First Eagle Investment (Trades Portfolio) announced its second quarter equity portfolio earlier this year.
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The New York-based firm, founded in 1864, is value-oriented and prioritizes on-site research. They visit companies and talk to management to gain firsthand information about their prospects. It is committed to preserving capital over the long-term by doing bottom-up, fundamental research to reduce risk.
These considerations led to the 13F filing for the three months ended June 30, which showed that the firm had entered 37 new positions, exited 29 stocks, and added or reduced a number of existing investments. First Eagle’s most notable trades included the divestment of Alibaba Group Holding Ltd. (BABA, Financial) – A new stake in Walmart Inc.WMT, Financial), increased bets for HCA Healthcare Inc.HCA, Financial) and Ross Stores Inc.ROST, Financial) and a reduction to the Exxon Mobil Corp.XOM, Financial) holding.
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. The reports also only reflect trades and holdings at the most recent portfolio file date. These may not be the same day or even the date this article was published.
Alibaba
First Eagle sold its 5.71 Million remaining shares of Alibaba (BABA, Financial), which has an impact on the equity portfolio of -1.52%. During the quarter, shares traded for an average of $98.24 each.
GuruFocus estimates that the firm lost 41.45% of the investment over its lifetime.
The Chinese ecommerce giant has a market capital of $255.83B. Its shares were trading at $96.63 on Thursday. There was a price/earnings ratio (55.21), a book ratio (1.85) and a sales ratio (2.0).
The GF Value Line suggests the stock is significantly undervalued currently based on historical ratios, past financial performance and analysts’ estimates of future earnings.
GuruFocus rated Alibaba’s financial strength 7 out of 10 despite having inadequate interest coverage. The Altman Z score of 2.91 suggests that the company is under considerable pressure. The company’s weighted average cost is higher than its return on capital, which indicates that it is struggling to create new value as it grows.
The company’s profitability scored a 9 out of 10 rating. Along with operating and gross margins that are in decline, Alibaba’s returns on equity, assets and capital are underperforming over half of its competitors. It also has a moderate Piotroski score of 5 out 9 which indicates that conditions are typical for a stable company. The predictability rank of 3.5% out of 5 stars is being monitored due to slowing revenue growth. GuruFocus research shows that companies with this rank average 9.3% annual returns over a 10-year span.
Alibaba is home to many gurus.
David Herro (Trades and Portfolio) holds the largest stake, with 1.65% of its outstanding share.
PRIMECAP Management (Trades, Portfolio),
Ken Fisher (Trades, Portfolio), Dodge & Cox,
Ray Dalio (Trades, Portfolio),
Al Gore (Trades, Portfolio),
Chris Davis (Trades and Portfolio) and other gurus have significant positions in stock.
Walmart
The firm invested in 1.96million shares of Walmart (WMT, Financial), allocating 0.67% from the equity portfolio to the stake. During the quarter, shares traded for an average of $138.51 each.
It was sold in 2018 from the stock.
The Betonville, Arkansas-based retail company, which operates the Walmart and Sam’s Club chains, has a market cap of $353.33 billion; its shares were trading around $129.14 on Thursday with a price-earnings ratio of 27.72, a price-book ratio of 4.60 and a price-sales ratio of 0.63.
According to the GF Value Line, this stock is currently modestly undervalued.
Walmart’s financial strength was rated 6 out of 10 by GuruFocus, driven by sufficient interest coverage and a high Altman Z-Score of 4.32 that indicates it is in good standing. The ROIC is also more important than the WACC, which means that there is value being created.
The company’s profitability fared better, scoring an 8 out of 10 rating. Walmart’s solid margins and outperforming industry peers have earned it a high Piotroski F Score of 7, which indicates that operations are healthy. The one-star predictability rank, which is also under watch, is also available. GuruFocus data shows that companies with this rank return an average of 1.1% annually.
With a 0.15% stake, Dalio is the retailer’s largest guru shareholder. Other top guru shareholders are
Bill Gates (Trades, Portfolio)’ foundation trust, the
T Rowe Price Equity Income Fund (Trades, Portfolio),
Jim Simons (Trades, Portfolio)’ Renaissance Technologies and Fisher.
HCA Healthcare
First Eagle’s HCA Healthcare (HCA) increased its impact on the equity portfolio by 0.93%.HCA, Financial) position by 78.55%, purchasing 1.96 Million shares. The stock traded at an average price per share of $215.40 during the quarter.
The total number of shares held by the firm is 4.47 million, which accounts for 2.12% in the equity portfolio. GuruFocus data shows that it has reaped an estimated 28.54% from its investments so far.
The company is headquartered in Nashville, Tennessee and has a $62.76 million market cap. It owns and runs health care facilities across the U.S. on Thursday. Shares traded at $218.52, with a price/earnings ratio ratio of 10.51, and a 1.13 price-sales ratio.
