Tom Gayner
, chief investment officer of financial holding company, Markel
Corp. (
MKL
), has updated his portfolio for the third quarter ending Sept.
30, introducing nine companies to his portfolio, adding to
current shares of seven stocks, reducing one stock and completely
selling all of his shares of 12 companies - a total of 29
transactions.
Gayner's portfolio has an equity value of $2.34 billion and
contains 98 stocks. Gayner invests in stocks based on the worth
of its present value of future cash flows. He also sums up what
he looks for in any investment under four qualities: 1) a
profitable business, 2) a solid management team, 3) good
reinvestment opportunities such as positive returns on capital,
and lastly, 4) a fair or better purchase.
The top sectors represented in Gayner's portfolio are financials,
industrials, consumer goods and consumer services. Its top three
holdings to date are: CarMax Inc. (
KMX
) at 6.2 percent ownership, Berkshire Hathaway Inc. (
BRK.A
) at 6.1 percent ownership and Diageo PLC (
DEO
) at 6 percent ownership.
Below are three companies among the stocks of which he completely
sold out in the third quarter that made the most impact to his
portfolio: Western Union Co. (
WCU
), Marriott Vacations Worldwide Corp. (
VAC
) and Altria Group Inc. (
MO
).
Western Union Co. (
WCU
)
The transaction to sell all of Gayner's Western Union Co. (
WCU
) shares impacted his portfolio by 0.30 percent.
Headquartered in Colorado, Western Union is involved in the
business of money transfers, business services and commercial
services.
Recently, Western Union's market price underwent an eye-opening
plunge, trading at about $17 on Oct. 30, and then dropping to
about $12 the following day.
On the same day of the price drop, which also happened to be the
day after fierce storm, Hurricane Sandy, wreaked havoc in the
east coast, Western Union announced in a press release a series
of disaster relief efforts.
The efforts included giving away $75,000 worth of grants to
organizations supporting disaster relief efforts, enabling a "no
transfer fee" program to all of its consumers available through
Nov. 30, and a donation initiative through the Western Union
Foundation that matched all U.S.-based employee donations to the
foundation worth $2 for every $1.
WU
data by
GuruFocus.com
In Western Union's latest quarterly report dated Oct. 30, the
company announced pretty positive gains for its third quarter.
Western Union reported a 1 percent revenue increase, an earnings
per share of $0.45 compared to the $0.38 in the prior year, and
an EBITDA margin of 30.7 percent compared to 30 percent flat in
the same period last year.
"In the third quarter...business was challenging, as soft global
economic conditions, compliance-related changes and competitive
pressures in certain money transfer corridors impacted revenues,"
Western Union president and chief executive officer, Hikmet Ersek
said in the release. "We continue to generate strong cash flow,
and year-to-date we have now returned $600 million to
shareholders through share repurchase and dividends."
Ersek also spoke of three key areas that the company will
specifically focus on in strategic actions for improvement:
consumer value proposition, digital channels and cost
optimization.
Gayner reported to owning 390,000 Western Union Shares in the
second quarter, before selling all of them recently. This was his
first sell of company shares since acquiring it in the fourth
quarter of 2010.
Western Union is currently trading at $12.55 per share, almost up
2 percent today, with a market cap of $10.82 billion. It has a
Financial Strength rank of 5 out of 10, a Profitability &
Growth rank of 7 out of 10 and two Severe Warning signs that
reveal severe cash flow divergence and a possibility that the
company is losing efficiency.
Marriott Vacations Worldwide Corp. (
VAC
)
Gayner's transaction to sell all of his shares of Marriott
Vacations Worldwide Corp.(
VAC
) affected his portfolio by 0.19 percent.
Gayner only acquired Marriott Vacations in the first quarter of
this year, starting off with 133,877 shares. Gayner then reduced
762 shares in the second quarter before completely selling all
133,115 shares recently.
As a global hospitality resort chain, Marriott Vacations operates
under three brands: Marriott Vacation Club, The Ritz-Carlton
Destination Club and Grand Residences by Marriott.
Marriott Vacations stocks are currently trading at $37.49 per
share. While its stock is down three percent for today,
Marriott's stock price is trading near its five-year high of
about $40; around the same time last year, Marriott stocks were
only selling for $17 per share.
In October, the company released its third quarter financial
results, which ended Sept. 7.
As the company nears its first full year as a separate public
company after announcing its spin-off from Marriott International
Inc.(
MAR
) in November 2011, it reported organizational costs of $33
million in adjusted earnings before taxes, depreciation and
amortizations (EBITDA), a $17 million increase compared to the
same period last year.
Additionally, the company's North American contract sales
increased 13 percent compared to year-over-year data, as well as
experienced an increase in adjusted net income by $5 million.
Stephen Weisz, president and chief executive officer says the
company expects to drive $15 million to $20 million of annualized
cost saving by 2014, in connection with its separation efforts
from Marriott International and scheduled evaluation of Marriott
Vacations' organizational structure.
"Our strong third quarter performance continues to underscore the
successful execution of our top-line growth and margin expansion
strategies," he said. "Given three consecutive quarters of strong
performance and positive outlook for the fourth quarter, we are
raising our full year Adjusted EBITDA as adjusted guidance to
$130 million, to $140 million from 115 million, to $125 million."
Marriott Vacations has a market cap of $1.33 billion, a P/E (ttm)
ratio of 43.1, a P/B ratio of 1.1 and a P/S ratio of 0.8. Its two
Severe Warning signs denote an low Altman Z-score and a low
interest coverage, and its one Medium Warning sign highlights its
price being close to its 52-week high.
Altria Group Inc. (
MO
)
Gayner's decision to sell all of his shares of Altria Group Inc.
(
MO
) impacted his portfolio by 0.19 percent.
Altria Group is the parent company of several tobacco and wine
brands such as Phillip Morris USA, John Middleton, U.S. Smokeless
Tobacco Co., John Middleton, Ste. Michelle Wine and Nu Mark.
It's currently trading at $31.50 per share and is currently down
1.41 percent for the day.
Altria announced its third quarter results in Oct. 25, which
focused solely on shareholder returns.
While its diluted earnings per share for the quarter decreased
43.9 percent compared to the same period last year, its
nine-month reported diluted earnings per share increased 22.8
percent.
Additionally, Altria chairman and chief executive officer, Marty
Barrington, announced an expansion of the company's already $1
billion share repurchase program.
"Altria delivered solid financial results for the third quarter
and first nine months of 2012 while taking steps to strengthen
its ability to create shareholder value in the future," he said.
"The business performance of our operating companies enabled us
to increase our already strong cash returns to
shareholders...Altria increased its dividend by 7.3% and
repurchased over $260 million of our stock in the third quarter.
Today, we are announcing a $500 million expansion of our $1.0
billion share repurchase program."
Gayner's holding history with Altria spans back since the third
quarter of 2003.
GuruFocus gives Altria a Financial Strength of 6 out of 10 and a
Profitability & Growth rank of 5 out of 10.
Its two Good Signs indicate an expanding operating margin and a
low P/E ratio. In contract, its two Severe Warning signs indicate
that its revenue has been in decline for the last five years and
a cash flow experiencing severe divergence. Its Medium Warning
sign denotes that its dividend pay out ratio is too high and may
not be sustainable.
View the rest of the details about Tom Gayner's portfolio updates
here. Also read other articles about Tom Gayner in our GuruFocus
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