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Diamond Hill Sells Morgan Stanley and IBM, Buys Pepsi

- By Tiziano Frateschi

Diamond Hill Capital (Trades, Portfolio) is a registered investment adviser based in Columbus, Ohio. During the fourth quarter the guru traded shares in the following stocks:


The investor reduced its stake in Morgan Stanley (MS) by 28.38% with an impact of -0.65% on the portfolio.

The company through its subsidiaries and affiliates provides financial products and services to a diversified group of clients and customers including corporations, governments, financial institutions and individuals.

GuruFocus gives the stock a profitability and growth rating of 6 out of 10. While the return on equity (ROE) of 7.22% is outperforming the sector, the return on assets (ROA) of 0.74% is underperforming 58% of the companies in the Global Capital Markets industry. Financial strength has a rating of 5 out of 10 with a cash-debt ratio of 0.25.

The largest shareholder among the gurus is Jeff Ubben (Trades, Portfolio) with 1.44% of outstanding shares followed by T Rowe Price Equity Income Fund (Trades, Portfolio) with 0.59%, Richard Pzena (Trades, Portfolio) with 0.53%, HOTCHKIS & WILEY with 0.23% and Ken Heebner (Trades, Portfolio) with 0.2%.

The guru acquired an 815,996-shares stake in PepsiCo Inc. (PEP) with an impact of 0.5% on the portfolio.

The company is a food, snack and beverage company. It manufactures, markets, distributes and sells convenient and enjoyable beverages, foods and snacks, serving customers and consumers in more than 200 countries and territories.

GuruFocus gives the stock a profitability and growth rating of 7 out of 10. The ROE of 53.33% and ROA of 8.87% are outperforming 72% of the companies in the Global Beverages - Soft Drinks industry. Financial strength has a rating of 6 out of 10. The cash-debt ratio of 0.44 is below the industry median of 0.61.

Donald Yacktman (Trades, Portfolio) is the largest shareholder among the gurus with 0.61% of outstanding shares followed by Ken Fisher (Trades, Portfolio) with 0.38%, Yacktman Fund (Trades, Portfolio) with 0.29%, Pioneer Investments (Trades, Portfolio) with 0.23%, Yacktman Focused Fund (Trades, Portfolio) with 0.19%, T Rowe Price Equity Income Fund with 0.17% and Jim Simons (Trades, Portfolio) with 0.16%.

The firm reduced its stake in International Business Machines Corp. (IBM) by 32.21%. The trade had an impact of 0.39% on the portfolio.

It is an information technology (IT) company. It creates business value for clients and solves business problems through integrated solutions that leverage information technology and knowledge of business processes.

GuruFocus gives the stock a profitability and growth rating of 5 out of 10. The ROE of 74.04% and ROA of 10.23% are outperforming 81% of the companies in the Global Information Technology Services industry. Financial strength has a rating of 6 out of 10. The cash-debt ratio of 0.20 is above the industry median of 10.14.

The largest shareholder among the gurus is Warren Buffett (Trades, Portfolio) with 8.61% of outstanding shares followed by Prem Watsa (Trades, Portfolio) with 0.14%, Jeremy Grantham (Trades, Portfolio) with 0.05%, Tweedy Browne (Trades, Portfolio) with 0.03% and Jerome Dodson (Trades, Portfolio) with 0.02%.

The guru increased its position in Axalta Coating Systems Ltd. (AXTA) by 32.21%. The transaction had an impact of 0.39% on the portfolio.

The company is a manufacturer, marketer and distributor of performance coatings systems. Its products include primer, basecoat, clearcoat, thinners and reducers, primer and electrocoat.

GuruFocus gives the stock a profitability and growth rating of 6 out of 10. The ROE of 3.64% and ROA of 0.71% are underperforming 75% of the companies in the Global Specialty Chemicals industry. Financial strength has a rating of 5 out of 10. The cash-debt ratio of 0.16 is below the industry median of 0.84.

