Causeway Capital Management leader Sarah Ketterer (Trades, Portfolio) disclosed her second-quarter portfolio earlier this month.
Seeking to post superior risk-adjusted returns, the guru’s Los Angeles-based firm, which she founded with Harry Hartford in 2001, invests in mispriced equities in both developed and emerging markets. The investment team looks for potential opportunities among mid- and large-cap companies using quantitative and value-oriented methods. Each stock also receives a risk score based on the amount of volatility it adds to the portfolio. The team then enters positions in the stocks with the highest expected risk-adjusted returns that also have a lower price-earnings ratio and higher dividend yield than the market.
With these criteria in mind, the 13F filing shows Ketterer’s firm entered nine new positions during the three months ended June 30, sold out of nine stocks and trimmed or added to a number of other existing investments. The most significant trades included a new stake in AbbVie Inc. (ABBV, Financial), reduced bets on Canadian National Railway Co. (CNI, Financial), Ryanair Holdings PLC (RYAAY, Financial) and Taiwan Semiconductor Manufacturing Co. Ltd. (TSM, Financial) and the divestment of Credicorp Ltd. (BAP, Financial).
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.
AbbVie
The guru invested in 339,060 shares of AbbVie (ABBV, Financial), allocating 1.20% of the equity portfolio to the position. The stock traded for an average price of $146.84 per share during the quarter.
The Chicago-based pharmaceutical company, which manufactures Humira, has a $263.15 billion market cap; its shares were trading around $149.09 on Monday with a price-earnings ratio of 30.68, a price-book ratio of 20.45 and a price-sales ratio of 4.72.
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 88 out of 100, the GF Score indicates the company has good outperformance potential. While it received high ratings for profitability and growth, its financial strength and momentum ranks are more moderate and value is low.
Of the gurus invested in AbbVie, Diamond Hill Capital (Trades, Portfolio) has the largest stake with 0.08% of its outstanding shares. Jim Simons (Trades, Portfolio)’ Renaissance Technologies and the T Rowe Price Equity Income Fund (Trades, Portfolio) also have notable holdings.
Canadian National Railway
The investor curbed her stake in Canadian National Railway (CNI, Financial) by 38.99%, shedding 1.84 million shares. The transaction had an impact of -5.22% on the equity portfolio. Shares traded for an average price of $118.58 each during the quarter.
She now holds 2.88 million shares total, which represent 9.21% of the equity portfolio and is her second-largest position. GuruFocus says Ketterer has lost an estimated 4.71% on the investment since establishing it in the fourth quarter of 2021.
The Canadian railroad company, which provides freight services in Canada and parts of the U.S., has a market cap of $73.92 billion; its shares were trading around $112.72 on Monday with a price-earnings ratio of 19.44, a price-book ratio of 4.91 and a price-sales ratio of 5.90.
According to the GF Value Line, the stock is modestly undervalued currently.
The GF Score of 92 implies the company has high outperformance potential, driven by solid ratings for profitability, growth, value and momentum and a more moderate financial strength rank.
With an 8.36% stake, Bill Gates (Trades, Portfolio)’ foundation trust has the largest stake in Canadian National. Other top guru investors include Simons’ firm, Ray Dalio (Trades, Portfolio)’s Bridgewater Associates, Joel Greenblatt (Trades, Portfolio), Lee Ainslie (Trades, Portfolio) and First Eagle Investment (Trades, Portfolio).
Ryanair Holdings
Ketterer trimmed her holding of Ryanair (RYAAY, Financial) by 18.79%, selling 1.74 million shares. The transaction impacted the equity portfolio by -3.93%. During the quarter, the stock traded for an average per-share price of $100.71.
The guru now holds 7.51 million shares, occupying 21.85% of the equity portfolio as the largest holding. GuruFocus data shows she has gained an estimated 28.44% on the investment so far.
The Irish airline, which is a low-cost carrier operating predominately in secondary airports, has a $22.56 billion market cap; its shares were trading around $99.05 on Monday with a price-earnings ratio of 17.17, a price-book ratio of 2.92 and a price-sales ratio of 1.53.
Based on the GF Value Line, the stock appears to be significantly undervalued currently.
The GF Score of 72 means the company is likely to have average performance going forward on the back of high ratings for profitability and financial strength, middling marks for momentum and low growth and value ranks.
Baillie Gifford (Trades, Portfolio) is Ryanair’s largest guru shareholder with a 3.63% stake. The stock is also being held by David Herro (Trades, Portfolio), the Causeway International Value (Trades, Portfolio) Fund, Simons’ firm, PRIMECAP Management (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio), Francis Chou (Trades, Portfolio), Ainslie and Steven Cohen (Trades, Portfolio).
Taiwan Semiconductor Manufacturing
The guru whittled down the Taiwan Semiconductor (TSM, Financial) stake by 48.46%, selling 1.33 million shares. The transaction had an impact of -2.96% on the equity portfolio. The stock traded for an average price of $93.07 per share during the quarter.
Ketterer now holds a total of 1.41 million shares, accounting for 3.75% of the equity portfolio. It is also her fifth-largest holding. GuruFocus found she has gained around 126.98% on the long-held investment.
The Taiwanese manufacturer of semiconductor chips has a market cap of $478.50 billion; its shares were trading around $92.26 on Monday with a price-earnings ratio of 15.29, a price-book ratio of 4.44 and a price-sales ratio of 6.33.
The GF Value Line suggests the stock is significantly undervalued currently.
Supported by solid ratings for all five criteria, the GF Score of 100 indicates the company has high outperformance potential.
Holding a 0.57% stake, Ken Fisher (Trades, Portfolio) is the largest guru shareholder of Taiwan Semiconductor. Other notable investors include First Eagle, Baillie Gifford (Trades, Portfolio), Philippe Laffont (Trades, Portfolio), Steve Mandel (Trades, Portfolio), Frank Sands (Trades, Portfolio), Ruane Cunniff (Trades, Portfolio) and Ron Baron (Trades, Portfolio).
Credicorp
With an impact of -1.22% on the equity portfolio, Ketterer exited her 384,722-share position in Credicorp (BAP, Financial). During the quarter, shares traded for an average price of $137.15 each.
GuruFocus says she gained 3.45% on the investment over its lifetime.
The Peruvian financial services company has an $11.08 billion market cap; its shares were trading around $139.32 on Monday with a price-earnings ratio of 8, a price-book ratio of 1.38 and a price-sales ratio of 1.99.
According to the GF Value Line, the stock is modestly undervalued currently.
The GF Score of 84 means the company has good outperformance potential. It received high ratings for growth, value and momentum as well as more moderate profitability and financial strength ranks.
Dodge & Cox is Credicorp’s largest guru shareholder with a 6.79% stake. John Rogers (Trades, Portfolio) and Baillie Gifford (Trades, Portfolio) also have notable holdings.
Additional trades and portfolio composition
During the quarter, Ketterer also established positions in Quest Diagnostics Inc. (DGX, Financial) and CSX Corp. (CSX, Financial), added to the Avantor Inc. (AVTR, Financial) holding and cut back the Alibaba Group Holding Ltd. (BABA, Financial) and Carrier Global Corp. (CARR, Financial) holdings.
Her $3.80 billion equity portfolio, which is composed of 81 stocks, is most heavily invested in the industrials, financial services and technology sectors.
