{"id":38483,"date":"2016-12-06T16:59:00","date_gmt":"2016-12-06T16:59:00","guid":{"rendered":"https:\/\/wp2.inovestor.com\/2016\/12\/us-large-portfolio-transactions-2\/"},"modified":"2022-07-06T21:18:40","modified_gmt":"2022-07-06T21:18:40","slug":"us-large-portfolio-transactions-2","status":"publish","type":"post","link":"https:\/\/www.inovestor.com\/en-ca\/2016\/12\/us-large-portfolio-transactions-2\/","title":{"rendered":"US-Large Portfolio Transactions"},"content":{"rendered":"

Sells :<\/strong><\/p>\n

–\u00a0Robert Half International (RHI) \u2013 Market Trend.<\/strong> Reduction of the Industrials sector weight from 17% to 12%. We had to decrease our number of positions from 4 to 3, and RHI was the one with the lowest SPscore (66%) and the highest premiums when compared to CHRW, LMT and AZO.<\/p>\n

–\u00a0Cisco Systems (CSCO) and Intel Corp (INTC) \u2013 Market Trend.<\/strong> Reduction of the Information Technology sector weight from 19% to 10%; we had to go from 5 to 3 positions in the portfolio. CSCO and INTC were our two holdings with the lowest SPscores, 61% and 65% respectively, and showed signs of weakness when looking at the intrinsic value and EVA trends. CSCO was also trading at a steep premium while its overall economic performance was decreasing.<\/p>\n

–\u00a0Southern Co (SO) \u2013 Market Trend.<\/strong> Reduction of the Utilities sector weight from 2% to 1%. We had to go down from 1 position to 0, so SO\u2019s sale was mandatory. Southern Co is still one of the best options available within the Utilities sector, so we might buy it again if the Utilities sector weight increases above 2% next time we review the portfolio.<\/p>\n

–\u00a0Skechers (SKX) \u2013 SPscore.<\/strong> SKX\u2019s SPscore decreased from 72% to 65% in the last 3 months. We replaced it by Foot Locker (FL) with an SPscore of 69%, up by 1% over the last 3 months.<\/p>\n

–\u00a0Ross Stores (ROST) \u2013 SPscore.<\/strong> ROST\u2019s SPscore also decreased a lot over the past year. Even though the company\u2019s economic performance is still very good, the risk has increased a lot due to the high premium at which the stock is currently trading. The P\/IV ratio is of 1.7 and the Future Growth Value is of 54%.<\/p>\n

–\u00a0Kimberly-Clark (KMB) \u2013 SPscore.<\/strong> KMB\u2019s return on capital decreased for the 3rd consecutive year. The P\/IV ratio of 0.93 doesn\u2019t reflect a very attractive upside potential, especially when considering that the intrinsic value has decreased in the past 2 quarters. The 27% FGV premium is hard to justify given that the EVA hasn\u2019t increased at all, and revenues also fell in each of the last 4 years.<\/p>\n

–\u00a0Gilead Sciences (GILD) \u2013 SPscore.<\/strong> After many consecutive quarters of strong growth in the return on capital, intrinsic value, current operating value and EVA, this growth has disappeared in December 2015, date at which we can clearly see the total EVA generated for shareholders topped out. For now, the company hasn\u2019t been able to turn this situation around and the EVA continues to decrease at a quite high pace.<\/p>\n

Buys :<\/strong><\/p>\n

–\u00a0Scripps Network Interactive (SNI) \u2013 Market Trend.<\/strong> Increase of the Consumer Discretionary sector from 22% to 27%. We had to go from 5 to 7 positions in the portfolio, and SNI is in 3rd position within its sector on the S&P500 with an SPscore of 71%. We already own the 2nd position, AZO. SNI shows a positive intrinsic value trend, a stable EVA, good free cash-flows and has aggressively increased its dividend over the past 5 years.<\/p>\n

–\u00a0Cracker Barrel Old Country (CBRL) \u2013 Market Trend.<\/strong> This is the 2nd addition in the Consumer Discretionary sector. CBRL, with an SPscore of 67%, has a growth profile. The stock is trading at a slight premium but the company offers high growth rates in its economic performance indicators since early 2014. The EVA is currently at its highest level in 5 years.<\/p>\n

–\u00a0Wal-Mart Stores (WMT) \u2013 Market Trend.<\/strong> Increase of the Consumer Staples sector weight from 7% to 10%. We had to go from 2 to 3 positions in the portfolio and WMT is ranked #1 within its sector in the U.S., with an SPscore of 71%. Even though WMT doesn\u2019t show high growth rates, the indicators are extremely stable and the stock, which is undervalued, could benefit from the holiday season.<\/p>\n

–\u00a0HCA Holdings (HCA) \u2013 Market Trend.<\/strong> Increase in the Health Care sector weight from 9% to 12%. We had to go from 2 to 3 positions in the portfolio, and HCA is ranked #1 within its sector on the S&P500 with an SPscore of 70%. HCA offers a growing return on capital, intrinsic value and EVA while trading at a discount both when compared to its intrinsic value and future growth value (FGV).<\/p>\n

–\u00a0Foot Locker (FL) \u2013 SPscore.<\/strong> Replacement for Skechers (SKX). For more details on FL, please refer to the November 24th blog post.<\/p>\n

–\u00a0Kroger (KR) \u2013 SPscore.<\/strong> Replacement for Kimberly-Clark (KMB). Kroger has a higher SPscore than KMB, but more importantly, it trades at a discount to its intrinsic value, which continually increases, and to its future growth value. KR\u2019s return on capital and EVA also continually increase very linearly, especially since last year. Kroger does share buybacks and regularly increases its dividend while generating positive free cash-flows.<\/p>\n

–\u00a0Johnson & Johnson (JNJ) \u2013 SPscore.<\/strong> Replacement for Gilead Sciences (GILD). Just like WMT, JNJ has a stability profile. The intrinsic value, EVA, return on capital and free cash-flows have been very stable over the past 5 years while being at very acceptable levels.<\/p>\n

–\u00a0Target (TGT) \u2013 SPscore.<\/strong> Replacement for Ross Stores (ROST). TGT\u2019s SPscore (66%) is slightly better than ROST\u2019s (63%) and it also offers as-high intrinsic value and EVA growth rates. More importantly, by switching from ROST to TGT, we go from owning an overvalued stock with a P\/IV ratio of 1.7 and a FGV of 54% to a fairly valued stock, with a P\/IV ratio of 1.0 and a FGV premium of only 5%.<\/p>\n

* All new positions entered the portfolio with a 4.1% weight.<\/p>\n","protected":false},"excerpt":{"rendered":"

Sells : –\u00a0Robert Half International (RHI) \u2013 Market Trend. Reduction of the Industrials sector weight from 17% to 12%. We had to decrease our number of positions from 4 to 3, and RHI was the one with the lowest SPscore (66%) and the highest premiums when compared to CHRW, LMT and AZO. –\u00a0Cisco Systems (CSCO) […]<\/p>\n","protected":false},"author":14,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[55],"tags":[161,166],"class_list":["post-38483","post","type-post","status-publish","format-standard","hentry","category-modelportfolio","tag-model-portfolio","tag-us"],"acf":[],"yoast_head":"\nUS-Large Portfolio Transactions - Inovestor<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.inovestor.com\/en-ca\/2016\/12\/us-large-portfolio-transactions-2\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"US-Large Portfolio Transactions\" \/>\n<meta property=\"og:description\" content=\"Sells : –\u00a0Robert Half International (RHI) \u2013 Market Trend. 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