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Brandes Investments' Top 5 Buys in the 3rd Quarter

Brandes Investment Partners, the firm founded by Charles Brandes (Trades, Portfolio), disclosed in a quarterly filing that its top five buys for the third quarter were Cemex SAB de CV (NYSE:CX), Halliburton Co. (NYSE:HAL), Takeda Pharmaceutical Co. Ltd. (NYSE:TAK), Netgear Inc. (NASDAQ:NTGR) and United Therapeutics Corp. (NASDAQ:UTHR). Additionally, the firm disclosed this week it trimmed its holding of Avadel Pharmaceuticals PLC (NASDAQ:AVDL) according to GuruFocus Real-Time Picks, a Premium feature.

The firm follows investment teachings from Benjamin Graham: Brandes Investment Partners seeks out-of-favor companies that are trading at discounts to intrinsic value and holds them until the market recognizes the companies' true worth.


As of quarter-end, the firm's $3.87 billion equity portfolio contains 138 stocks, of which 11 are new positions. The top three sectors in terms of portfolio weight are financial services, health care and industrials.


Real-time Sell: Avadel

Brandes Investment Partners disclosed on Nov. 29 a stake of 4,440,050 shares in Avadel, down 1,742,786 shares or 28.19% from the third quarter-end holding of 6,182,836 shares. The shares traded around $6.35 that day.


The Dublin, Ireland-based drug company develops and commercializes branded pharmaceutical products, including controlled-release therapeutic products based on its proprietary drug delivery technologies in the U.S. According to GuruFocus, Avadel's cash-to-debt ratio of 0.58 underperforms 60.85% of global competitors, suggesting low financial strength.



Brandes Investment Partners added 9,324,366 shares of Cemex, increasing the stake 14.6% and the equity portfolio 0.95%. Shares averaged $3.67 during the quarter.


GuruFocus ranks the Mexican cement company's profitability 6 out of 10: Even though net margins are underperforming 52.38% of global competitors, Cemex's operating margin has increased approximately 4.20% per year on average over the past five years and is outperforming 61.52% of global building materials companies.



Brandes Investment Partners added 1,186,284 shares of Halliburton, increasing the stake 75.69% and the equity portfolio 0.58%. Shares averaged $20.70 during the quarter.


GuruFocus ranks the Houston-based energy company's profitability 6 out of 10 on the heels of operating margins outperforming 62.91% of global competitors despite contracting approximately 9.30% per year on average over the past five years.


Other gurus with holdings in Halliburton include Sarah Ketterer (Trades, Portfolio) and Dodge & Cox.



The firm added 499,819 shares of Takeda, increasing the holding 37.21% and the equity portfolio 0.22%. Shares averaged $17.29 during the quarter.


GuruFocus ranks the Japanese drug manufacturer's profitability 5 out of 10: Although the company's return on equity underperforms just 58.51% of global competitors, Takeda's operating margin is underperforming 62.27% of global drug manufacturers. Despite this, it has a solid Piotroski F-score of 5 out of 9.



The firm added 185,356 shares of Netgear, increasing the position 26.92% and the equity portfolio 0.15%. Shares averaged $31.37 during the quarter.


The San Jose, California-based company provides networking solutions through three business segments: Arlo, connected home and SMB. GuruFocus ranks Netgear's financial strength 8 out of 10 on several positive investing signs, which include robust interest coverage and a debt-to-equity ratio that outperforms 80.94% of global competitors.

United Therapeutics

Brandes Investment Partners added 74,963 shares of United Therapeutics, increasing the holding 33.74% and the equity portfolio 0.15%. Shares averaged $80.58 during the quarter.


The Silver Spring, Maryland-based biotech company develops drugs for pulmonary arterial hypertension, a rare and progressive disease marked by abnormally high blood pressure in the arteries. According to GuruFocus, United Therapeutics' cash-to-debt and debt-to-equity ratios are underperforming over 73% of global competitors, suggesting low financial strength.


Disclosure: No positions.

Read more here:

  • John Paulson's Top 5 Buys in the 3rd Quarter
  • Stanley Druckenmiller's Top 4 Buys in the 3rd Quarter
  • Wallace Weitz's Major Consumer Cyclical Holdings

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This article first appeared on GuruFocus.