U.S. Markets closed
  • S&P 500

    3,629.65
    -5.76 (-0.16%)
     
  • Dow 30

    29,872.47
    -173.77 (-0.58%)
     
  • Nasdaq

    12,094.40
    +57.62 (+0.48%)
     
  • Russell 2000

    1,845.02
    -8.51 (-0.46%)
     
  • Crude Oil

    45.22
    -0.49 (-1.07%)
     
  • Gold

    1,818.60
    +7.40 (+0.41%)
     
  • Silver

    23.49
    +0.04 (+0.19%)
     
  • EUR/USD

    1.1912
    -0.0007 (-0.0596%)
     
  • 10-Yr Bond

    0.8780
    -0.0040 (-0.45%)
     
  • Vix

    21.25
    -0.39 (-1.80%)
     
  • GBP/USD

    1.3351
    -0.0032 (-0.2376%)
     
  • USD/JPY

    104.2740
    -0.1660 (-0.1589%)
     
  • BTC-USD

    17,330.77
    -648.41 (-3.61%)
     
  • CMC Crypto 200

    338.69
    -31.82 (-8.59%)
     
  • FTSE 100

    6,355.29
    -35.80 (-0.56%)
     
  • Nikkei 225

    26,537.31
    +240.45 (+0.91%)
     

FPA Capital Fund Buys 4 Stocks in 4th Quarter

GuruFocus.com

The FPA Capital Fund (Trades, Portfolio), part of Los Angeles-based First Pacific Advisors (Trades, Portfolio), disclosed this week that it established four new positions during fourth-quarter 2019: Centene Corp. (NYSE:CNC), ACI Worldwide Inc. (NASDAQ:ACIW), Science Applications International Corp. (NYSE:SAIC) and Spirit Airlines Inc. (NYSE:SAVE).


Managed by Arik Ahitov, the fund seeks long-term growth through investments in stocks of companies with strong balance sheets, high free cash flow and an understandable and successful business strategy. More specifically, the fund seeks companies with high returns on equity and are trading at attractive price-book and price-to-normalized-earnings ratios.

6e1886036fd3028dda5ee22c59522f06.png
6e1886036fd3028dda5ee22c59522f06.png

As of quarter-end, the fund's $133 million equity portfolio contains 23 stocks, with a turnover rate of 14%. The top three sectors in terms of portfolio weight are consumer cyclical, industrials and technology, with weights of 22.60%, 20% and 18.79%.

Centene

The fund purchased 106,602 shares of Centene, giving the position 5.03% weight in the equity portfolio. Shares averaged $54.66 during the quarter.

79b449c305ee8aa6081d5184c455a1c3.png
79b449c305ee8aa6081d5184c455a1c3.png

Centene offers health care plans to U.S. government-sponsored health care programs, with a focus on uninsured individuals. The St. Louis-based company disclosed on Tuesday that it extended the expiration date of the exchange offers issued by WellCare Health Plans Inc. (NYSE:WCG), the company bound to a merger with Centene, to Jan. 21. The exchange offers were made pursuant to the terms set forth in the offering memorandum dated Nov. 1, 2019.

GuruFocus ranks Centene's profitability 8 out of 10: Even though operating margins have declined and are underperforming 76.47% of global competitors, the company has a three-star business predictability rank and a three-year revenue growth rate that outperforms 73.68% of global companies that offer health care plans.

717fef7a5b4df920c245bc8e3a7a85da.png
717fef7a5b4df920c245bc8e3a7a85da.png

Andreas Halvorsen (Trades, Portfolio) and Lee Ainslie (Trades, Portfolio) also have holdings in Centene.

61ca8b82e67aca467e95818ed0b0554a.png
61ca8b82e67aca467e95818ed0b0554a.png

ACI Worldwide

The fund purchased 117,643 shares of ACI Worldwide, giving the holding 3.34% weight in the equity portfolio. Shares averaged $34.24 during the quarter.

80d2d67b3fb4cd77ac6d809eee10fcb4.png
80d2d67b3fb4cd77ac6d809eee10fcb4.png

The Naples, Florida-based company develops, markets and installs a range of software products primarily focused on facilitating electronic payments. GuruFocus ranks the company's profitability 7 out of 10: Although its revenue declined 0.80% per year over the past three years, ACI Worldwide's business predictability ranks two stars as revenues are overall still growing over the past 10 years.

e7b4bf4072209045a366eab21a72c60a.png
e7b4bf4072209045a366eab21a72c60a.png

Other factors that contribute to a profitability rank of 7 include operating margins that are outperforming approximately 74% of global competitors.

8e6776e7c5d992232b81544038053f9a.png
8e6776e7c5d992232b81544038053f9a.png

Science Applications International

The fund purchased 36,863 shares of Science Applications International, giving the position 2.41% equity portfolio weight. Shares averaged $83.73 during the quarter.

5cd01f56c679fe42388f91334cb6650e.png
5cd01f56c679fe42388f91334cb6650e.png

The Reston, Virginia-based company provides technical, engineering and enterprise information technology solutions, primarily to the U.S. government. GuruFocus ranks the company's profitability 7 out of 10: Operating margins are expanding approximately 1.50% per year on average over the past five years despite outperforming just around 58% of global competitors. Additionally, its return on equity of 13% outperforms 69.31% of global software companies.

721aabfb1c9cab7ee3289b961af64e20.png
721aabfb1c9cab7ee3289b961af64e20.png

Spirit

The fund purchased 64,518 shares of Spirit Airlines, giving the holding 1.95% equity portfolio weight. Shares averaged $38.12 during the quarter.

9eee90d647f1acfd7a2612d872f931fa.png
9eee90d647f1acfd7a2612d872f931fa.png

The Miramar, Florida-based airline serves the U.S., the Caribbean and Latin America. GuruFocus ranks Spirit's profitability 8 out of 10 on several positive investing signs, which include operating margins that outperform over 74% of global airlines and a three-year revenue growth rate near a 10-year high of 18% and outperforms over 84.83% of global competitors.

24da91b5184a7e379f0aa6e2f53cc5b5.png
24da91b5184a7e379f0aa6e2f53cc5b5.png

Disclosure: No positions.

Read more here:

  • Jerome Dodson's Parnassus Fund Buys 2 Stocks in 4th Quarter

  • Jana Partners Slims Holding in Calloway Golf

  • Berkshire Bank Holding JPMorgan Rises on Strong 2019 Revenue Growth



Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.

This article first appeared on GuruFocus.