low financial strength, Fresenius Medical Care’s GF Score of 80 out of 100 is driven by a momentum rank of 9 out of 10, a GF Value rank of 8 out of 10, a profitability rank of 7 out of 10 and a growth rank of 5 out of 10.
