During the first quarter, the Wintergreen Fund (Trades, Portfolio) invested in one new stock, and closed positions in five others, according to GuruFocus Real Time Picks.
The fund invests in securities of any nation that are priced below what the firm believes is the true value. As of the first quarter, the portfolio held 28 stocks, with 34.5% of assets in the consumer defensive sector. This is followed by 22.6% in consumer cyclical stocks and 12.3% in real estate.
David Winter founded Wintergreen Advisers in 2005 after previously holding several positions at Franklin Mutual Advisers. Winter is responsible for day-to-day management of the Wintergreen Fund (Trades, Portfolio).
Two of the closed out positions –Â Wynn Macau and Galaxy Entertainment Group –Â were top underperformers during 2014, according to Winters’ annual shareholder letter.
New buy
The fund’s only new stock purchase during the quarter was 229,577 shares of CSX for an average price of $34.50 per share. The stock now has a 0.85% portfolio weighting.
CSX provides rail-based transportation services including traditional rail service and transport of intermodal containers and trailers. The stock has increased 18% over the past year and now trades at $34.11. The current P/E ratio is 17.1 and the P/S ratio is 2.7.
GuruFocus rates the company’s business predictability as an excellent 4.5 out of 5 stars based on consistent revenue and earnings growth. Over the past five years, the revenue growth rate was 10%, while EBIT grew by 12.1%.
In 2014, the company reported EBIT per share of $3.61, up from $3.41 the year before. The graph below shows the earnings trend over time.
Sold out
Wynn Macau Ltd. (HKSE:01128, Financial)
The fund sold all 20,345,666 shares in Wynn Macau for an average price of HK$20.11 per share.
The casino and resort company’s stock declined 55% over the past year and now trades at HK$14.28, with a P/E ratio of 12.6 and P/S ratio of 2.52.
In 2014, Wynn reported net income of $6,445 million, down from $7,701 million the year before. However, over the past five years, this figure has risen more than 10%.
The current dividend yield is 11.76% –Â close to the two-year high –Â while the payout ratio is a high 135%.
Galaxy Entertainment Group (HKSE:00027, Financial)
The fund also sold out of its holding in Galaxy Entertainment, selling 9,145,335 shares for an average price of HK$39.11 per share.
Galaxy operates casinos and entertainment facilities in Macau. The stock declined 41% over the past year and is now priced at HK$35.45. The current P/E ratio is 16.4 and the P/S ratio is 2.12.
Over the past five years, the company has posted good growth rates, with revenue growing at 41.8%, and EBIT growing by 74.8%. Net income has grown steadily over time, recording at HK$10,363 million in 2014. Wynn Macau’s net income grew more than 83% over the past five years.
Wintergreen sold all 404,321 shares of its stake in MasterCard for an average price of $86.75 per share. The total gain for the sale was 194%.
The stock rose 20% over the past year and is now trading at $92.73, with a P/E ratio of 28.3 and P/S ratio of 11.2. The revenue growth rate over the past five years was 16%, while EBIT grew by 21.1%.
Last year, net income was $3,617 million, up from $3,116 million in 2013. MasterCard’s operating margin has remained steady at about 53% since 2012.
The dividend yield is 0.58%, which is close to the 10-year high, while the payout ratio is 17%.
H.B. Fuller Company (FUL, Financial)
Wintergreen sold 40,364 shares of H.B. Fuller Company for an average $42.78 per share, a holding the fund had bought in Q3 2014.
H.B. Fuller manufactures adhesives, sealants, paints, and other specialty chemical products. The stock declined 12% over the past year and is currently priced at $42.03, with a P/E ratio of 48 and P/S ratio of 1.03.
In 2014, the company reported EBIT per share of $1.92, down from $2.94 the year before. Net income also declined from $97 million in 2013 to $50 million.
The current dividend yield is 1.2% –Â close to the three-year high –Â and the payout ratio is 55%.
Domtar Corp (TSX:UFS, Financial)
The fund also sold off 38,767 shares of Domtar for an average $52.26 per share. It initiated the holding in the previous quarter.
Domtar manufactures fiber-based products such as communications papers, specialty and packaging papers, and hygiene products. The stock was up 8% over the past year, but is still undervalued when compared to the Peter Lynch earnings line.
Domtar reported net income of $497 million in 2014, a large improvement from $97 million the year before. In addition, EBIT per share also increased to $6.47, up from $2.57 in 2013.
The dividend yield is 3.24%, and the payout ratio is 23%.
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