Jean-Marie Eveillard (Trades, Portfolio), former portfolio manager at First Eagle Funds, purchased 26 new stocks during the fourth quarter, according to GuruFocus Real Time Picks.
The legendary value investor was born in Paris and was named Morningstar’s International Manager of the Year in 2001. In 2003, he received Morningstar’s first Fund Manager Lifetime Achievement Award. After retiring from active portfolio management, he now serves as Senior Advisor to First Eagle Funds.
Flowserve Corp (FLS, Financial)
After selling out of Flowserve in Q2 2014, Eveillard initiated another position this past quarter after the stock price declined, purchasing 3,470,642 shares at an average price of $58.02 per share. The graph below depicts his holding history.
Flowserve manufactures precision-engineered flow control equipment for critical processes. Its products include pumps, valves, seals, automation and aftermarket services. The stock price declined 26% over the past year and currently trades at $55.77. The current P/E ratio is 17.5, while the P/S ratio is 1.58.
GuruFocus rates Flowserve’s business predictability as 3.5 out of 5 stars. The DCF calculator shows the stock is undervalued, estimating a fair value of $90.81. This gives a 39% margin of safety.
The company’s EBIT per share has been increasing steadily over time, recording at $5.73 in 2014. Over the past five years, this has increased 15%.
Eveillard purchased 611,237 shares of W W Grainger at an average price of $238.52 per share. The holding has a 0.34% portfolio weighting.
W W Grainger is a leading distributor of industrial supplies, MRO equipment, tools, and materials. The stock is currently priced at $249.76 with a P/E ratio of 21.2 and P/S ratio of 1.7. The company’s business predictability is rated as a perfect 5 stars, indicating very consistent earnings and revenue growth. The DCF calculator estimates a fair value of $227.57, giving a -10% margin of safety.
In 2014, EBIT per share was $19.47, a figure that grew 12.72% over the past five years.
Net income has also steadily increased by 11.5% over the past five years, recording at $802 million in 2014. The graph below shows the net income trend over time.
W W Grainger’s current dividend yield is 1.8%, which is close to the five-year high. The payout ratio is 37%.
The Timken Co (TKR, Financial)
Eveillard also bought 3,151,409 shares in Timken Co, which traded for an average price of $41.47 during the quarter. He had sold out of a previous holding in Q4 2013.
Timken manufactures and markets mechanical components such as bearings, power transmission solutions, and precision steel components. Over the past year, the stock price dropped 10% and currently trades at $40.06, with a forward P/E ratio of 15.15 and P/S ratio of 1.16.
The company’s EBIT per share declined 19.6% over the past five years and recorded at $2.28 in 2014.
The current dividend yield is 2.5%, while the payout ratio is 62%.
CF Industries Holdings (CF, Financial)
Eveillard initiated a new position in CF Industries with 413,865 shares bought for an average price of $297.95 per share. The new holding has a 0.28% portfolio weighting.
CF Industries manufactures and distributes nitrogen and phosphate fertilizer products. The stock price increased 29% over the past year, and now trades at $310.86 with a P/E ratio of 11.6 and P/S ratio of 3.4.
GuruFocus rates the business predictability as 4.5 out of 5 stars. The DCF calculator estimates a fair value of $390.31, meaning the stock is undervalued with a margin of safety of 20%.
EBIT per share grew by more than 27% over the past five years, reporting at $46.13 last year. In 2013, EBIT per share was $40.74.
The current dividend yield is 1.9%, which is close to the 10-year high. The payout ratio is just 18%, which shows the company has plenty of room to continue growing the dividend.
Salix Pharmaceuticals (SLXP, Financial)
His fifth-largest purchase during the quarter was 479,891 shares of Salix for an average price of $146.80 per share. The stock accounts for 0.2% of the portfolio.
Salix is a specialty pharmaceutical company that develops drugs and medical devices to treat gastrointestinal diseases. The stock rose 63% over the past year and is currently priced at $172.81. The forward P/E ratio is 19.23 and the P/S ratio is 10.22.
In 2014, EBIT per share dropped dramatically to $-7.71, down from $3.84 the year before.
Net income also dropped to $-415 million, down from $131 million in 2013. The following graph shows the net income trend over time.
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