The GF Value Line suggests that the stock is currently fairly priced.
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GuruFocus rated HCA Healthcare’s financial strength 4 out of 10. Despite having issued new long-term loans in recent years, the company is able to manage it due to adequate interest coverage. However, the Altman Z-Score score of 2.58 indicates that the company is under pressure. The ROIC is also higher than the WACC, which indicates that value creation occurs.
The company’s profitability fared better with a 10 out of 10 rating on the back of operating margin expansion, strong returns that outperform a majority of competitors and a high Piotroski F-Score of 8. Consistent earnings and revenue growth also contributed to HCA’s five-star predictability rank. GuruFocus reports that companies with this rank return an average 12.1% annually.
First Eagle, a 1.56% stakeholder in HCA, is now the largest guru shareholder. The
Vanguard Health Care Fund (Trades, Portfolio),
Bill Nygren (Trades, Portfolio).
Diamond Hill Capital You will also find notable holdings in (Trades, Portfolio).
Ross Stores
The firm’s Ross Stores (with an impact of 0.72%) has seen an increase in its equity portfolio.ROST, Financial) Holding by 1,899.84%, purchasing 3.64 Million Shares. Stock traded at an average of $89.08 per shares during the quarter.
First Eagle currently holds 3.83 Million shares, which is 0.76% of its equity portfolio. GuruFocus claims that First Eagle has earned 6.89% since its establishment in the third quarter 2019.
The Dublin, California-based retail firm, which operates discount department stores such as Ross Dress for Less, has an estimated market capital of $31.30 Billion. Its shares traded at $89.54 on Thursday. There was a price ratio of 19.92, a book ratio of 7.74, and a sales ratio of 1.69.
The GF Value Line indicates that the stock is currently significantly undervalued.
Ross Stores’ financial strength was rated 5 out of 10 by GuruFocus. Altman Z-Score 4.53, which indicates a company’s financial strength, is indicative of a comfortable level for interest coverage. This means that assets are increasing at a faster rate then revenue. The ROIC also surpasses the WACC. This means that value is being added.
The company’s profitability also fared well with an 8 out of 10 rating. Although margins are declining, the company’s returns outperforms most industry peers. Ross also has a high Piotroski score of 7 as well as a one-star predictability rank.
Ross is one of the most important gurus.
PRIMECAP Management (Trades and Portfolio) holds the largest stake at 3.23% of its outstanding share capital.
Steven Cohen (Trades and Portfolio)
Parnassus Endeavor Fund (Trades, Portfolio),
Elfun Trusts (Trades, Portfolio), Simons’ firm,
Joel Greenblatt (Trades, Portfolio),
Lee Ainslie (Trades, Portfolio), Fisher and Dalio also have the stock.
Exxon Mobil
First Eagle halted Exxon Mobil’s investment (XOM, Financial) by 15.47%, resulting in the sale of 3.65 million shares. The equity portfolio suffered a -0.74% impact from the transaction. The average price of shares traded during the quarter was $90.08.
The firm currently holds 19.95 millions shares, which account for 4.82% of its equity portfolio. This is the second-largest holding. GuruFocus data indicates that the firm has seen a 16.78% increase in investment since it was established in the second quarter 2010.
The integrated oil and natural gas giant, headquartered in Irving Texas, has a market cap of $382.38 Billion. On Thursday, its shares traded at $92.34 with a price/earnings ratio (10.05), a pricing-book ratio (2.16) and a pricesales ratio (1.11).
According to the GF Value Line the stock is currently fairly valued.
GuruFocus rated Exxon Mobil’s financial strength 8 out of 10. In addition to adequate interest coverage and a 4.30 Altman Z Score, Exxon Mobil is in good standing. The ROIC is higher than the WACC, creating value.
The company’s profitability scored a 7 out of 10 rating due to strong margins and returns that are outperforming versus competitors. Exxon Mobil has a Piotroski F Score of 8 and a one star predictability rank.
With a 0.48% stake, First Eagle is the company’s largest guru shareholder. Other gurus with large holdings in Exxon Mobil include Simons’ firm,
Richard Pzena (Trades, Portfolio), The T. Rowe Price Equity Income Fund, Fisher, Dalio and
John Paulson (Trades, Portfolio).
Portfolio performance and additional trades
The firm also acquired a number holdings during the quarter, including Fidelity N Information Services Inc.FIS, Financial), D.R. Horton Inc.DHI, Financial), Alphabet Inc. (GOOG, Financial), Douglas Emmett Inc. (DEI, Financial) and Fomento Economico Mexicano SAB de CV (FMX, Financial).
Consisting of 392 holdings, First Eagle’s $35.42 billion equity portfolio is most heavily invested in the technology, financial services, energy and basic materials sectors.
First Eagle posted a return of 12.24% in 2021, underperforming the S&P 500’s 28.70% return.
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