Diamond Hill Capital
employs a disciplined intrinsic value-based approach to investing
with a long-term perspective, in the footsteps of Ben Graham and
. Based in Columbus, Ohio, it has $9.4 billion in assets under
management. According to its most recent letter, from July 2012,
Diamond Hill buys stock with a five-year time horizon in mind. In
the fourth quarter they bought 11 new stocks, the largest of
which were: TJX Companies (
), Progressive Corp. (
), HollyFrontier (
), Navigators Group (
) and Hyster-Yale Materials Handling Inc. (
TJX Companies (
Diamond Hill bought 3,144,909 shares of TJX Companies in the
fourth quarter for $43 each on average. The largest new weighting
in its portfolio, it occupies 1.5%.
TJX is a discount global retailer that operates TJ Maxx,
Marshalls, HomeGoods and other stores. Its market cap is $33.2
Over the past 10 years, TJX has been on an upward trajectory. It
increased revenue at an average annual rate of 11.1%, EBITDA at
14.5%, free cash flow at 17.3% and book value at 13.7%.
It has been consistently profitable, with net income increasing
annually for the past 10 years. Meanwhile, its stock price has
In its December 2012 results reported Jan. 3, 2013, TJX achieved
a 6% comparable sales increase, over an 8% increase the previous
year, driven by greater customer traffic at all divisions. The
strong sales and margins enabled it to raise its fourth quarter
earnings per share outlook to the range of $0.77 to $0.78 a
share, a 24% to 26% increase. It also raised full year EPS
guidance to $2.50 to $2.51, an approximately 20% increase over
the previous year.
TJX has a P/E ratio of 19.2, and its P/B at 9.23 and P/S at 1.38
are both at 52-week highs. Its Wednesday stock price of $42.61 is
also approaching its 10-year high.
Progressive Corp. (
Diamond Hill bought 2,953,687 shares of property and casualty
insurance company Progressive Corp. in the fourth quarter for $22
per share on average. It takes a 0.72% weighting in their
Progressive is one of the largest U.S. private passenger auto
insurance groups, with premiums of more than $15 billion
annually, and a market cap of $13.64 billion.
Over the past 10 years, Progressive grew revenue per share at a
rate of 8.1% annually on average, and book value at a rate of
6.9%. Meanwhile, free cash flow had a decline rate of 0.8%.
In the past nine years, progressive has consistently earned more
than $1 billion in net income, with the exception of a loss in
Progressive has a P/E of 15.1, P/B of 2.1 and P/S of 0.8.
Currently, its stock price of $20.99 is close to a five-year
Diamond Hill Capital
purchased 1,051,686 shares of HollyFrontier for $42 per share on
average in the fourth quarter.
HollyFrontier is one of the largest independent petroleum
refining companies in the U.S. Its operations span the
mid-continent, Rocky Mountain and southwestern regions. With a
$10.62 billion market cap, HollyFrontier is headquartered in
Dallas, Texas. Its stock price on Thursday of $46.55 is close to
a 10-year high.
HollyFrontier has the rapid growth rates of 36% for revenue per
share, 36.1% for EBITDA and 27.2% for book value, on average
annually for the past 10 years.
On Nov. 7, the company reported record net income of $600.4
million, or $2.94 per diluted share, a 15% year-over-year
increase. Results were helped by higher than usual crude oil
differentials and heavy crude oil differentials, which
contributed to a record-high refined product margins.
HollyFrontier has a P/E ratio of 6.6. Its P/B ratio is 1.4, which
is close to a one-year high, and its P/S is 0.57, which is close
to a three-year high.
Navigators Group (
Diamond Hill Capital
purchased 204,595 shares of Navigators Group for $52 per share on
average, which equals a 0.12% weighting in its portfolio.
Navigators Group is a holding company of international commercial
property and casualty specialty insurance, with operations around
the world and headquarters in New York.
The company in the past 10 years had a revenue per share growth
rate of 7.2%, EBITDA growth rate of 11.5%, and book value growth
rate of 10.2%, on average annually. Meanwhile, its free cash flow
declined at a rate of 7.6% on average annually.
Also over the past 10 years, its stock gained 113% to trade for
$54.17 per share on Thursday afternoon. The price is close to a
Navigators Group has a P/E of 16.6, P/B of 0.9 (which is close to
a three-year low) and P/S of 0.8977.
Hyster-Yale Materials Handling Inc. (
Diamond Hill purchased Hyster-Yale Materials Handling Inc. for
$43 per share on average in the fourth quarter of 2012.
HY is a truck parts company that sells products around the world
with the brand name Hyster and Yale. Becoming a publicly traded
company in 2012 after being spun off of NACCO Industries Inc. on
Sept. 28, HY has a $844.3 million market cap.
In the third quarter, the company reported net income of $24.9
million, or $1.48 per diluted share, a 42% year-over-year
increase. Revenues slipped to $585.6 million from $628.8 million
a year previously. Revenues descended primarily because of
unfavorable foreign currency movements resulting from a weakening
euro and Brazilian real compared of the U.S. dollar, and a
decline in unit volume mainly in Europe and the Americas.
In the fourth quarter 2012, HY is expecting mitigated global lift
truck market growth compared to the previous year, led by
decreases in Western Europe, Japan and Latin America. Growth is
expected to increase slightly in 2013.
See more of Diamond Hill Capital's latest portfolio updates here.
Also check out the Undervalued Stocks, Top Growth Companies and
High Yield stocks of Diamond Hill Capital.About GuruFocus:
GuruFocus.com tracks the stocks picks and portfolio holdings of
the world's best investors. This value investing site offers
stock screeners and valuation tools. And publishes daily articles
tracking the latest moves of the world's best investors.
GuruFocus also provides promising stock ideas in 3 monthly
newsletters sent to