Tudor Investment Corp. recently disclosed its portfolio updates for the third quarter of 2020, which ended on Sept. 30.
Founded by Paul Tudor Jones (Trades, Portfolio) II in 1980, Tudor Investment has since grown into a global firm with offices in Connecticut, New York, Palm Beach, London, Singapore and Sydney. The firm is perhaps best known for its discretionary macro trading, and it focuses on model-driven and systematic investment approaches. The firm believes that it is necessary to continuously innovate its strategies in order to keep and expand its edge in ever-evolving markets.
Based on its investing strategy, the firm’s biggest sells during the quarter were TD Ameritrade Holding Corp. (NASDAQ:AMTD) and E*TRADE Financial Corp. (NASDAQ:ETFC), while its biggest buys were Advanced Disposal Services Inc. (NYSE:ADSW) and GrubHub Inc. (NYSE:GRUB).
The firm sold out of its 2,627,276-share stake in TD Ameritrade, impacting the equity portfolio by -4.74%. During the quarter, shares traded for an average price of $37.63.
Based in Omaha, Nebraska, TD Ameritrade is an electronic broker that offers an online trading platform for customers to trade financial assets such as stocks, futures contracts, exchange-traded funds and options. On Oct. 6, it was acquired by rival Charles Schwab Corp. (NYSE:SCHW) in an all-stock transaction.
On Nov. 30, shares of Charles Schwab (which TD Ameritrade is now a part of) traded around $48.78 for a market cap of $91.57 billion. The share price has increased 32% since the TD Ameritrade acquisition.
GuruFocus gives the company a financial strength rating of 4 out of 10 and a profitability rating of 6 out of 10. The cash-debt ratio of 3.51 is above the industry median of 2.91, while the Piotroski F-Score of 3 out of 9 implies poor business efficiency. The three-year revenue growth rate of 13.2% is surpassed by the three-year earnings per share without non-recurring items growth rate of 26.8%.
The firm also sold all 1,599,639 of its E*TRADE Financial shares, impacting the equity portfolio by -3.94%. Shares traded for an average price of $52.16 during the quarter.
E*Trade is a financial services company that offers an electronic trading platform with a wide range of investment options, from managed portfolios to CDs and bonds. It was acquired by Morgan Stanley (NYSE:MS) on Oct. 2 in an all-stock transaction.
On Nov. 30, shares of Morgan Stanley (which E*TRADE is now a part of) traded around $61.83 for a market cap of $111.86 billion. The share price has increased 28% since the E*TRADE acquisition.
GuruFocus gives the company a financial strength rating of 3 out of 10 and a profitability rating of 5 out of 10. The cash-debt ratio of 0.47 is lower than 74% of industry peers, but the Piotroski F-Score of 8 out of 9 indicates the company has a healthy financial situation. The three-year revenue growth rate is 11%, while the three-year earnings per share without NRI growth rate is 21.1%.
Advanced Disposal Services
The firm added 2,462,959 shares, or 169.58%, to its investment in Advanced Disposal Services for a total holding of 3,915,366 shares. The trade had a 3.24% impact on the equity portfolio. During the quarter, shares traded for an average price of $30.14.
Advanced Disposal Services is a waste disposal company based in Florida. It provides collection and recycling services for residential, commercial, industrial and construction customers in several eastern U.S. states. The company was acquired by Waste Management Inc. (NYSE:WM) on Oct. 30 in an all-cash transaction.
On Nov. 30, shares of Waste Management (which Advanced Disposal Services is now a part of) traded around $119.13 for a market cap of $50.35 billion. The share price has increased 10% since the Advanced Disposal Services acquisition.
GuruFocus gives the company a financial strength rating of 4 out of 10 and a profitability rating of 7 out of 10. The interest coverage ratio of 5.82 is near the industry median of 5.36, while the Altman Z-Score of 3.28 indicates the company is not likely in danger of bankruptcy. The return on invested capital has typically been higher than the weighted average cost of capital in recent years, indicating the company is efficiently using its funds to increase profits.
The firm also upped its stake in GrubHub by 654,218 shares, or 4513.09%, for a total holding of 668,714 shares. The trade had a 2.05% impact on the equity portfolio. Shares traded for an average price of $72.02 during the quarter.
GrubHub is a company that partners with local restaurants to provide their customers with online and mobile ordering and delivery services. On June 10, GrubHub entered an agreement to be acquired by Just Eat Takeaway (XAMS:TKWY) in an all-stock deal, though the merger has not yet been completed.
On Nov. 30, shares of GrubHub traded around $70.34 for a market cap of $6.52 billion. The share price has increased 19% since the announcement of the intended merger.
GuruFocus gives the company a financial strength rating of 6 out of 10 and a profitability rating of 7 out of 10. The cash-debt ratio of 0.76 is lower than the industry median of 4.71%, but the Altman Z-Score of 4.88 indicates the company is not likely in danger of bankruptcy in the near term. The operating margin and net margin have been in decline throughout the company’s history, with the trend accelerating after 2017, though the three-year revenue growth rate is an astonishing 35.9%.
As of the quarter’s end, the firm held common stock shares of 1,239 companies valued at a total of $2.30 billion.
The top holdings were Advanced Disposal Services with 5.15% of the equity portfolio, GCI Liberty Inc. (GLIBA) with 3.1% and GrubHub with 2.1%. In terms of sector weighting, the firm was most invested in technology, industrials and health care.
Disclosure: Author owns no shares in any of the stocks mentioned. The mention of stocks in this article does not at any point constitute an investment recommendation. Portfolio updates reflect only common stock positions as per the regulatory filings for the quarter in question and may not include changes made after the quarter ended.
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