Robert Olstein (Trades, Portfolio), the founder and chief investment officer of Olstein Capital Management, released his firm's second-quarter equity portfolio earlier this month.
With the goal of long-term capital appreciation, the guru's New York-based firm invests in undervalued companies that have good financial strength, a competitive edge and are able to generate free cash flow. The investment team also takes downside risk into consideration before pursuing a position.
Keeping these criteria in mind, 13F filings show Olstein entered one new holding during the three months ended June 30, sold out of two stocks and added to or trimmed a number of other existing investments. Notable trades for the quarter consisted of a new position in Target Corp. (TGT, Financial) and the divestment of Walgreens Boots Alliance Inc. (WBA, Financial) and Oracle Corp. (ORCL, Financial).
Investors should be aware 13F filings do not give a complete picture of a firm’s holdings as the reports only include its positions in U.S. stocks and American depository receipts, but they can still provide valuable information. Further, the reports only reflect trades and holdings as of the most-recent portfolio filing date, which may or may not be held by the reporting firm today or even when this article was published.
Target
The guru invested in 41,000 shares of Target (TGT, Financial), allocating 0.87% of the equity portfolio to the position. The stock traded for an average price of $148.67 per share during the quarter.
The Minneapolis-based retail company has a $62.99 billion market cap; its shares were trading around $136.48 on Monday with a price-earnings ratio of 23.25, a price-book ratio of 5.43 and a price-sales ratio of 0.57.
The GF Value Line suggests the stock is significantly undervalued currently based on its historical ratios, past financial performance and analysts’ future earnings projections.
At 86 out of 100, the GF Score indicates the company has good outperformance potential on the back of high ratings for profitability, growth and value as well as more moderate financial strength and momentum ranks.
Of the gurus invested in Target, Ken Fisher (Trades, Portfolio) has the largest stake with 1.14% of its outstanding shares. The stock is also being held by the Smead Value Fund (Trades, Portfolio), the Parnassus Value Equity Fund (Trades, Portfolio), Ray Dalio (Trades, Portfolio)’s Bridgewater Associates, Mairs and Power (Trades, Portfolio) and the T Rowe Price Equity Income Fund (Trades, Portfolio).
Walgreens Boots Alliance
Olstein exited his 267,000-share holding of Walgreens Boots Alliance (WBA, Financial), which had an impact of -1.45% on the equity portfolio. Shares traded for an average price of $32.61 each during the quarter.
GuruFocus estimates he lost 13.77% on the investment over the course of its lifetime.
Headquartered in Deerfield, Illinois, the operator of a pharmacy retail chain has a market cap of $25.77 billion; its shares were trading around $29.86 on Monday with a price-book ratio of 1.22 and a price-sales ratio of 0.19.
According to the GF Value Line, the stock is a possible value trap currently. As such, potential investors should be sure to do thorough research before making a decision.
The GF Score of 75 implies the company is likely to have average performance going forward. While it received high ratings for profitability and value, the growth, financial strength and momentum ranks are more moderate.
With a 0.20% stake, Jim Simons (Trades, Portfolio)’ Renaissance Technologies is Walgreens’ largest guru shareholder. Other top guru investors include John Rogers (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio), Mario Gabelli (Trades, Portfolio), John Hussman (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio) and Bruce Berkowitz (Trades, Portfolio).
Oracle
The investor sold all 46,000 shares of Oracle (ORCL, Financial), impacting the equity portfolio by -0.67%. During the quarter, shares traded for an average per-share price of $103.23.
GuruFocus data shows Olstein gained around 36.65% on the long-held investment.
The Austin, Texas-based software company has a $316.78 billion market cap; its shares were trading around $116.61 on Monday with a price-earnings ratio of 38.14, a price-book ratio of 291.78 and a price-sales ratio of 6.48.
Based on the GF Value Line, the stock appears to be modestly overvalued currently.
The GF Score of 82 means the company has good outperformance potential, driven by high ratings for profitability and growth, middling marks for financial strength and momentum and a low value rank.
First Eagle Investment (Trades, Portfolio) has the largest stake in Oracle with 0.77% of its outstanding shares. Fisher, PRIMECAP Management (Trades, Portfolio), Barrow, Hanley, Mewhinney & Strauss, Bill Nygren (Trades, Portfolio), Grantham and several other gurus also have notable holdings.
Additional trades and portfolio performance
During the quarter, Olstein also curbed his investments in a number of stocks, including Alphabet Inc. (GOOG, Financial), Cushman & Wakefield PLC (CWK, Financial), Microsoft Corp. (MSFT, Financial), Southwest Airlines Co. (LUV, Financial) and Stanley Black & Decker Inc. (SWK, Financial). He added to the Deere & Co. (DE, Financial) and Avantor Inc. (AVTR, Financial) positions.
The guru's $618 million equity portfolio, which consists of 99 stocks, is most heavily invested in the industrials, financial services and consumer cyclical sectors.
The Olstein All Cap Value Fund returned -19.13% in 2022, underperforming the Russell 3000 Value Index’s return of -7.98%.
