As the year draws to an end, it is becoming clear which
investors outperformed in 2012. Though official return figures
have not come in yet, GuruFocus'
Score Board of Gurus
shows which investors produced the largest average returns in the
past 6 and 12 months, as well as on a historical basis.
According to the score board, the Gurus with the highest average
returns over the past 12 months were
with 40.33 percent,
with 37.22 percent,
with 30.31 percent, Ronald Muhlenkamp with 21.8 percent and
Irving Kahn with 21.25.
Richard Blum heads Blum Capital Partners, a firm that makes
"strategic block and control investments" in public and private
companies, using a strategies that applies a rigorous private
equity process to the public markets and often takes an active
role in unlocking value. His strategy stresses seeking companies
that are undervalued due to temporary price dislocations caused
by short-term phenomena in the market.
This year, the strategy paid off in spades. Blum's portfolio,
which contains just 14 stocks, has as its largest holding CBRE
Group Inc. (
), which experienced a lift of 26% over the past year. Rounding
out the top five are: ITT Educational Services Inc. (
) (down 66 percent), Avid Technology Inc. (
) (down 9 percent), Collective Brands (
) (up 51 percent), and JDA Software Group Inc. (
) (up 35%).
CBRE Group Inc., which occupies more than a third of Blum's
portfolio, is the world's largest commercial real estate services
firm (based on 2011) revenue. In the third quarter, he carved off
nearly one-third of the position to hold more than 15 million
shares. He has held the stock since before the second quarter of
2007, and it has declined 18% over the past five years.
For the past three years, the company has been increasing both
revenue and net income annually. It has cash of $2.62 billion and
long-term liabilities and debt of $3.11 billion. Free cash flow
also remained positive for the past three years.
The company currently has a P/E of 28.4, P/B of 3.7 and P/S of
Blum appears rather bearish on the market in the third quarter as
he only reduced and sold out positions and did not add to any
existing holdings or buy any new ones.
Eveillard, head of First Eagle Funds, beat the market with the
top holdings Cisco Systems (
) (up 5%), Comcast Corp. (
)(up 61%) and Sysco Corp. (
) (up 8%).
In his firm's semi-annual report from April 2012, the managers of
the First Eagle Global Fund noted of the firm's positioning:
"We believe that maintaining a clear goal is the most important
navigational tool. At First Eagle, our goal is to attempt to
preserve and grow real purchasing power, first and foremost by
trying to avoid the permanent impairment of capital. We do this
by investing in companies one security at a time, with what we
feel is an appropriate margin of safety in price, capital
structure and management temperament. In selecting these
securities, we seek to identify some form of scarcity - as
opposed to following the popular market trends of the day. In our
view, one of the most disturbing characteristics of the
investment landscape is the widespread adoption of thematic
investing, where people feel the need to be heavily invested in
broad sectors or geographic regions offering the promise of macro
Comcast, the largest gainer of Eveillard's top three stocks, is a
media, entertainment and communications company and majority
owner of NBCUniversal. The company has seen its stock proceed
upward relatively linearly over the last four years.
Eveillard has held the stock for over five years and increased
his stake to 23,329,608 shares in the third quarter.
In the last five years the company has grown revenue per share at
an annual rate of 17.4%, EBITDA at 15.2%, free cash flow at 32.1%
and book value at 5.7%. See its 10-year financials here.
Comcast has a current P/E of 16.5, and its P/B at 2 and P/S at
1.6 are both close to their three-year lows.
Francis Chou, founder of Chou Funds, in his annual report dated
Aug. 17, reflected: "In equities, we believe the financial and
retail sectors are undervalued and have invested in them using a
basket approach rather than concentrating on one or two stocks in
His three largest stocks in the year were Berkshire Hathaway (
) (up 13%), Sears Holdings Corp. (
) (down 24%) and Watson Pharmaceuticals Inc. (
) (up 2.1%).
