Main transactions of the 2nd quarter of Fran

Cobas Asset Management recently released its portfolio updates for the second quarter of 2020, which ended June 30.

Under the leadership of the President and Chief Investment Officer

Francisco Garcia Parames (Businesses, Portfolio), the portfolio management company seeks to follow

warren buffet (Trades, Portfolio) value-oriented investment strategies, focusing on undervalued assets that have high potential for long-term growth. The company invests mainly in European companies, but it also holds positions in the United States and Asia.

Based on its latest portfolio updates, the company’s top five transactions for the second quarter were new purchases of GeoPark Ltd. (GPRK, Financial), AcadeMedia AB (OSTO: ACAD, Financial) and G-III Apparel Group Ltd. (GII, financial) and discounts in International Seaways Inc. (INSW, Financial) and Kosmos Energy Ltd. (KOS, Financial).

Investors should be aware that portfolio updates for mutual funds do not necessarily provide a complete picture of a guru’s holdings. The data comes from quarterly updates on the website of the fund(s) in question. These are usually long positions in US and foreign stocks. All figures are at the end of the quarter only; it is possible that the guru has already made changes to the positions after the end of the quarter. However, even this limited data can provide valuable information.


The company took a new stake of 645,506 shares in GeoPark (GPRK, Financial), giving the stock a weighting of 1.13% in the equity portfolio. During the quarter, the shares traded at an average price of $15.61.

GeoPark is an independent Latin American oil and natural gas exploration and production company with operations in Colombia, Chile, Brazil, Peru and Argentina. It’s no surprise to see a new energy stake in a guru’s portfolio given the current state of the Western energy market, which has seen prices skyrocket due to Russia’s war. against Ukraine and the resulting sanctions.

GeoPark is a rarity among small cap energy stocks in that it has a stable balance sheet with a Piotroski F-Score of 8 out of 9 and an interest coverage ratio of 8.05. Its return on invested capital is generally higher than its weighted average cost of capital, which testifies to the creation of value. The focus on low-cost areas helps improve profitability.


The company also invested in 1,621,995 shares of AcadeMedia AB (OSTO: ACAD, Financial). At an average price for the quarter of 50.69 Swedish krona (5.01) per share, the holding has a portfolio weighting of 1.01%.

AcadeMedia is a Swedish provider of educational services for kindergarten, elementary and secondary schools as well as vocational and adult education. It also produces lesson plans, provides vocational training and provides vocational rehabilitation services.

The company is looking for a growth path by changing its management team and looking for acquisitions. For example, in July, the company announced that it had reached an agreement to buy Futuregames operator Changemaker Education for $6 million. AcadeMedia is also trading below its GF value, which is based on past valuation multiples, past returns and analyst estimates of future trading performance.


Clothing group G-III

The company re-established a position in G-III Apparel Group, buying 329,015 shares after selling the stock in Q3 2021. The stock has a portfolio weighting of 0.93% and traded at 25, $29 per share on average during the quarter. .


G-III Apparel is an American apparel company based in New York that owns a portfolio of globally known and recognized brands, including Calvin Klein, DKNY, Guess, Tommy Hilfiger and Andrew Marc, among others.

Cobas Asset Management has a history of trading in and out of G-III, buying low and selling high, as shown in the holding history table above. Thus, it seems likely that the company’s final position in the stock would follow the same buy reasoning during times of market pessimism. G-III is well positioned to weather the economic woes with a profitability ranking of 7 out of 10 and margins that outperform 66% of its peers.


International shipping lanes

The company has reduced its international shipping lanes (INSW, Financial) by 67.31%, leaving a remaining holding of 509,074 shares and reducing the equity portfolio by 2.38% to the average share price for the quarter of $21.90.


International Seaways is one of the world’s largest tanker companies providing crude oil and petroleum product transportation services. Based in the United States, the company owns and operates its own fleet of vessels.

While the outlook for fossil fuels is generally good at the moment, the same cannot be said for ocean shipping companies, which are starting to exit incredibly high spot prices a little too soon after the devastation caused by pandemic shutdowns. . International Seaways has an Altman Z-Score of just 0.38 and its ROIC is well below its WACC, implying significant risk.


Cosmos Energy

The company reduced its stake in Kosmos Energy (KOS, Financial) by an additional 32.75%, marking the third straight quarter of cuts, for a remaining stake of 2,357,523 shares. The trade took 1.04% on the stock portfolio. Shares averaged $7.21 each during the quarter.


Kosmos Energy is a deepwater hydrocarbon production company that was previously incorporated in Bermuda, although it recently reincorporated in Delaware. It mainly produces oil in Equatorial Guinea, Ghana and the Gulf of Mexico.

Even with the positive outlook for the oil and gas sector, Kosmos Energy is trading at a price-to-earnings ratio of 457.92, although the forward price-to-earnings ratio based on Morningstar analyst estimates is 3.79. Return on capital and return on earnings are both low, suggesting that the operations are not very profitable.


Portfolio overview

At the end of the quarter, the equity portfolio consisted of 65 common equity positions valued at a total of $703 million. Revenue for the quarter was 10%.

The main holding was Golar LNG Ltd. (GLNG) with 7.47% of the equity portfolio, followed by Babcock International Group PLC (LSE: BAB) with 4.50% and CIR SpA (LTS: 0ONR) with 4.22%.

In terms of sector weighting, the company was most invested in energy, industrials and consumer discretionary.


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