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Dodge & Cox Boosts Stake in Media Giant Grupo Televisa

- By Holly LaFon

Value investing firm Dodge & Cox slightly increased its holding of Grupo Televisa (TV) at the end of the first quarter, GuruFocus Real-Time Picks reported Wednesday.

Dodge & Cox purchased 3,592,700 shares of the company, reflecting a 6.54% boost in its holdings to 58,534,820 shares. With the buy, Dodge & Cox expanded its ownership to 10.1% of Grupo Televisa. Of that, 7.8% is owned in its International Stock Fund, which had 11.0% of assets allocated to the communication services industry at the end of the fourth quarter.

Grupon Televisa also became one of the fund's worst detractors from relative results in the fourth quarter after the stock plunged 32%. The price dipped further in 2019, falling 12.9% to $11.06 on March 29, the last trading day before Dodge & Cox reported purchasing on March 31. Down 2.52% for the day, the stock closed at $10.82 Wednesday.

The long-term focused fund started its Grupo Televisa position before the second quarter of 2011 and traded numerous times since. Most recently, it reduced the position by 7% in the third quarter when the price averaged $19 and increased it by 2.11% in the fourth quarter when the price averaged $15.

Dodge & Cox's International Stock Fund pursues medium to large-cap "well established" companies based outside the U.S., including in emerging markets. As its largest holdings, it has selected Sanofi (SNY), Samsung Electronics (005930.KS) and Novartis (NVS). Grupo Televisa, based in Mexico, represents one of its few stocks from Latin America, which encompasses 7.3% of the fund, with the largest percentages in Europe (excluding the U.K.) at 39.3% and the U.K. at 15.4%.

Grupo Televisa, which has a $6.6 billion market capitalization, ranks as the largest media company in Spanish-speaking countries, operating broadcast and pay-TV channels. In 2018, its net sales rose 8.2% to $1.33 billion, driven by growth in its content and cable segments. Net income also increased to $299 million for 2018 from $236 million for 2017.

Over the past five years, Grupo Televisa delivered growth rates of 4.5% for revenue, 6.4% for Ebitda and 3.7% for book value. Rates of decline totaled 3.9% for operating income, 3.1% for earnings per share and 5.9% for free cash flow.

Regarding valuation multiples, the company has a price-earnings ratio near a five-year low at 20.45. Its price-book ratio at 1.35 and price-sales ratio at 1.2 both hover near their respective 10-year lows.

Fellow investors in Grupo Televisa that GuruFocus tracks include David Herro (Trades, Portfolio), who has the largest allocation at 1.12% of his reported equity portfolio, followed by Bill Gates (Trades, Portfolio) at 0.97% of his equity portfolio. Dodge & Cox represents the third largest with 0.63% of its overall holdings invested in the stock.

See Dodge & Cox's portfolio here.

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This article first appeared on GuruFocus.