Bill Nygren (Trades, Portfolio), manager of the Oakmark Fund, disclosed this week that his firm’s top six trades for the first quarter of 2021 included the closure of its positions in Aptiv PLC (APTV, Financial) and Parker Hannifin Corp. (PH, Financial), new stakes in Altria Group Inc. (MO, Financial) and ConocoPhillips (COP, Financial) and boosts to its holdings in Regeneron Pharmaceuticals Inc. (REGN, Financial) and Fiserv Inc. (FISV, Financial).
The Chicago-based fund seeks investments in the stock of companies in which the fund managers believe trade at a discount to the fair value of the company’s business. Oakmark believes that over time, the stock will reflect the value of the underlying business. The fund sells a holding when the stock approaches Oakmark’s estimate of intrinsic value.
The fund said in its shareholder letter that it returned 15.5% during the first quarter, topping the Standard & Poor’s 500 index return of 6.2% during the same period, driven by growth in cyclical positions on the heels of economy recovery. As of March 31, the fund’s $14.91 billion equity portfolio contains 51 stocks, with two new positions and a quarterly turnover ratio of 4.81%. The top three sectors in terms of weight are financial services, communication services and consumer cyclical, with weights of 36.63%, 14.61% and 12.06%, respectively.
Oakmark sold 2.036 million shares of Aptiv PLC (APTV, Financial), trimming the equity portfolio 2.01%. Shares averaged $145.59 during the first quarter; the stock is significantly overvalued based on Friday’s price-to-GF-Value ratio of 1.77. Based on GuruFocus estimates, Oakmark gained approximately 68.35% on the stock since initially buying shares during the fourth quarter of 2017.
The fund said in its letter that while the Dublin-based auto supplier has the potential to continue outgrowing lightweight vehicle production in the foreseeable future, the market “has already fully appreciated” this dynamic. GuruFocus ranks Aptiv’s profitability 8 out of 10 on several positive investing signs, which include a four-star business predictability rank and profit margins outperforming more than 69% of global competitors.
Gurus with large holdings in Aptiv include
Daniel Loeb (Trades, Portfolio) and
Pioneer Investments (Trades, Portfolio).
Oakmark sold 850,000 shares of Parker Hannifin (PH, Financial), freeing up 1.76% of equity portfolio space. Shares averaged $288.49 during the first quarter; the stock is significantly overvalued based on Friday’s price-to-GF-Value ratio of 1.72. Based on GuruFocus estimates, the fund gained approximately 154.88% on the stock since initially purchasing shares during the first quarter of 2012.
GuruFocus ranks the Cleveland-based diversified industrial company’s profitability 8 out of 10 on several positive investing signs, which include a 4.5-star business predictability rank and an operating margin that has increased approximately 4.2% per year on average over the past five years and is outperforming over 83% of global competitors.
Oakmark purchased 3 million shares of Altria (MO, Financial), giving the position 1.03% weight in the equity portfolio. Shares averaged $44.79 during the first quarter; the stock is fairly valued based on Friday’s price-to-GF-Value ratio of 0.97.
GuruFocus ranks the Richmond, Virginia-based tobacco company’s profitability 8 out of 10 on several positive investing signs, which include a high Piotroski F-score of 8 and an operating margin that has increased approximately 3.5% per year on average over the past five years and is outperforming more than 95% of global competitors.
Oakmark dissolved its 1.3 million share stake in Concho Resources Inc. (CXO, Financial) and gained 2.156 million shares of ConocoPhillips (COP, Financial) following ConocoPhillips’ all-stock acquisition of Concho during January. The net portfolio impact of the two reflects a 0.77% equity portfolio increase for ConocoPhillips and a 0.58% equity portfolio reduction for Concho.
The fund said in its letter that it retained the position in ConocoPhillips after determining that the combined entity was nearly as undervalued as Concho. Despite this, GuruFocus ranks ConocoPhillips’ financial strength 4 out of 10 on the heels of a low Piotroski F-score of 3, a moderately-weak Altman Z-score of 2.12, and debt ratios that underperform approximately half of global competitors.
Oakmark purchased 350,000 shares of Regeneron (REGN, Financial), boosting the position by 201.15% and the equity portfolio by 1.11%. Shares averaged $486.85 during the first quarter; the stock is modestly undervalued based on Friday’s price-to-GF-Value ratio of 0.78.
GuruFocus ranks the Tarrytown, New York-based biotech company’s profitability 8 out of 10 on several positive investing signs, which include profit margins and returns outperforming over 94% of global competitors.
Oakmark purchased 1 million shares of Fiserv (FISV, Financial), doubling the position and increasing the equity portfolio by 0.8%. Shares averaged $114.68 during the first quarter; the stock is fairly valued based on Friday’s price-to-GF-Value ratio of 0.92.
GuruFocus ranks the Brookfield, Wisconsin-based software company’s profitability 8 out of 10 on the heels of a three-year revenue growth rate that outperforms more than 78% of global competitors and an operating margin that tops more than 71% of global software companies.
Disclosure: No positions.
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.