is the CEO of Causeway Capital, which she co-founded in 2001.
Causeway's team manages $16.2 billion employing a quantitative,
bottom-up approach with a macroeconomic overlay. Her
International Value Fund has had strong performance recently,
returning 8.20% since inception, and 24.23% over the last year.
Forbes appearance last week
, Ketterer said she is looking for "more yield, more
defensiveness without having to pay up for those expensive
consumer staples stocks." Both energy and health care she
believes performed poorly last year but will outperform in 2013.
Particularly, health care stocks that help state and federal
governments save money as "Obamacare" allows more people to
qualify for Medicaid will see growth. She is also looking within
sectors that are approaching fair value for individual companies
that have in some way slipped up temporarily, to the detriment of
their share price.
Backing up to the fourth quarter of 2012, Causeway purchased five
new stocks: St. Jude Medical Inc. (
), State Street Corp. (
) and Citigroup (
New buy: St. Jude Medical Inc. (
Ketter bought 562,800 shares of St. Jude Medical stock in the
fourth quarter for approximately $37 per share on average, the
new holding accounting for 2.5% of her portfolio.
In five years, St. Jude Medical shares have moved up 5%, and
their current market price at $41.08 is close to a one-year high,
with a market cap of $12.66 billion.
St. Jude Medical's business is to develop devices and services
for use in cardiac, neurological and chronic pain treatment, with
four dominant focus areas: cardiac rhythm management, atrial
fibrillation, cardiovascular and neuromodulation.
The company's revenue has risen each of the past 10 years, as
EBITDA grew at a rate of 15.5% annually on average. Last year,
St. Jude Medical began paying a dividend of $0.21 per share,
which is increased to $0.23 per share in the February 2013.
Shares fell 23% in a little over a month after the company
released its third quarter 2012 earnings results on Oct. 17, in
which it reported a 4% year-over-year decrease in revenue to
$1.33 billion, and net earnings of $176 million from $227 million
the previous year, the decrease primarily due to organizational
In the fourth quarter, revenue decline was narrower, falling 2%
year over year to $1.372 billion, and 1% on a currency neutral
basis. Net earnings beat estimates, at $0.39 per share, flat over
the previous year, including $113 million, or $0.36 per share in
restructuring activity charges, and $46 million, or $0.15 per
share income tax charge.
The company also announced in the third quarter commencing a $300
million stock repurchase program using its balance sheet cash and
cash flow to offset dilution from its stock compensation programs
State Street Corp. (
Ketterer purchased 258,750 shares of State Street Corp. for
approximately $44 per share on average, the new holding
accounting for 1.5% of her portfolio.
State Street Corp. shares have declined 31% over the past five
years, and have a current market price of $56.50 per share, which
is close to a three-year high, and a market cap of $25.86
The company is a financial services provider focused on
institutional investors, with $24.4 trillion in assets under
custody and administration and business in 29 countries.
After falling approximately $3 billion from 2008 to 2009, State
Street's revenue has been growing for three consecutive years, as
net income and free cash flow recovered and have grown for the
last two years. The company has also pulled its return on equity
up to 12.80% as of the third quarter of 2012, its highest point
since 2008, and maintained a 1.2% return on equity from the
The dividend of State Street has been steadily increasing since
it was cut to $0.04 in 2009 and 2010. It was increased 33% to
$0.24 per share in March 2012, in the same announcement that the
company approved a $1.8 billion stock repurchase program through
March 31, 2013. In full-year 2012, it bought back 33.4 million
shares of its stock for approximately $1.4 billion, leaving
approximately $360 million of its purchase plan available for
additional share repurchases.
The company's fourth quarter results included EPS of $1.00,
decreased from $1.36 in the previous quarter and increased from
$0.76 year over year. Revenue was $2.45 billion, reflecting a 4%
increase from the previous quarter and 6% increase year over
State Street Corp has a P/E of 14.4, P/B of 1.3 and P/S of 2.9,
which is close to a three-year high.
New Buy: Citigroup (
Ketterer purchased 304,500 shares of Citigroup for approximately
$37 per share in the fourth quarter, the new holding also
spanning 1.5% of her portfolio.
The market price of Citigroup has increased 27.2% over the last
year, with shares currently at $41.15 and a market cap of $124.64
Citigroup is a global bank with business in more than 160
countries, focused on consumer, corporation, government and
institutional clients through Citicorp, its core franchise, and
Citigroup's results for the third quarter, released Oct. 15, were
marred by CVA/DVA losses on improvement in Citi's credit spreads
and a pre-tax loss on the sale of its interest in Morgan Stanley
Smith Barney. Including these effects, net income was $468
million, or $0.15 per diluted share, on revenues of $14 billion.
Excluding the effects, revenues would have been $19.4 billion, a
3% increase from the prior period and including a 5% increase in
Citicorp revenue, and earnings would have been $1.06 per diluted
share, a 26% increase from the prior-year period. The quarter's
sale of MSSB reduced Citi Holdings to 9% of the company's balance
Fourth-quarter net income was $1.2 billion, or $0.38 per diluted
share, on revenues of $18.2 billion, both increased from net
income of $956 million, or $0.31 per diluted share, on revenues
of $17.2 billion, in the year-ago quarter. The company's CVA/DVA
losses also decreased from the previous quarter to $485 million,
primarily due to improved credit spreads, and results were
impacted by $1 billion in repositioning charges, compared to $428
million in the year-ago quarter. Excluding the CVA/DVA, revenues
would have been $18.7 billion, an 8% increase from the prior-year
period, and exluding CVA/DVA and repositioning charges, earnings
would have been $0.69 per diluted share, up 68% from the
The fourth quarter repositioning charges were announced Dec. 5,
and involved actions geared toward reducing expenses and
improving efficiency, while enhancing its emerging markets
business. One component of the plan was the reduction of
approximately 8,000 positions across its institutional clients
group and global consumer banking, and 350 positions at Citi
Citigroup currently has a P/E of 17.8, P/B of 0.7 and P/S of 1.9,
with a quarterly dividend of $0.01.
The top holdings in
's portfolio are Ryanair Holdings PLC (
), UnitedHealth Group Inc. (
), Air Products & Chemicals Inc. (
), Microsoft Corp. (
) and Nasdaq OMX Group Inc. (
See her stock portfolio here
. Also check out her undervalued stocks, top growth companies and
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