Robert Olstein (Trades, Portfolio), founder and chief investment officer of Olstein Capital Management, released his firm's fourth-quarter equity portfolio earlier this week.
In order to attain long-term capital appreciation, the guru's New York-based firm invests in undervalued companies that have good financial strength, a competitive edge and are able to generate free cash flow. The investment team also takes downside risk into consideration before pursuing a position.
Keeping these criteria in mind, 13F filings show Olstein entered one new holding during the three months ended Dec. 31, sold out of three stocks and added to or trimmed a number of other existing investments. Notable trades for the quarter consisted of a new position in International Flavors & Fragrances Inc. (IFF, Financial), increased bets on Generac Holdings Inc. (GNRC, Financial) and Fidelity National Information Services Inc. (FIS, Financial) and reductions of the Zimmer Biomet Holdings Inc. (ZBH, Financial) and Universal Health Services Inc. (UHS, Financial) holdings.
Investors should be aware that 13F filings do not give a complete picture of a firm’s holdings as the reports only include its positions in U.S. stocks and American depository receipts, but they can still provide valuable information. Further, the reports only reflect trades and holdings as of the most-recent portfolio filing date, which may or may not be held by the reporting firm today or even when this article was published.
International Flavors & Fragrances
Olstein invested in 28,000 shares of International Flavors & Fragrances (IFF, Financial), allocating 0.46% of the equity portfolio to the position. The stock traded for an average price of $98.31 per share during the quarter.
The New York-based company, which produces flavors, fragrances and cosmetic actives for a number of end markets, has a $28.75 billion market cap; its shares were trading around $112.75 on Wednesday with a price-book ratio of 1.70 and a price-sales ratio of 2.27.
The GF Value Line suggests the stock is modestly undervalued currently based on its historical ratios, past financial performance and analysts’ future earnings projections.
At 84 out of 100, the GF Score indicates the company has good outperformance potential on the back of high ratings for profitability, GF Value and momentum and middling marks for growth and financial strength.
Of the gurus invested in International Flavors & Fragrances, Barrow, Hanley, Mewhinney & Strauss has the largest stake with 2.10% of its outstanding shares. Andreas Halvorsen (Trades, Portfolio), First Pacific Advisors (Trades, Portfolio), Steven Romick (Trades, Portfolio) and the T Rowe Price Equity Income Fund (Trades, Portfolio) also have significant positions.
Generac Holdings
The guru upped the Generac (GNRC, Financial) position by 119.18%, buying 65,250 shares. The transaction had an impact of 1.03% on the equity portfolio. Shares traded for an average price of $113.16 each during the quarter.
Olstein now holds 120,000 shares in total, which occupy 1.90% of the equity portfolio and is his largest position. GuruFocus estimates he has gained 26.82% on the investment so far.
The manufacturer of power generation equipment, which is headquartered in Waukesha, Wisconsin, has a market cap of $7.69 billion; its shares were trading around $121.44 on Wednesday with a price-earnings ratio of 18.26, a price-book ratio of 3.32 and a price-sales ratio of 1.71.
According to the GF Value Line, the stock, while undervalued, is a possible value trap currently. As such, potential investors should do thorough research before making a decision.
The GF Score of 80 suggests the company is likely to have average performance going forward. While Generac received high ratings for profitability and growth, financial strength was more moderate and the GF Value and momentum ranks were low.
With 0.59% of its outstanding shares, John Rogers (Trades, Portfolio) has the largest position in Generac. Other top guru investors include Mairs and Power (Trades, Portfolio), Philippe Laffont (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio) and Joel Greenblatt (Trades, Portfolio).
Fidelity
The investor boosted the Fidelity (FIS, Financial) holding by 43.78%, buying 43,997 shares. The transaction impacted the equity portfolio by 0.47%. During the quarter, the stock traded for an average per-share price of $71.04.
He now holds 144,497 shares, accounting for 1.54% of the equity portfolio. GuruFocus data shows Olstein has lost an estimated 20.87% on the investment, which is now his 10th-largest holding, since the first quarter of 2022.
