Top 5 Buys of Charles Brandes’ Firm

Brandes Financial investment Associates, the agency commenced by Charles Brandes (Trades, Portfolio), disclosed this week that its top rated five purchases for the fourth quarter of 2019 were Alibaba Team Holding Co. Ltd. (NYSE:BABA), Baidu Inc. (NASDAQ:BIDU), Cameco Corp. (NYSE:CCJ), Ingredion Inc. (NYSE:INGR) and Westlake Chemical Corp. (NYSE:WLK).

The San Diego-based mostly agency follows Benjamin Graham’s investing design, seeking out-of-favor securities that are buying and selling at reductions to their intrinsic values and keeping them till the market place acknowledges genuine worthy of.

A key Graham investing design is the web-web performing capital technique: Graham said in his book “The Clever Investor” that the thought is to invest in stocks at two-thirds or considerably less than web existing asset value or web-web performing capital. The former equals overall existing belongings considerably less overall liabilities, although the latter equals the sum of income and income equivalents, seventy five% of accounts receivable and 50% of overall inventories, considerably less overall liabilities.

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As of quarter-close, the $four.21 billion equity portfolio consists of 141 stocks, of which ten signify new holdings. The top rated a few sectors in terms of bodyweight are wellbeing treatment, financial services and industrials.

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Alibaba

Brandes Financial investment acquired 345,185 shares of Alibaba, supplying the keeping 1.seventy four% bodyweight in the equity portfolio. Shares averaged $188.59 for the duration of the quarter.

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The Hangzhou, Zhejiang-based mostly firm operates numerous major on-line marketplaces, which includes Taobao and Tmall. GuruFocus ranks Alibaba’s profitability 9 out of ten on numerous good investing symptoms, which incorporate a a few-12 months income development fee, an functioning margin and a return on belongings all outperforming over 94% of world-wide rivals.

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Gurus with substantial holdings in Alibaba incorporate Ken Fisher (Trades, Portfolio) and PRIMECAP Management (Trades, Portfolio).

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Baidu

Brandes Financial investment acquired 166,147 shares of Baidu, supplying the place .50% bodyweight in the equity portfolio. Shares averaged $114.eighteen for the duration of the quarter.

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The Beijing-based mostly firm operates a huge selection of on-line media platforms, which includes Baidu Lookup, Baidu Maps and Baidu Baike. According to GuruFocus, the company’s business predictability ranks a strong a few stars even though financial gain margins and returns are underperforming extra than 50 % of world-wide rivals.

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Cameco

Brandes Financial investment acquired 1,095,366 shares of Cameco, supplying the stake .23% bodyweight in the equity portfolio. Shares averaged $9.24 for the duration of the quarter.

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The Canadian power firm provides uranium mostly through its McArthur River mine in Saskatchewan. GuruFocus ranks Cameco’s financial toughness five out of ten: Despite the fact that the company’s financial debt-to-equity ratio of .twenty outperforms sixty.29% of world-wide rivals, it has a moderately weak Altman Z-rating of two.35.

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Ingredion

Brandes Financial investment acquired 48,333 shares of Ingredion, supplying the place .11% bodyweight in the equity portfolio. Shares averaged $84.22 for the duration of the quarter.

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The Westchester, Illinois-based mostly firm manufactures elements for the food stuff, beverage, paper and own treatment industries. GuruFocus ranks the company’s profitability 7 out of ten on numerous good investing symptoms, which incorporate a return on belongings that outperforms 73.sixty% of world-wide rivals and an functioning margin that has elevated roughly two.six% for each 12 months over the past five yrs.

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Westlake

Brandes Financial investment acquired sixty one,484 shares of Westlake, supplying the keeping .ten% bodyweight in the equity portfolio. Shares averaged $sixty seven.27 for the duration of the quarter.

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The Houston-based mostly firm provides lower-density polyethylene, a plastic that goes into bags, food stuff wrap and other solutions. GuruFocus ranks the company’s profitability 9 out of ten: The operating margin outperforms sixty one.62% of world-wide rivals although its a few-12 months income development fee outperforms 88.eighty one% of world-wide exclusive chemical firms.

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Disclosure: No positions.

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About the creator:

James Li

I am an editorial researcher at GuruFocus. I have a Master’s in Finance from SMU, and I get pleasure from creating stories on financial developments and investor portfolios. Comply with me on Twitter at @JamesLiGuru!

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