Milwaukee-based Al Frank Asset Management, whose portfolio is
managed by Guru investor and chief investment officer
reported a total of 34 changes to its portfolio for the third
quarter. The updates consisted of shareholding reductions to five
companies and complete sells of all its shares of seven
companies, in addition to 11 adds and 11 new buys.
Founded in 1977, Al Frank Asset Management not only manages
private accounts but also two mutual funds: the Al Frank Fund and
the Al Frank Dividend Value Fund.
The firm's investment philosophy is based on three core
principles: selection, diversification and patience.
The Al Frank Asset Management website elaborates more on its
investment motives explaining: "We don't limit ourselves to
specific market capitalization constraints. Nor do we abide by
absolute stock valuation metrics, instead allowing ourselves to
be more flexible in defining what we believe are undervalued
Describing its third investment virtue, the firm continues:
"Patience in turn enables us to have low turnover of our
holdings, which keeps our trading costs down while potentially
improving our after-tax returns (as realized capital gains are
often of the long-term variety). To minimize risk and maximize
opportunity, our holdings of individual stocks number in the
hundreds, we think improving our chances of owning those rare few
stocks that everyone wishes they'd noticed earlier."
With an equity value of $575 million, Al Frank Asset Management
maintains 134 stocks in its portfolio, with a
quarter-over-quarter turnover rate of eight percent.
Below are three stocks among the firm's third quarter sells that
made the most impact in its portfolio: Home Depot Inc. (
), Wal-Mart Stores Inc. (
) and Nexen Inc. (
Home Depot Inc. (
Selling all of its shares of home improvement retailer, Home
Depot Inc. (
) in the third quarter impacted Al Frank Asset Management's stock
portfolio by 1.3 percent.
With Home Depot's price close to its 10-year high of $63.15, it's
currently trading at $61.15 and has a market cap of $90.52
billion (an enterprise value of $98.52 billion).
rank on GuruFocus is a strong 8 out of 10, showing positive trend
lines for revenue, earnings per share and free cash flow, despite
that has been in a five-year decline.
Yet, Home Depot's operating margin is 12.5 percent, although in
decline, is still higher than its major competitor, Loews Corp. (
), whose operating margin, while on a positive trend, is at 9.6
Additionally, Home Depot has a
Profitability and Growth
rank of 7 out of 10 and a Business Predictability rank of 1 out
of 5 stars.
Home Depot has a P/E ratio (ttm) of 21.2, a P/B ratio of 5.4 and
a P/S ratio of 1.3 - all three are close to their three-year
highs, which appear as part of the company's five Medium Warning
Besides John Buckingham, other Gurus who have sold out of their
Home Depot shares include Meridian Funds, Brian Rogers, Ray
Dalio, George Soros and Paul Tudor Jones.
View Home Depot's holding history with other Gurus here.
Wal-Mart Stores Inc. (
After selling out all of its shares of giant retailer, Wal-Mart
Stores Inc. (
), the total impact made on the Al Frank firm's stock portfolio
amounted to 1.1 percent.
The firm's long-term holding history of Wal-Mart stocks dates
back on or even before the first quarter of 2007. Before selling
all of its stock in the third quarter, Al Frank Asset Management
had more than 85,000 shares of Wal-Mart.
Wal-Mart is currently selling around its 10-year high at $72.54
WMT data by GuruFocus.com
With no Severe Warning signs, and in fact, six Good Signs
indicating booming revenue, operating margin and dividend yield
(which is actually close to its 10-year high), Wal-Mart secures a
7 out of 10 Financial Strength on GuruFocus as well as a Business
Predictability rank of a full-fledged 5 out of 5 stars.
One of Wal-Mart's fiercest competitors, bulk retailer, Costco
Wholesale Corp. (
) appears with similar standings.
Like Wal-Mart, Costco is also selling at its 10-year high at
$95.36, with no Severe Warning signs and solid Financial
Strength. While Costco is a smaller corporation (its market cap
is $41.91 billion compared to Wal-Mart's $251.52 billion), it
targets a more exclusive consumer population by operating under
Besides Buckingham, other Gurus who have sold out of their shares
of Wal-Mart include Arnold Van Den Berg, Wallace Weitz, Richard
Perry, Louis Moore Bacon and Paul Tudor Jones.
View Wal-Mart's holding history with other Gurus here.
Nexen Inc. (
Calgary-based Nexen Inc. (
) is involved in the energy resources development business that
focuses on three major areas: conventional oil and gas, oil sands
and shale gas. Nexen has operations in the UK North Sea, offshore
West Africa, the Gulf of Mexico and Western Canada, according to
Nexen is currently awaiting completion of the company's
acquisition by Chinese offshore oil and natural gas producer,
), a $15.1 billion transaction scheduled to close in the fourth
Upon the announcement of the acquisition in July, Nexen's stock
price saw an overnight jolt as CNOOC declared an all-cash price
of $27.50 for each Nexen common share, covering closing costs and
its volume-weighted average share price.
NXY data by GuruFocus.com
The purpose of the transaction is for CNOOC Ltd. to expand its
Canadian presence, as well as in Nigeria, Gulf of Mexico and the
UK North Sea.
Selling all of its shares of Nexen created an impact of 0.9
percent, while Al Frank Asset Management once had more than
300,000 shares of Nexen when it first introduced it to its
portfolio in the fourth quarter of 2011.
Prior to the acquisition announcement in July, Nexen was trading
around $15, maintaining a ranking on GuruFocus of 2 out of 5
stars in Business Predictability, 6 out of 10 in Financial
Strength and 7 out of 10 in Profitability and Growth.
The oil and gas sector is currently the sixth largest industry
represented in the firm's portfolio, with industrials, technology
and unassigned stocks as its top industry holdings.
Nexen has a market cap of $12.4 billion (an enterprise value of
It will maintain its Nexen name and brand after the acquisition.
View the rest of the changes on John Buckingham's portfolio here.
Also view other articles about John Buckingham and Al Frank Asset
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