Also known as FIS, the Jacksonville, Florida-based fintech company, which provides payment processing and electronic banking services, has a $43.71 billion market cap; its shares were trading around $73.67 on Wednesday with a price-earnings ratio of 48.15, a price-book ratio of 0.97 and a price-sales ratio of 3.13.
Based on the GF Value Line, the stock, while undervalued, appears to be a value trap currently. As a result, investors should cautiously investigate the situation before making a decision.
The company has poor future performance potential with a GF Score of 69, driven by a high profitability rating, middling marks for growth, financial strength and GF Value and a low momentum rank.
Dodge & Cox is Fidelity’s largest guru shareholder with a 1.66% stake. Barrow, Hanley, Mewhinney & Strauss, Steven Cohen (Trades, Portfolio), First Eagle Investment (Trades, Portfolio) and PRIMECAP Management (Trades, Portfolio) also have notable holdings.
Zimmer Biomet
The guru curbed the Zimmer Biomet (ZBH, Financial) position by 35.59%, selling 31,500 shares. The transaction impacted the equity portfolio by -0.55%. The stock traded for an average price of $116.05 per share during the quarter.
Olstein now holds 57,000 shares in total, which has a weight of 1.14% in the equity portfolio. GuruFocus says he has gained an estimated 17.68% on the investment so far.
The medical device company headquartered in Warsaw, Indiana, which manufactures orthopedic reconstructive implants, supplies and surgical equipment, has a market cap of $27.57 billion; its shares were trading around $131.40 on Wednesday with a price-earnings ratio of 76.40, a price-book ratio of 2.29 and a price-sales ratio of 3.95.
The GF Value Line suggests the stock is modestly overvalued currently.
The GF Score of 73 indicates the company is likely to have average performance going forward. It raked in a high profitability rank as well as moderate financial strength, GF Value and momentum ratings. The growth rank, however, was low.
Of the gurus invested in Zimmer Biomet, Dodge & Cox has the largest stake with 2.55% of its outstanding shares. The stock is also being held by PRIMECAP, T. Rowe Price, Hotchkis & Wiley, Cohen, Sarah Ketterer (Trades, Portfolio), Ray Dalio (Trades, Portfolio)’s Bridgewater Associates, Rogers and Mario Gabelli (Trades, Portfolio), among others.
Universal Health Services
The Universal Health Services (UHS, Financial) holding was slashed 55.56%, with the investor selling 35,000 shares. The transaction had an impact of -0.52% on the equity portfolio. During the quarter, shares traded for an average price of $118.04 each.
Olstein now holds 28,000 shares total, which make up 0.62% of the equity portfolio. GuruFocus found he has gained around 12.95% on the long-held investment.
The Pennsylvania-based health care company, which owns and operates hospitals, surgical centers and radiation oncology facilities, has a $10.37 billion market cap; its shares were trading around $145.14 on Wednesday with a price-earnings ratio of 14.93, a price-book ratio of 1.77 and a price-sales ratio of 0.84.
According to the GF Value Line, the stock is modestly undervalued currently.
The company has high outperformance potential based on its GF Score of 93. Universal Health received high ratings for growth, profitability and GF Value and moderate financial strength and momentum ranks.
With a 6.49% stake, First Eagle is Universal Health’s largest guru shareholder. Other top guru investors include Jeremy Grantham (Trades, Portfolio), Dalio’s firm, Hotchkis & Wiley and Jones.
Additional trades and portfolio performance
During the quarter, Olstein also sold out of Keurig Dr Pepper Inc. (KDP, Financial), cut back on the investments in Quest Diagnostics Inc. (DGX, Financial), Willis Towers Watson PLC (WTW, Financial) and Cracker Barrel Old Country Store Inc. (CBRL, Financial) and increased its holding of The Walt Disney Co. (DIS, Financial).
The guru's $637 million equity portfolio, which consists of 98 stocks, is most heavily invested in the industrials, consumer cyclical, financial services and technology sectors.
The Olstein All Cap Value Fund returned -19.13% in 2022, underperforming the Russell 3000 Value Index’s return of -7.98%.
