Jerome Dodson Trims Essent Group
- By Kyle Ferguson
Guru Jerome Dodson (Trades, Portfolio) reduced his stake in the Essent Group (ESNT), removing 250,000 shares from his portfolio at an average price of $25.34 per share during the third quarter. Dodson purchased his initial stake in the Essent Group during the fourth quarter of 2015. Since then, the company's market price has gained an estimated 13%.
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The intrinsic value of ESNT
The Essent Group is a private mortgage insurance company that, through its subsidiaries, serves the housing finance industry by offering mortgage insurance, reinsurance and risk management products to mortgage lenders and investors to support homeownership.
The Essent Group has a market cap of $2.63 billion, an enterprise value of $2.49 billion, a price-earnings (P/E) ratio of 14.01 and a price-book (P/B) ratio of 2.09.
According to GuruFocus, Essent Group has an 8 of 10 financial strength rating, with no debt. The company also has an equity to asset ratio of 0.75 with a Piotroski F-Score of 5, indicating the company's financial situation is typical for a stable company. The company also has a 5 of 10 profitability and growth rating, with an operating margin of 66.13%, a net-margin of 46.40%, a ROE of 16.41%, a ROA of 12.48%, three-year revenue growth of 44.90% and three-year EBITDA growth of 324.50%.
Dodson likely trimmed his position in the Essent Group because the company's market price is close to its 3-year high and likely wanted to cash in on some of his profit.
Below is a Peter Lynch chart that shows the Essent Group is trading below its intrinsic value.
Dodson is the founder and president of Parnassus Investments. He is the lead portfolio manager of the Parnassus Fund and the Parnassus Asia Fund and is the sole portfolio manager of the Parnassus Endeavor Fund. Prior to founding Parnassus Investments in 1984, he served as president and CEO of Continental Savings of America from 1976 to 1982, where he started the Solar T-Bill program to finance solar energy installations and also developed innovative programs to finance low and moderate income housing. Dodson received his bachelor's degree in political science from the University of California, Berkeley and his master's degree in business administration from Harvard Business School. The Parnassus Fund currently owns 37 stocks with an estimated total value of $742 million.
Disclosure: Author does not own any shares of this company.
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This article first appeared on GuruFocus.
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The intrinsic value of ESNT
