Each month, we screen for attractive “bond replacement” investment candidates by looking up the reports of investments purchased by “Superinvestors” covered by the Dataroma site. Dataroma follows 64 managers that are all using value-based strategies.
This month, we looked through the purchases of 10 funds, but were only able to find six candidates, pulled together from four managers’ portfolios. Four of the six options in our target window (90-180 days) were relatively illiquid, having not yet traded today. Here is a list of the funds at which we looked and the candidates we found.
|Robert Olstein||Olstein Capital||$0.7 B||9/30/2018||Data||No positions of 2% or larger|
|Thomas Gayner||Market Asset Management||$5.9 B||9/30/2018||Data||Added to positions, but not enough for our threshold|
|Bill Nasgovitz||Heartland Select Value||$0.2 B||9/30/2018||Data||Added to a few large positions, but not enough for our threshold. Largest: SAVE (1.9%, +50.0%)|
|David Katz||Matrix Advisors||$58 M||9/30/2018||Data||CMCSA (2.9%; +46.9%), CBS (2.6%, +23.8%)|
|Kahn Brothers Advisors||Kahn Brothers Group||$0.7 B||9/30/2018||Data||NYCB (6.3%, +29.3%), NTP (2.9%, +21.4%)|
|Tweedy Browne C.||Tweedy Browne Value||$0.5 B||9/30/2018||Data||Reduced most large positions, some substantially.|
|Dodge & Cox||Dodge & Cox||$73.0 B||9/30/2018||Data||FDX (2.5%, +20.4%)|
|Sam Peters||ClearBridge Value||$2.2 B||9/30/2018||Data||Trimmed many large positions. Only buys or adds < 1% AUM positions|
|Richard Pzena||Hancock Classic Value||$2.4 B||9/30/2018||Data||GE (2.3%, +48.9%)|
|Mairs & Power||Mairs & Power Growth||$4.5 B||9/30/2018||Data||Trimmed many large positions. Added to a few large positions, but under our threshold|
In our screen, we looked for any transactions that met the following criteria:
- Stocks listed represented more than 2% of the portfolio’s value
- Stocks listed were a new purchase for the fund OR the position was increased by a material amount (+20% or more)
You will see a column on the sheet below labeled “Transaction”. “Buy” means a new position and “+29%” means an increase in an existing position of 29%. We believe the willingness to take a new large position or to significantly increase one’s position size has greater information content than simple “bookkeeping” transactions.
These conditions were designed to screen for the stocks in which the managers had demonstrated the most confidence (by portfolio weight) and about which they had made an active decision to invest. As we explain in our video introduction to “Bond Replacement” investments, we are using these portfolio managers’ actions as an indication of undervaluation.
You can find the spreadsheet here:
A PDF copy of the spreadsheet is embedded below. Please reach out if you have any questions about these materials!