1 Stock Mariko Gordon and Sarah Ketterer Agree On
- By Sydnee Gatewood
While gurus Mariko Gordon (Trades, Portfolio) and Sarah Ketterer (Trades, Portfolio) may have different approaches to value investing, they do have a holding in common.
Warning! GuruFocus has detected 4 Warning Sign with LDOS. Click here to check it out.
The intrinsic value of LDOS
Gordon, who runs New York-based Daruma Capital Management, manages a concentrated portfolio of small and mid-cap companies. The firm invests in a company not only when it offers good value, but when it can identify clear catalysts that will send the stock higher.
Ketterer's Los Angeles-based firm, which she founded in 2001 with Harry Hartford, seeks to achieve superior risk-adjusted returns by investing in mispriced equities in both developed and emerging markets.
As of the second quarter, Gordon and Ketterer both had positions in Leidos Holdings Inc. (LDOS).
Leidos Holdings
Gordon expanded her position in Leidos by 10.77% in the second quarter to 70,022 shares, while Ketterer invested in a 949,949-share holding.
The company, which conducts defense, aviation, information technology and biomedical research, has a $10.36 billion market cap; its shares were trading around $68.85 on Wednesday with a price-earnings ratio of 24.08, a price-book ratio of 2.99 and a price-sales ratio of 1.08.
The Peter Lynch chart shows the stock is trading higher than its fair value, suggesting it is overpriced.
Leidos' financial strength and profitability and growth were both rated 5 out of 10 by GuruFocus. Supported by the fact it has poor interest coverage and its revenue per share is in decline, the Altman Z-Score of 2.64 indicates the company is under some financial pressure.
The company is strengthened by margins and returns that outperform industry peers. In addition, its Piotroski F-Score of 6 implies business conditions are stable. Leidos also has a business predictability rank of one out of five stars. According to GuruFocus, companies with this rank typically see their stock prices gain an average of 1.1% per year.
According to GuruFocus, Gordon has made an estimated gain of 31% on her investment since the first quarter of 2016. Ketterer has gained approximately 10% since the second quarter.
Of the gurus invested in Leidos, Jim Simons (Trades, Portfolio)' Renaissance Technologies has the largest position with 0.74% of outstanding shares. Pioneer Investments (Trades, Portfolio), Steven Cohen (Trades, Portfolio), David Dreman (Trades, Portfolio), Caxton Associates (Trades, Portfolio) and Jeremy Grantham (Trades, Portfolio) are also shareholders.
Portfolio performance
Gordon's $1.54 billion portfolio, which is composed of 50 stocks, is largely invested in the industrials and technology sectors. According to its website, the firm's Small-Cap Composite Fund underperformed its benchmark in 2017 with a return of 12.24%. The Russell 2000 posted a 14.65% return.
Ketterer's 93-stock portfolio, which is valued at $9.9 billion, is largely invested in the technology sector, followed by the financial services sector. According to its website, Causeway's International Value Fund has underperformed its benchmark so far this year, posting a -5.7% return. The MSCI EAFE has returned -2.4%.
Disclosure: No positions.
This article first appeared on GuruFocus.
Warning! GuruFocus has detected 4 Warning Sign with LDOS. Click here to check it out.
The intrinsic value of LDOS
