Part of Chicago-based Harbor Funds, the guru's fund primarily invests in companies with market caps of at least $1 billion at the time of purchase. He focuses on companies that have strong balance sheets and earnings performance, good sales momentum and growth outlook, a history of high profitability, a unique market position and a capable, committed management team.
Based on these criteria, Segalas established holdings in Shopify Inc. (NYSE:SHOP), Dexcom Inc. (NASDAQ:DXCM), Coupa Software Inc. (NASDAQ:COUP) and Peloton Interactive Inc. (NASDAQ:PTON) during the quarter.
The guru invested in 699,979 shares of Shopify, dedicating 0.74% of the equity portfolio to the position. The stock traded for an average price of $342.33 per share during the quarter.
The Canadian e-commerce company has a $48.18 billion market cap; its shares were trading around $419.18 on Wednesday with a forward price-earnings ratio of 500, a price-book ratio of 16.65 and a price-sales ratio of 31.67.
The median price-sales chart shows the stock is trading above its historical average, suggesting it is overvalued.
GuruFocus rated Shopify's financial strength 8 out of 10 on the back of comfortable interest coverage and a robust Altman Z-Score of 77.97, which indicates the company is in good standing financially.
The company's profitability did not fare as well, scoring a 3 out of 10 rating. Although Shopify's operating margin is expanding, it is being weighed down by negative returns that underperform over half of its competitors. In addition, it has a low Piotroski F-Score of 2, which suggests business conditions are poor, and a Sloan ratio that indicates it has poor earnings quality.
Of the gurus invested in Shopify, Frank Sands (Trades, Portfolio) has the largest stake with 1.47% of outstanding shares. Other top guru shareholders are Steve Mandel (Trades, Portfolio), Philippe Laffont (Trades, Portfolio), Stanley Druckenmiller (Trades, Portfolio), Jim Simons (Trades, Portfolio)' Renaissance Technologies, Chase Coleman (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio) and Pioneer Investments (Trades, Portfolio).
Segalas picked up 1.10 million shares of Dexcom, allocating 0.58% of the equity portfolio to the stake. During the quarter, the stock traded for an average price of $156.54 per share.
The San Diego-based company, which develops, manufactures and sells glucose monitoring systems for managing diabetes, has a market cap of $21.18 billion; its shares were trading around $230.57 on Wednesday with a forward price-earnings ratio of 129.87, a price-book ratio of 27.71 and a price-sales ratio of 15.55.
According to the median price-sales chart, the stock is overvalued.
Dexcom's financial strength was rated 5 out of 10 by GuruFocus on the back of a solid cash-debt ratio of 1.29 and a high Altman Z-Score of 9.7.
The company's profitability scored a 4 out of 10 rating. Although its operating margin is expanding, Dexcom's returns are negative and underperform over half of its industry peers. It also has a moderate Piotroski F-Score of 4, suggesting its operations are stable. Despite recording consistent earnings and revenue growth, the business predictability rank of 3.5 out of five stars is on watch. GuruFocus says companies with this rank typically see their stocks gain an average of 9.3% per annum over a 10-year period.
With his purchase of 2.40% of the company's outstanding shares, Segalas became Dexcom's largest guru shareholder. Ron Baron (Trades, Portfolio), Laffont, Pioneer, Steven Cohen (Trades, Portfolio), Simons' firm and Mario Gabelli (Trades, Portfolio) also own the stock.
The investor purchased a 1.11 million-share stake in Coupa Software, giving it 0.52% space in the equity portfolio. Shares traded for an average price of $138.63 during the quarter.
The software company, which is headquartered in San Mateo, California, operates cloud-based spend management platforms. It has a $10.71 billion market cap; its shares were trading around $169.80 on Wednesday with a forward price-earnings ratio of 333.33, a price-book ratio of 22.97 and a price-sales ratio of 29.26.
Based on the median price-sales chart, the stock appears to be overvalued.
Although GuruFocus has not assigned the company a financial strength or profitability rating, it does have some positive metrics. For instance, the Altman Z-Score of 6.23 suggests it is in good financial standing despite having a Sloan ratio that indicates it has poor earnings quality.
Additionally, Coupa is suffering from negative margins and returns that underperform a majority of competitors. This is slightly offset by a moderate Piotroski F-Score of 4.
Mandel is the company's largest guru shareholder with 2.22% of outstanding shares. Halvorsen, Cohen, Druckenmiller, Louis Moore Bacon (Trades, Portfolio), Simons' firm, Jones, Chuck Royce (Trades, Portfolio), Laffont and Baron also see value in the stock.
Segalas invested in 2.3 million shares of Peloton, expanding the equity portfolio by 0.19%. The stock traded for an average per-share price of $23.02 during the quarter.
The American company, which went public in September, is known for its popular interactive stationary exercise bikes. It has a market cap of $8.53 billion; its shares were trading around $30.40 on Wednesday with a price-book ratio of 20.69 and a price-sales ratio of 7.65.
The stock has gained approximately 10% since its initial public offering.
While the company has no long-term debt currently, negative margins and returns are weighing down on its performance. GuruFocus has also identified a buildup in inventory as a major potential problem going forward.
Segalas is currently the company's largest guru shareholder with 0.83% of outstanding shares. George Soros (Trades, Portfolio) and Pioneer also see value in the stock.
Segalas also boosted several other holdings during the quarter, including Apple Inc. (NASDAQ:AAPL), adidas AG (XTER:ADS), Adobe Inc. (NASDAQ:ADBE), AstraZeneca PLC (NYSE:AZN), Twilio Inc. (NYSE:TWLO) and American Tower Corp. (AMT).
The guru's $29.53 billion equity portfolio, which is composed of 59 stocks, is heavily invested in the technology sector at 31.42%, followed by smaller positions in the consumer cyclical (21.02%) and communication services (13.93%) spaces.
According to its fact sheet, the Capital Appreciation Fund posted a return of 33.28% in 2019, eclipsing the S&P 500's 31.49% return.
Disclosure: No positions.
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This article first appeared on GuruFocus.