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First Eagle Investment's Top 1st-Quarter Trades

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- By Margaret Moran

First Eagle Investment (Trades, Portfolio) Management recently disclosed its portfolio updates for the first quarter of 2021, which ended on March 31.


The firm takes a long-term, flexible, absolute return-oriented investment approach that does not attempt to "beat the benchmark." Instead, it seeks to achieve attractive returns while providing downside protection. The firm's portfolio managers operate a variety of funds under the leadership of president and CEO Mehdi Mahmud.

Based on its investing strategy, the firm's biggest buys for the quarter were Becton, Dickinson and Co. (NYSE:BDX) and Alibaba Group Holding Ltd. (NYSE:BABA), while its most notable sells were 3M Co. (NYSE:MMM) and Deere & Co. (NYSE:DE).

Becton, Dickinson and Co.

The firm increased its holding in Becton, Dickinson and Co. (NYSE:BDX) by 1,035,956 shares, or 410.02%, for a total stake of 1,288,614 shares. The trade had a 0.67% impact on the equity portfolio. During the quarter, shares traded for an average price of $250.52.

First Eagle Investment's Top 1st-Quarter Trades
First Eagle Investment's Top 1st-Quarter Trades

Beckton, Dickinson and Co. is a medical technology company based in New Jersey. One of the largest companies of its kind, it manufactures and sells medical devices, instrument systems and reagents and also provides consulting and analytics services in related fields.

On May 13, shares of Becton, Dickinson and Co. traded around $244.08 for a market cap of $70.98 billion and a price-earnings ratio of 43.43. According to the GuruFocus Value chart, the stock is fairly valued.

First Eagle Investment's Top 1st-Quarter Trades
First Eagle Investment's Top 1st-Quarter Trades

The company has a financial strength rating of 4 out of 10 and a profitability rating of 8 out of 10. The cash-debt ratio of 0.21 is lower than 89% of competitors, but the Piotroski F-Score of 7 out of 9 suggests the company is financially stable. Both the three-year revenue growth rate and the three-year Ebitda growth rate are 3.9%.

First Eagle Investment's Top 1st-Quarter Trades
First Eagle Investment's Top 1st-Quarter Trades

Alibaba Group Holding

First Eagle established a new holding worth 951,926 shares in Alibaba Group Holding Ltd. (NYSE:BABA), impacting the equity portfolio by 0.57%. Shares traded for an average price of $245.98 during the quarter.

First Eagle Investment's Top 1st-Quarter Trades
First Eagle Investment's Top 1st-Quarter Trades

Alibaba is a Chinese multinational conglomerate with holdings in e-commerce, retail, internet and technology assets, among many others. By volume, Alibaba is the largest e-commerce company in the world, with millions of merchants and hundreds of millions of users.

On May 13, shares of Alibaba traded around $206.08 for a market cap of $558.99 billion and a price-earnings ratio of 24.06. According to the GF Value chart, the stock is significantly undervalued.

First Eagle Investment's Top 1st-Quarter Trades
First Eagle Investment's Top 1st-Quarter Trades

The company has a financial strength rating of 7 out of 10 and a profitability rating of 8 out of 10. The cash-debt ratio of 3.93 and Altman Z-Score of 5.55 show a fortress-like balance sheet. The three-year revenue growth rate is 45%, while the three-year Ebitda growth rate is 38.1%.

First Eagle Investment's Top 1st-Quarter Trades
First Eagle Investment's Top 1st-Quarter Trades

3M Co

The firm sold out of its 1,659,969-share position in 3M Co. (NYSE:MMM), which had a -0.82% impact on the equity portfolio. During the quarter, shares traded for an average price of $179.02.

First Eagle Investment's Top 1st-Quarter Trades
First Eagle Investment's Top 1st-Quarter Trades

Minnesota-based 3M, or Minnesota Mining and Manufacturing Company, is a diversified conglomerate that operates mainly in the fields of industry, worker safety, U.S. health care, consumer goods, electronics components and adhesives.

On May 13, shares of 3M traded around $203.41 for a market cap of $117.91 billion and a price-earnings ratio of 20.78. According to the GuruFocus Value chart, the stock is modestly overvalued.

First Eagle Investment's Top 1st-Quarter Trades
First Eagle Investment's Top 1st-Quarter Trades

The company has a financial strength rating of 5 out of 10 and a profitability rating of 8 out of 10. The cash-debt ratio of 0.27 is lower than 80% of industry peers, but the Altman Z-Score of 4.8 indicates the company is not likely to face bankruptcy. The return on invested capital is consistently higher than the weighted average cost of capital, meaning the company is creating value for shareholders.

First Eagle Investment's Top 1st-Quarter Trades
First Eagle Investment's Top 1st-Quarter Trades

Deere & Co

First Eagle reduced its investment in Deere & Co (NYSE:DE) by 1,036,168 shares, or 40.29%, leaving a remaining holding of 1,535,473 shares. The trade had a -0.79% impact on the equity portfolio. Shares traded for an average price of $327.94 during the quarter.

First Eagle Investment's Top 1st-Quarter Trades
First Eagle Investment's Top 1st-Quarter Trades

Operating under the brand name John Deere, Deere & Co. is a manufacturer of agricultural, construction and forestry machinery, as well as diesel engines, heavy equipment drivetrains and lawn care equipment. It has its headquarters in Moline, Illinois.

On May 13, shares of Deere & Co. traded around $378.11 for a market cap of $118.51 billion and a price-earnings ratio of 34.57. According to the GF Value chart, the stock is significantly overvalued.

First Eagle Investment's Top 1st-Quarter Trades
First Eagle Investment's Top 1st-Quarter Trades

The company has a financial strength rating of 3 out of 10 and a profitability rating of 8 out of 10. The cash-debt ratio of 0.17 is far below the industry median of 0.62, but the Piotroski F-Score of 7 out of 9 indicates the company is financially healthy. Over the past few years, the ROIC and WACC have averaged out to be roughly equal.

First Eagle Investment's Top 1st-Quarter Trades
First Eagle Investment's Top 1st-Quarter Trades

Portfolio overview

At the end of the quarter, First Eagle held 98 stocks in a common stock portfolio valued at $37.59 billion. The firm's top holdings were Oracle Corp. (NYSE:ORCL) with 5.17% of the equity portfolio, Comcast Corp. (NASDAQ:CMCSA) with 4.34% and Exxon Mobil Corp (NYSE:XOM) with 3.85%.

In terms of sector weighting, the firm was most invested in technology, basic materials and financial services.

First Eagle Investment's Top 1st-Quarter Trades
First Eagle Investment's Top 1st-Quarter Trades

Disclosure: Author owns no shares in any of the stocks mentioned. The mention of stocks in this article does not at any point constitute an investment recommendation. Portfolio updates reflect only common stock positions as per the regulatory filings for the quarter in question and may not include changes made after the quarter ended.

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This article first appeared on GuruFocus.