Insights into the Deep-Value Investment Firm's Q4 Moves
Donald Smith & Co (Trades, Portfolio), known for its deep-value investment strategy, has recently disclosed its 13F holdings for the fourth quarter of 2023. The firm, founded by the late Donald G. Smith, continues to follow the principles laid out by its founder. Smith, who had a storied career in finance, was a proponent of investing in undervalued companies with strong earnings potential. His approach focused on acquiring stocks at the lower end of the price-to-tangible book value spectrum, with a keen eye on their future earnings growth over a two to four-year horizon.
Summary of New Buys
During the quarter, Donald Smith & Co (Trades, Portfolio) initiated positions in four new stocks:
- RLJ Lodging Trust (RLJ, Financial) was the most significant new addition with 1,160,158 shares, representing 0.35% of the portfolio and valued at $13.6 million.
- Allegiant Travel Co (ALGT, Financial) followed, with 149,889 shares making up approximately 0.32% of the portfolio, totaling $12.4 million.
- AdvanSix Inc (ASIX, Financial) was the third largest new holding, with 139,900 shares accounting for 0.11% of the portfolio, valued at $4.2 million.
Key Position Increases
The firm also ramped up its investments in several companies:
- Golar LNG Ltd (GLNG, Financial) saw a substantial increase of 1,802,470 shares, bringing the total to 2,716,761 shares. This represents a 197.14% jump in share count and a 1.06% impact on the current portfolio, valued at $62.5 million.
- Howard Hughes Holdings Inc (HHH, Financial) also experienced a significant boost with an additional 394,191 shares, resulting in a total of 1,023,279 shares and a 62.66% increase in share count, valued at $87.5 million.
Summary of Sold Out Positions
The firm exited two positions entirely:
- Triton International Ltd (TRTN, Financial) was completely sold off, with all 1,477 shares divested, leading to a 0% impact on the portfolio.
- Everest Group Ltd (EG, Financial) also saw a total liquidation of its 266 shares, causing a 0% impact on the portfolio.
Key Position Reductions
Significant reductions were made in several holdings:
- Celestica Inc (CLS, Financial) faced a major cutback of 1,951,399 shares, resulting in a 60.56% decrease in shares and a 1.65% impact on the portfolio. The stock traded at an average price of $26.6 during the quarter and has seen a return of 43.57% over the past three months and 21.70% year-to-date.
- M/I Homes Inc (MHO, Financial) was reduced by 469,181 shares, marking a 23.11% reduction in shares and a 1.36% impact on the portfolio. The stock's average trading price was $100 during the quarter, with a return of 29.68% over the past three months and a year-to-date decrease of 12.04%.
Portfolio Overview
As of the fourth quarter of 2023, Donald Smith & Co (Trades, Portfolio)'s portfolio comprised 63 stocks. The top holdings included 7.76% in AerCap Holdings NV (AER, Financial), 5.63% in United States Steel Corp (X, Financial), 5.51% in M/I Homes Inc (MHO), 4.28% in Unum Group (UNM, Financial), and 4.23% in Eldorado Gold Corp (EGO, Financial). The investments are predominantly spread across eight industries: Financial Services, Basic Materials, Industrials, Consumer Cyclical, Energy, Real Estate, Technology, and Utilities.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
