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FPA Capital Fund's Top 5 Trades in the 3rd Quarter

GuruFocus.com
·3 mins read

- By James Li

The FPA Capital Fund (Trades, Portfolio), part of Los Angeles-based First Pacific Advisors (Trades, Portfolio), disclosed this week that its top five trades during the third quarter included purchases in NCR Corp. (NYSE:NCR), ACI Worldwide Inc. (NASDAQ:ACIW) and GCI Liberty Inc. (NASDAQ:GLIBA) and sells in Vail Resorts Inc. (NYSE:MTN) and Noble Energy Inc. (NASDAQ:NBL).


Managed by Arik Ahitov, the fund seeks long-term capital appreciation through investments in small and mid-cap companies with strong balance sheets, understandable business strategies, capable management teams and unique business characteristics.

FPA Capital Fund's Top 5 Trades in the 3rd Quarter
FPA Capital Fund's Top 5 Trades in the 3rd Quarter

As of the quarter's end, the fund's $107 million equity portfolio contains 24 stocks, with three new positions and a turnover ratio of 17%. The top three sectors in terms of weight are technology, communication services and consumer cyclical, representing 28.40%, 23.08% and 15.48% of the equity portfolio.

FPA Capital Fund's Top 5 Trades in the 3rd Quarter
FPA Capital Fund's Top 5 Trades in the 3rd Quarter

NCR

The fund purchased 248,723 shares of NCR, giving the position 5.15% weight in the equity portfolio. Shares averaged $19.35 during the third quarter; the stock is modestly undervalued based on its current price-to-GF Value ratio of 0.76.

FPA Capital Fund's Top 5 Trades in the 3rd Quarter
FPA Capital Fund's Top 5 Trades in the 3rd Quarter

GuruFocus ranks the Atlanta-based automated teller machine operator's profitability 7 out of 10 on several positive investing signs, which include expanding operating margins and a high Piotroski F-score of 7. Despite this, NCR's financial strength ranks 4 out of 10 on the back of debt ratios underperforming over 87% of global competitors.

FPA Capital Fund's Top 5 Trades in the 3rd Quarter
FPA Capital Fund's Top 5 Trades in the 3rd Quarter

ACI Worldwide

The fund added 87,205 shares of ACI Worldwide, increasing the position 45.48% and the equity portfolio 2.13%. Shares averaged $27.69 during the third quarter; the stock is modestly undervalued with a price-to-GF Value ratio of 0.87.

FPA Capital Fund's Top 5 Trades in the 3rd Quarter
FPA Capital Fund's Top 5 Trades in the 3rd Quarter

GuruFocus ranks the Naples, Florida-based payment processor's profitability 7 out of 10 on the back of profit margins outperforming over 65% of global competitors.

FPA Capital Fund's Top 5 Trades in the 3rd Quarter
FPA Capital Fund's Top 5 Trades in the 3rd Quarter

Gurus with large holdings in ACI Worldwide include Wallace Weitz (Trades, Portfolio) and Ken Fisher (Trades, Portfolio).

FPA Capital Fund's Top 5 Trades in the 3rd Quarter
FPA Capital Fund's Top 5 Trades in the 3rd Quarter

GCI Liberty

The fund purchased 27,027 shares of GCI Liberty, giving the position 2.07% weight in the equity portfolio. Shares averaged $78.72 during the third quarter.

FPA Capital Fund's Top 5 Trades in the 3rd Quarter
FPA Capital Fund's Top 5 Trades in the 3rd Quarter

GuruFocus ranks the Englewood, Colorado-based telecommunication service company's profitability 5 out of 10: Although the company's returns are outperforming over 72% of global competitors, GCI Liberty's operating margin has declined approximately 7.2% per year on average over the past five years and is underperforming over 72% of global competitors.

FPA Capital Fund's Top 5 Trades in the 3rd Quarter
FPA Capital Fund's Top 5 Trades in the 3rd Quarter

Vail Resorts

The fund sold 10,792 shares of Vail Resorts, trimming the equity portfolio 1.95%. Shares averaged $205.93 during the third quarter; the stock is modestly overvalued based on its current price-to-GF Value ratio of 1.16.

FPA Capital Fund's Top 5 Trades in the 3rd Quarter
FPA Capital Fund's Top 5 Trades in the 3rd Quarter

GuruFocus ranks the Broomfield, Colorado-based resort hotel operator's profitability 7 out of 10 on the back of operating margins that are outperforming over 82% of global competitors despite three-year revenue and earnings growth rates underperforming over 63% of global travel and leisure companies.

FPA Capital Fund's Top 5 Trades in the 3rd Quarter
FPA Capital Fund's Top 5 Trades in the 3rd Quarter

Noble Energy

The fund sold 206,714 shares of Noble Energy, reducing the position 34.37% and the equity portfolio 1.84%. Shares averaged $9.77 during the third quarter; the stock is a possible value trap based on its current price-to-GF Value ratio of 0.49 and low GuruFocus financial strength rank of 2.

FPA Capital Fund's Top 5 Trades in the 3rd Quarter
FPA Capital Fund's Top 5 Trades in the 3rd Quarter

The Houston-based energy company's low financial strength rank stems from several warning signs, including a weak Piotroski F-score of 3, a cash-to-debt ratio and a debt-to-equity ratio that both underperform over 85% of global competitors.

FPA Capital Fund's Top 5 Trades in the 3rd Quarter
FPA Capital Fund's Top 5 Trades in the 3rd Quarter

Disclosure: No positions.

Read more here:

  • Jerome Dodson's Parnassus Fund Buys 1 Stock, Sells 3 Others in 3rd Quarter

  • 5 Health Care REITs to Consider in 4th Quarter

  • 3 High-Quality Stocks With Fair GF Valuations



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This article first appeared on GuruFocus.