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Charles de Vaulx's Top 5 Buys of the 3rd Quarter

Charles de Vaulx (Trades, Portfolio), chief investment officer of International Value Advisers, disclosed this week that his five new buys for the third quarter were Newmont Goldcorp Corp. (NYSE:NEM), Barrick Gold Corp. (TSX:ABX)(NYSE:GOLD), Newcrest Mining Ltd. (ASX:NCM), CDK Global Inc. (CDK) and Gruma SAB de CV (MEX:GRUMA B).


A former manager at First Eagle Investment (Trades, Portfolio), de Vaulx employs a value-oriented approach and seeks investments in companies with one or more of the following characteristics: high financial strength, temporarily-depressed earnings or entrenched franchises. The fund manager said in his quarterly letter that for the three months ending Sept. 30, the IVA Worldwide Fund returned -2.21%, underperforming the MSCI All Country World Index benchmark return of -0.03%.

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Guru seeks opportunities in gold

De Vaulx said that gold returned 3.6% and added 0.2% to performance for the quarter. Although the fund's exposure to the commodity declined from 6.2% to 5.4%, it added three positions in gold, changing the underlying mix to 3.5% in gold bullion and 1.9% in gold miners.

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The fund manager detailed that gold provides a hedge to the portfolio in case of a market recession as it is "inversely correlated to stocks and bonds." Despite an "arcane" tax rule regarding realized gains in gold, de Vaulx said the fund increased its overall gold exposure as policymakers become increasingly "desperate in the face of a global economic slowdown."

Newmont Goldcorp

De Vaulx purchased 1,424,942 shares of Newmont Goldcorp, dedicating 1.48% of the equity portfolio to the stake. Shares averaged $38.86 during the quarter.

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GuruFocus ranks the Greenwood Village, Colorado-based company's profitability 6 out of 10: Although operating margins are expanding and outperforming 79.97% of global competitors, Newmont Goldcorp's three-year revenue growth rate of 4.8% underperforms 53.34% of global metals and mining companies.

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First Eagle, the firm whose portfolio manager is our keynote speaker at the 2020 Value Conference, has the largest holding in Newmont with 20,816,497 shares.

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Barrick Gold

De Vaulx purchased 1,697,907 shares of Barrick Gold, giving the position 0.80% weight in the equity portfolio. Shares averaged 23.34 Canadian dollars ($17.64) during the quarter.

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GuruFocus ranks the Toronto-based company's profitability 6 out of 10: Operating margins are outperforming 82.30% of global competitors despite contracting approximately 4.3% per year on average over the past five years. Other positive investing signs include a strong Piotroski F-score of 7 and a return on equity that outperforms 89.88% of global competitors.

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Gurus with holdings in Barrick Gold's U.S.-based shares (NYSE:GOLD) include First Eagle and Jim Simons (Trades, Portfolio)' Renaissance Technologies.

Newcrest Mining

De Vaulx purchased 1,005,349 shares of Newcrest Mining, giving the stake 0.64% weight in the equity portfolio. Shares averaged 34.89 Australian dollars ($23.84) during the quarter.

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GuruFocus ranks the Melbourne, Australia-based company's profitability 7 out of 10 on the heels of a Piotroski F-score of a perfect 9 and strong operating margins, offsetting a three-year revenue growth rate that outperforms just 57.75% of global metals and mining competitors.

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CDK

De Vaulx purchased 478,748 shares of CDK, giving the holding 0.63% weight in the equity portfolio. Shares averaged $47.86 during the quarter.

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The Hoffman Estates, Illinois-based company provides integrated information technology and digital marketing solutions to automotive retail and adjacent industries. GuruFocus ranks CDK's profitability 8 out of 10 on the heels of an operating margin and a Joel Greenblatt (Trades, Portfolio) return on capital that outperforms over 86% of global competitors.

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Gruma

De Vaulx purchased 1,375,025 shares of Gruma, giving the position 0.38% weight in the equity portfolio. Shares averaged 184.5 pesos ($9.59) during the quarter.

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GuruFocus ranks the Mexican food producer's profitability 8 out of 10 on several positive investing signs, which include operating margins that have increased approximately 4% per year over the past five years and are outperforming 79.05% of global competitors.

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Disclosure: No positions.

Read more here:

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  • Brandes Investments' Top 5 Buys in the 3rd Quarter
  • John Paulson's Top 5 Buys in the 3rd Quarter



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This article first appeared on GuruFocus.