The stock that was one of the biggest detractors of his portfolio
in the first six months of the year, fifth-largest holding
Overstock.com Inc. (
), turned out to be one of the best in the second half. It gained
76% over the last year. Overstock is an online discount retailer.
Overstock particularly surged on release of its third-quarter
earnings on Oct. 25. The company had a 7% increase in revenue
year over year, and net income increased to $2.69 billion, from a
loss of $7.79 billion a year previously.
Revenue increased primarily due to an increase in the number of
unique visitors to the company's web site and larger average
order size, which offset the impact of fewer customer orders due
to lower conversion rates.
Over the past five years, Overstock's revenue per share increased
at an annual rate of 6.1%, and it produced a profit in two of the
last ten years - 2009 and 2010. See its 10-year financials page
Ron Muhlenkamp, head of Muhlenkamp & Company, summarized his
investing perspective in his semi-annual letter from June:
"Our response to the investing environment described above has
changed incrementally over the last six months. Our cash holdings
remain at about 10% and the portfolio remains heavy in healthcare
and technology names - that's where we are finding the strong
balance sheets and good cash flows that we are looking for. We
also have significant investments in financial companies, as we
have found good values there. Generally, the environment for U.S.
financials has been improving, though we remain mindful of the
possibility of a traumatic event coming out of Europe. Our energy
investments are concentrated in companies we think stand to
benefit from the revolution in gas and oil production in the U.S.
We have invested in several companies that provide products that
allow consumers to choose between gasoline and diesel as a fuel
and natural gas as a fuel. We think natural gas prices are very
attractive to a number of industries and companies that provide
the ability to switch from one to another will do well."
The investor held Philip Morris International (
) (up 17 percent), Microsoft (
) (up 6.3 percent) and Alliance Data Systems Corp. (
) (up 28 percent) as his top positions.
Muhlenkamp's top gainer of the three, Alliance Data Systems
Corp., is a company that helps businesses improve their
relationships with customers by understanding consumer behavior
through its credit, marketing and loyalty programs.
Muhlenkamp has owned the stock since the first quarter of 2009
and ridden its increase all the way from an average of $37 per
share to $60. Then he repurchased in 2011 for $77 and saw it
increase to $135 per share in the third quarter of 2012.
In the last five years, ADS has grown revenue per share at an
annual rate of 21%, EBITDA at 26.1% and free cash flow at 19.4%.
In the same period, its book value declined an annual rate of
14.3%. At $144.83 per share, it current trades near its book
value of $142. See its 10-year financial page here.
Irving Kahn manages over $700 million at Kahn Brothers Advisors
and is a former teaching assistant for Ben Graham. He has over 78
years of investing experience and seeks undervalued and often
unpopular securities with a margin of safety and potential for
attractive capital appreciation.
His top three holdings are Pfizer (PFE) (up 25%), New York
Community Bancorp (NYCB) (up 3%) and Merck Co. (MRK) (up 27%).
The biggest gainer of his top three, Merck Co. (MRK), has been in
Kahn's portfolio for over five years. He has been reducing the
position since the second quarter of 2011.
In the last five years, Merck has increased revenue per share at
an annual rate of 9.1%, EBITDA at 7.7%, free cash flow at 14% and
book value at 23.3%. See its 10-year financials here.
In the third quarter, the company announced double-digit global
sales growth for six of its treatments, offset by a 55% decline
in one that lost its U.S. patent and declines in several others.
Overall sales declined 4% year over year to $11.5 billion, while
GAAP EPS was approximately flat at $0.56 per share. Sales to
emerging markets accounted for about 20% of the company's
pharmaceutical sales in the third quarter, driven by China, which
Merck is currently trading for a share price of $44.63, which is
close to its three-year high. Its P/B ratio at 2.32 and P/S ratio
at 2.81 are both close to their two-year highs. It has a P/E of
See how other Gurus performed this year and in the past six
months at GuruFocus' Guru Score Board.About GuruFocus:
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