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Southeastern Asset Management Trims Graham Holdings Stake

GuruFocus.com
·2 min read

- By James Li

Southeastern Asset Management, the firm founded by Mason Hawkins (Trades, Portfolio), disclosed this week that it reduced its holding of Graham Holdings Co. (NYSE:GHC) according to GuruFocus Real-Time Picks, a Premium feature.


The Memphis, Tennessee-based firm seeks long-term capital appreciation through investments in the stock of companies with good businesses, good people and good prices. Management at Southeastern believes the portfolio should contain top investment ideas; further, the firm generally holds at most 25 stocks per portfolio.

Southeastern Asset Management Trims Graham Holdings Stake
Southeastern Asset Management Trims Graham Holdings Stake

Transaction details and company background

Southeastern reduced its Graham Holdings position by 57,353 shares, approximately 20.54% of the third-quarter holding of 279,235 shares. The stock traded around $549.67 on the Jan. 11 transaction date.

Southeastern Asset Management Trims Graham Holdings Stake
Southeastern Asset Management Trims Graham Holdings Stake

The Arlington, Virginia-based company provides a wide range of educational services through its Kaplan International, Kaplan Higher Education, Kaplan Test Preparation and Kaplan Professional platforms. Graham Holdings also provides television broadcasting and online services.

Financial position

According to GuruFocus, Graham Holdings has an Altman Z-score of 3 and a Beneish M-score of -2.72, suggesting a low possibility of financial distress and earnings manipulation.

Southeastern Asset Management Trims Graham Holdings Stake
Southeastern Asset Management Trims Graham Holdings Stake

Additionally, the company has a moderately strong Piotroski F-score of 6 and debt ratios that outperform over 53% of global competitors. Based on these observations, GuruFocus ranked Graham Holdings' financial strength 6 out of 10.

Southeastern Asset Management Trims Graham Holdings Stake
Southeastern Asset Management Trims Graham Holdings Stake

Company profitability overview

GuruFocus ranks Graham Holdings' profitability 6 out of 10 on the back of three-year earnings growth rates and Joel Greenblatt (Trades, Portfolio) returns on capital outperforming over 70% of global competitors, yet weighed down by operating margins declining approximately 6.4% per year on average over the past five years.

Southeastern Asset Management Trims Graham Holdings Stake
Southeastern Asset Management Trims Graham Holdings Stake

See also

As of the September 2020 portfolio filing date, Southeastern's top five holdings are Lumen Technologies Inc. (NYSE:LUMN), CNX Resources Corp. (NYSE:CNX), Mattel Inc. (NASDAQ:MAT), FedEx Corp. (NYSE:FDX) and General Electric Co. (NYSE:GE).

Other gurus with positions in Graham Holdings include Jim Simons (Trades, Portfolio)' Renaissance Technologies, David Einhorn (Trades, Portfolio)'s Greenlight Capital Re Ltd. (NASDAQ:GLRE) and Jeremy Grantham (Trades, Portfolio)'s GMO.

Southeastern Asset Management Trims Graham Holdings Stake
Southeastern Asset Management Trims Graham Holdings Stake

Disclosure: The author has no further positions in the stocks mentioned. Except for the real-time trade in Graham Holdings, the mention of stock holdings do not reflect any further trades or portfolio hedges made during the fourth quarter of 2020.

Read more here:

  • Top 5 4th-Quarter Trades of Jerome Dodson's Parnassus Fund

  • Invesco European Growth Fund's Top 5 Trades of the 4th Quarter

  • 6 Stocks Added to Most Weighted Portfolio in 2021



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This article first appeared on GuruFocus.