Buffett is the largest shareholder among the gurus with 9.66% of outstanding shares followed by Barrow, Hanley, Mewhinney & Strauss with 2.44%, Lou Simpson (Trades, Portfolio) with 2.26%, Glenn Greenberg (Trades, Portfolio) with 1.84%, Chris Davis (Trades, Portfolio) with 1.62% and First Eagle Investment (Trades, Portfolio) with 0.93%.

The guru raised its shares in Coty Inc. Class A (COTY) by 52.89% with an impact of 0.36% on the portfolio.

It is a pure play beauty company with a portfolio of brands that compete in the three segments in which it operates: Fragrances, Color Cosmetics and Skin & Body Care

GuruFocus gives the stock a profitability and growth rating of 6 out of 10. The ROE of -0.49% and ROA of -0.11% are underperforming 76% of the companies in the Global Household & Personal Products industry. Financial strength has a rating of 5 out of 10 with cash-debt ratio of 0.15 that is below the industry median of 0.63.

The largest shareholder among the gurus is Diamond Hill Capital with 1.32% of outstanding shares followed by T Rowe Price Equity Income Fund with 0.75%, Robert Olstein (Trades, Portfolio) with 0.04%, Tom Russo (Trades, Portfolio) with 0.01% and Joel Greenblatt (Trades, Portfolio) with 0.01%.

The investor reduced its stake Colfax Corp. (CFX) by 39.29% with an impact of -0.35% on the portfolio.

The company provides gas- and fluid-handling and fabrication technology products and services to commercial and governmental customers around the world.

GuruFocus gives the stock a profitability and growth rating of 7 out of 10. The ROE of 4.28% and ROA of 1.94% are underperforming 60% of the companies in the Global Diversified Industrials industry. Financial strength has a rating of 6 out of 10. The cash-debt ratio of 0.17 is below the industry median of 1.04.

The largest shareholder among the gurus is Chuck Akre (Trades, Portfolio) with 3.83% of outstanding shares followed by Wallace Weitz (Trades, Portfolio) with 1.56%, Barrow, Hanley, Mewhinney & Strauss with 1.54%,Tom Gayner (Trades, Portfolio) with 0.92% and Arnold Van Den Berg (Trades, Portfolio) with 0.67%.

The guru raised its shares in Aetna Inc. (AET) by 43.56% with an impact of 0.34% on the portfolio.

It is a health care benefit company, which offers traditional and consumer-directed health insurance products and related services including medical, pharmacy, dental, behavioral health, group life and disability plans.

GuruFocus gives the stock a profitability and growth rating of 7 out of 10. While the ROE of 13.02% is outperforming the sector, the ROA of 3.52% is underperforming 56% of the companies in the Global Health Care Plans industry. Financial strength has a rating of 6 out of 10 and a cash-debt ratio of 1.02.

The largest shareholder among the gurus is Vanguard Health Care Fund (Trades, Portfolio) with 2.04% of outstanding shares followed by Larry Robbins (Trades, Portfolio) with 1.57%, Davis with 1.19%, Simons with 0.86%, Lee Ainslie (Trades, Portfolio) with 0.67% and Jana Partners (Trades, Portfolio) with 0.63%.

The investor exited its holding in American International Group Inc. (AIG) with an impact of -0.34% on the portfolio.

The company through its subsidiaries, provides insurance and related services in the U.S. and abroad.

GuruFocus gives the stock a profitability and growth rating of 5 out of 10. The ROE of -0.98% and ROA of -0.17% are underperforming 87% of the companies in the Global Insurance - Diversified industry. Financial strength has a rating of 5 out of 10 with a cash-debt ratio of 0.06.

The largest shareholder among the gurus is Carl Icahn (Trades, Portfolio) with 4.67% of outstanding shares followed by First Pacific Advisors (Trades, Portfolio) with 1.12%, First Eagle Investment (Trades, Portfolio) with 0.85%, Steven Romick (Trades, Portfolio) with 0.83%, Barrow, Hanley, Mewhinney & Strauss with 0.83% and Bill Nygren (Trades, Portfolio) with 0.71%.

Disclosure: I do not own any shares of any stocks mentioned in this article.

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This article first appeared on GuruFocus.