describes his team at Boston-based Delphi Management as
"disciples of the Graham-Dodd school of value investing," and
also insists on meeting directly with the management of companies
he is evaluating. Rather than attempting to read the market,
Black identifies good companies trading at prices that imply
In the first quarter of this year, Black's portfolio was valued
at $779 million, with 12% quarter-over-quarter turnover and 13
new stocks added, for a total of 132 holdings. But he put the
most amount of money to work in the following companies: WPP PLC
), Publicis Groupe SA (
), Toronto-Dominion Bank (
pick Chicago Bridge & Iron Company (
The New Buys Overview
WPP PLC (
Black's largest purchase of the quarter, he purchased 260,306
shares at $79 on average, for a 2.7% situating in his portfolio.
The price since increased 11% from his average price to $87.53 on
WPP is a London-based multinational advertising and public
relations company with operations in 110 countries. The company's
revenue and net income has been on a steadily increasing
trajectory for most of the past decade, as demonstrated in the
In the first quarter of 2013, WPP saw revenue growth of 5.9% year
over year in sterling to 2.53 billion pounds. The company is
using its strong free cash flow on capital expenditures,
acquisitions, share repurchases and dividend increases calibrated
to enhance shareholder value. It generated 1.4 billion in free
cash flow in the 12 months ended March 31, 2013, and spent almost
1.4 billion on capital expenditures, acquisitions, share
repurchases and dividends in the same period. The board is
considering increasing its pay-out target ratio from 40% to 45%
The company is focused on expanding through new acquisitions, and
closed 13 transactions in the first quarter in a number of
WPP's P/E of 18.42 is close to a two-year high, P/B is 2.2 and
P/S of 1.51 is close to a 10-year high. The share price of $11.57
is almost near its 10-year high.
Publicis Groupe SA (
Black purchased 669,328 shares of Publicis Groupe for $17 per
share on average, giving the company a 1.4% portfolio weighting.
It has gained 10% from the average price since. Tuesday its price
France-based Publicis Group is a communications group
specializing in marketing, publicity and media purchasing.
The company also has a primarily increasing earnings and revenue
history for 10 years, and particularly for the past several
Publicis has a P/E ratio of 16.9, P/B ratio of 5.8 and P/S ratio
of 3.99 which is approaching a 10-year high of 4.
Toronto-Dominion Bank (
Black bought 118,126 shares of Toronto-Dominion Bank for $83 per
share, a 1.3% portfolio weighting. In the meantime the stock has
declined 2.3% from the average price.
Toronto-Dominion Bank, collectively with its subsidiaries called
TD Bank Group, offers Canadian personal and commercial banking.
The company's revenue and earnings history has unfolded as
follows over 10 years:
In the first quarter of 2013, net income rose 9% year over year
to $1.92 and EPS rose 8% to $2 per share. The dividend also
increased 5% to $0.04 per share.
The bank's P/E ratio of 11.74 is close to a three-year low, and
P/B of 1.61 is close to a one-year low. It has a P/S of 3.3.
Chicago Bridge & Iron Company (
Black spent $53 per share on average for 83,190 shares of Chicago
Bridge & Iron in the first quarter. It is 66% of his
portfolio and shares have gained 19% from his average purchase
price. Warren Buffett of Berkshire Hathaway (
) also purchased shares of the company in the first quarter,
sending its stock price up sharply:
CB&I is a major energy infrastructure and government services
company. Its revenue has spent the last several years recovering
from a two-year decline:
Earnings have also strengthened in the last several years:
In the first quarter, CB&I reported $33.6 million in net
income, including acquisition-related costs of $51.2 million
after tax, an 87% year-over-year increase. Net income likewise
increased 72% to $147.8 million. Accretion from the acquisition
of Shaw Group in February contributed to the robust growth.
Management said it saw the acquisition as making CB&I "the
most complete energy infrastructure-focused company in the
Buffett, or one of his managers, also liked the company enough to
amass 6.15% of its outstanding shares, equal to 6,508,600, in the
first quarter. It was his company's only new buy of the quarter.
Investing Guru John Keeley commented on developments affecting
his holding of the company in his Keeley Funds fourth quarter
"Although ADT was the top contributor from the industrial sector
during the quarter, Chicago Bridge and Iron (
) was another strong performer in the sector. The global
engineering and construction firm rose sharply in December after
shareholders of Shaw Group approved Chicago Bridge and Iron's $3
billion acquisition which was proposed in July. The combined
entities will become one of the largest energy construction and
engineering contracting firms in the world."
See more Scott Black trades by observing his portfolio here. Also
check out the Undervalued Stocks, Top Growth Companies and High
Yield stocks of Scott Black.
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