is the founder and co-chief investment officer of New York-based
Pzena Investment Management. Recently, Pzena reported a total of
90 transactions to its third quarter portfolio update, 10 of
which were reductions to current shareholdings and 11 of which
were sells of all its shares in companies. The majority of the
updates were increases in stakes; there were also seven new buys
in the update.
The firm's investment philosophy is simple: Buy good businesses
when they go on sale. Seeking to generate excess returns for
long-term investors, Pzena lists five characteristics (on
pzena.com) that the firm looks for before investing:
- Low price relative to the company's normal earnings power
- Current earnings are below normal
- Management has a sound plan for earnings recovery
- The business has a history of earning attractive long-term
- There is tangible downside protection
As of the end of the third quarter, Pzena Investment Management
has 123 stocks in its portfolio, a total value of almost $12
million, with a quarter over quarter turnover rate of 29 percent.
The firm's portfolio
is as follows:
Oil & Gas
Below are three stock reductions that made the most impact on
Pzena's portfolio in the third quarter.
Avon Prodcuts (
Pzena's 83.63 percent reduction of cosmetic product manufacturer
Avon Products (
) brought his current shareholding down to a little over 1
million shares from the 6.6 million shares he reported in the
second quarter of this year.
This most recent transaction places Pzena's Avon holding at its
lowest since acquiring his first stake of Avon in the first
quarter of 2009.
Avon's market price has fluctuated from a minimum of $14.52 per
share and a maximum of $16.60 per share. Avon is currently
trading at $14.12, relatively lower than its beauty stock rivals
such as Estee Lauder (
), Revlon (
) and Elizabeth Arden (
rank of 3 out of 5 stars, GuruFocus lists two
Severe Warning signs
and three Medium Warning signs for Avon, revealing a declining
operating margin and a severely divergent cash flow as well as a
payout ratio that's too high and a declining per share revenue.
Besides Pzena , Guru investors Jim Simons, John Hussman, Wallace
Weitz and Pioneer Investments all either reduced their
shareholding or completely sold out their shares of Avon in the
To view its holding history with other Gurus, visit AVP: Holding
History. Also view its 10-Year Financials data to see Avon's
PPG Industries Inc. (
Pzena reduced his shares of PPG Industries (
) by 20.6 percent in the third quarter, selling more than 380,000
shares at an average price of $109.84 per share. Pzena has been
reducing his PPG shares consecutively every quarter since the
last quarter of 2011.
As a global provider of coatings and specialty products (such as
glass, lenses and sunwear), Pittsburgh-based PPG is currently
trading at $118.06 per share, which is close to its 10-year high
of $123.19. its P/B ratio of 4.3 and P/S ratio of 1.2 are both
close to three-year highs.
Pzena first acquired PPG in the second quarter of 2010. His
current shareholding is currently at 1,468,404 shares.
With a Business Predictability rank of 4 out of 5 stars,
GuruFocus lists one Severe Warning sign, four Severe Warning
signs and two Good Signs for PPG; while PPG has consistent growth
in per share revenue and a P/E ratio close to a 10-year low, the
company's operating margin has been in a five-year decline.
Additionally, PPG is ranked 6 out of 10 in Financial Strength and
8 out of 10 in Profitability and Growth on GuruFocus.
Besides Pzena, Guru investor Ken Fisher also reduced his shares
of PPG in the third quarter, while Gurus Hotchkis & Wiley,
Steven Cohen, Pioneer Investments and Tom Russo all either sold
out or reduced their shares in the second quarter.
To view PPG's holding history with other Gurus,visit PPG: Holding
History. Also view PPG's 10-Year Financials to see its financial
Computer Sciences Corp. (
Pzena reduced his shares of Computer Sciences Corp. (
) by 20.34 percent in the third quarter, selling a little over a
million shares at an average price of $28.42.
This transaction brought his holding down to 4.3 million shares
from 5.4 million shares reported in the second quarter.
After holding CSC stock for several years, Pzena sold all of his
shares of the company in the fourth quarter of 2008, when the
stock took a dive, and then picked back up in the third quarter
of 2011, purchasing about 6.2 million shares.
On its website, Virginia-based CSC describes itself as a "global
leader in providing technology-enabled business solutions and
Currently selling at $35.28, close to its one-year high, CSC
suffers five Severe Warning signs on GuruFocus, revealing a
declining Piotroski F-Score, an Altman Z-Score in the distress
zone, and declining gross margin, operating margin and per share
While its P/E ratio of 12.7 is close to a 10-year low, its P/B
ratio of 2 is close to its three-year high.
CSC has a Business Predictability rank of 1 out of 5 stars, a
Financial Strength rank of 5 out of 10 stars and a Profitability
and Growth rank of 4 out of 10 stars.
Besides Pzena, Guru Ray Dalio completely sold out his shares of
CSC in the third quarter, while Gurus Chuck Royce, Joel
Greenblatt and Paul Tudor Jones all either reduced or sold out
all of their shares of CDC as of the second quarter.
To view CSC's holding history with other Gurus, visit CSC:
Holding History. Also, view the company's 10-Year Financials to
see its financial standings.
See the rest of Richard Pzena's portfolio here. Also check out
the Undervalued Stocks, Top Growth Companies and High Yield
stocks of Richard Pzena.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