Southeastern Asset Management, the firm led by Mason Hawkins (Trades, Portfolio), disclosed in a regulatory filing that its top trades during the first quarter included new positions in Kellogg Co. (K, Financial), Fidelity National Information Services Inc. (FIS, Financial) and Fortune Brands Innovations Inc. (FBIN, Financial). The firm also reduced its holdings of General Electric Co. (GE, Financial), Lumen Technologies Inc. (LUMN, Financial) and Madison Square Garden Sports Corp. (MSGS, Financial).
The Memphis, Tennessee-based firm seeks long-term capital appreciation by investing in stocks with strong balance sheets, capable management teams and attractive valuations. The firm typically invests in stocks trading at most 60% below fair value and aims to keep a concentrated portfolio.
As of March, the firm’s $2.96 billion 13F equity portfolio contains 43 stocks, with six new positions and a quarterly turnover ratio of 11%. The top four sectors in terms of weight are communication services, consumer cyclical, industrials and financial services, representing 25.68%, 23.73%, 12.89% and 9.55% of the equity portfolio.
Investors should be aware 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.
Kellogg
Southeastern purchased 1,308,408 shares of Kellogg (K, Financial), dedicating 2.96% of its equity portfolio to the position. Shares averaged $67.28 during the first quarter; the stock is modestly undervalued based on its price-to-GF Value ratio of 0.90 as of Thursday.
The Battle Creek, Michigan-based cereal and packaged food giant has a GF Score of 79 out of 100 based on a profitability rank of 8 out of 10, a GF Value rank of 6 out of 10 and a rank of 5 out of 10 for financial strength, growth and momentum.
Kellogg’s high profitability rank is driven by several positive investing signs, which include 10 years of positive net income over the past decade and an operating margin that outperforms over 73% of global competitors.
Fidelity National Information Services
The firm invested in 1,135,095 shares of Fidelity National Information Services (FIS, Financial), giving the position 2.08% equity portfolio weight. Shares averaged $65.09 during the first quarter.
GuruFocus ranks the Jacksonville, Florida-based payment processing company a possible value trap based on its low price-to-GF Value ratio of 0.41 as of Thursday and low ranks for financial strength, growth and momentum.
The company’s warning signs include a five-year average operating margin decline rate of 12.90% per year and a three-year revenue growth rate that underperforms approximately 66% of global competitors.
Fidelity National Information Services’ poor GF Score of 59 out of 100 is driven by a profitability rank of 6 out of 10, a rank of 4 out of 10 for financial strength and GF Value and a rank of 2 out of 10 for growth and momentum.
Fortune Brands Innovations
Southeastern invested in 854,756 shares of Fortune Brands Innovations (FBIN, Financial), giving the position 1.70% equity portfolio weight. Shares averaged $61.14 during the first quarter; the stock is modestly overvalued based on its price-to-GF Value ratio of 1.15 as of Thursday.
The Deerfield, Illinois-based home and security products company has a GF Score of 75 out of 100 based on a momentum rank of 10 out of 10, a profitability rank of 8 out of 10, a financial strength rank of 5 out of 10, a growth rank of 4 out of 10 and a GF Value rank of 3 out of 10.
Even though the company’s three-year revenue decline rate of 4.1% underperforms more than 68% of global competitors, Fortune Brands Innovations’ operating margin has increased by approximately 7.40% per year on average over the past five years and outperforms approximately 90% of global competitors.
General Electric
Southeastern sold 627,780 shares of General Electric (GE, Financial), slicing 33.73% of the position and 1.32% of its equity portfolio.
Shares of General Electric averaged $83.83 during the first quarter; the stock is significantly overvalued based on its price-to-GF Value ratio of 1.83 as of Thursday.
The Boston-based industrial products giant has a GF Score of 56 out of 100 based on a momentum rank of 6 out of 10, a rank of 5 out of 10 for financial strength and profitability and a rank of 1 out of 10 for growth and GF Value.
Lumen Technologies
The firm sold 7,796,103 shares of Lumen Technologies (LUMN, Financial), trimming 19.55% of the position and 1.43% of its equity portfolio. Shares averaged $4.03 during the first quarter.
GuruFocus’ GF Value Line labeled the Monroe, Louisiana-based fiber communication services company a possible value trap based on its low price-to-GF Value ratio of 0.19 as of Thursday and a rank of just 3 out of 10 for financial strength and growth.
Lumen Technologies’ low GF Score of 52 out of 100 is driven by a profitability rank of 6 out of 10, a rank of 3 out of 10 for growth and financial strength, a GF Value rank of 2 out of 10 and a momentum rank of 1 out of 10.
Madison Square Garden Sports
The firm sold 205,226 shares of Madison Square Garden Sports (MSGS, Financial), chopping 54.07% of the position and 1.32% of its equity portfolio.
Shares of Madison Square Garden Sports averaged $186.23 during the first quarter; the stock is modestly undervalued based on its price-to-GF Value ratio of 0.72 as of Thursday.
The New York-based live sports and entertainment company has a GF Score of 64 out of 100 based on a GF Value rank of 9 out of 10, a momentum rank of 6 out of 10, a growth rank of 1 out of 10 and a rank of 4 out of 10 for profitability and financial strength.
