Donald Smith has been added into our List of Gurus. This is a review of his investing philosophy and top holdings (DDS, TSO, JBLU, AUY, CNA, PNW).
Donald G. Smith is the CIO of Donald Smith & Co. He began his career as an analyst with Capital Research Company and subsequently worked at Capital Guardian Trust Co. In 1980, Donald be-came the CIO of Home Insurance Company, and President of Home Port-folio Advisors, Inc., which he bought in 1983 and changed the name to Donald Smith & Co., Inc.
In 2010, Donald Smith & Co. has $3.6 billion under management. Over 30 years since inception compounded annualized return has been 15.3%. Over the last 10 years our annualized return is 12.1% versus -0.4% for the S&P 500.
Mr. Smith was awarded a B.S. in Finance and Ac-counting by the University of Illinois, an MBA by Harvard University and a J.D. from UCLA Law School and was admitted to the Bar Association of California. He volunteered for Ben Graham in UCLA to conduct a study on low P/E strategy.
Donald Smith is a deep-value manager employing a strict bottom-up approach. He invests in stocks of out-of-favor companies selling at discounts to tangible book value. He looks for companies in the bottom docile of price-to-tangible book ratios and a positive outlook for earnings potential over the next 2-4 years.
Read the Graham and Doddsville newsletter Fall 2010 for the interview with Donald Smith. These are his top holdings as of 6/30/2010. His Q3 portfolio will be updated in 1-2 weeks.
No. 1: Dillard's Inc. (DDS, Financial), Weightings: 5.49% - 6,609,664 Shares
Dillard's Inc. is one of the nation's largest fashion apparel and home furnishings retailers. Dillard's Inc. has a market cap of $1.82 billion; its shares were traded at around $28.46 with a P/E ratio of 16 and P/S ratio of 0.3. The dividend yield of Dillard's Inc. stocks is 0.6%.
No. 2: Tesoro Corp. (TSO, Financial), Weightings: 5.34% - 11,834,323 Shares
Tesoro was founded in 1968 as a company primarily engaged in petroleum exploration and production. Tesoro Corp. has a market cap of $2.01 billion; its shares were traded at around $14.17 with and P/S ratio of 0.1. Tesoro Corp. had an annual average earning growth of 11.8% over the past 10 years.
No. 3: JetBlue Airways Corp. (JBLU, Financial), Weightings: 4.75% - 22,384,931 Shares
JetBlue Airways is a low-fare, low-cost passenger airline, which provides high-quality customer service primarily on point-to-point routes and is based in New York's John F. Jetblue Airways Corp. has a market cap of $2.14 billion; its shares were traded at around $7.54 with a P/E ratio of 23.6 and P/S ratio of 0.6. Jetblue Airways Corp. had an annual average earning growth of 6.3% over the past 10 years.
No. 4: Yamana Gold Inc. (AUY, Financial), Weightings: 4.35% - 10,927,008 Shares
Yamana Gold is a Canadian gold producer with significant gold production, gold and copper-gold development stage properties, exploration properties and land positions in all major mineral areas in Brazil. Yamana Gold Inc. has a market cap of $8.6 billion; its shares were traded at around $11.71 with a P/E ratio of 23.8 and P/S ratio of 7.2. The dividend yield of Yamana Gold Inc. stocks is 0.8%. Yamana Gold Inc. had an annual average earning growth of 105.9% over the past 5 years.
No. 5: CNA Financial Corp. (CNA, Financial), Weightings: 4.23% - 4,281,597 Shares
CNA Financial Corporation is an insurance holding company whose primary subsidiaries consist of property/casualty and life insurance companies. Cna Financial Corp. has a market cap of $7.71 billion; its shares were traded at around $28.48 with a P/E ratio of 8.2 and P/S ratio of 0.9.
No. 6: Pinnacle West Capital Corp. (PNW, Financial), Weightings: 3.93% - 2,797,073 Shares
Pinnacle West Capital is engaged, through its subsidiaries, in the generation, transmission, and distribution of electricity and selling energy, products and services; in real estate development; and in venture capital investment. Pinnacle West Capital Corp. has a market cap of $4.6 billion; its shares were traded at around $42.14 with a P/E ratio of 15.7 and P/S ratio of 1.4. The dividend yield of Pinnacle West Capital Corp. stocks is 4.9%.
Donald G. Smith is the CIO of Donald Smith & Co. He began his career as an analyst with Capital Research Company and subsequently worked at Capital Guardian Trust Co. In 1980, Donald be-came the CIO of Home Insurance Company, and President of Home Port-folio Advisors, Inc., which he bought in 1983 and changed the name to Donald Smith & Co., Inc.
In 2010, Donald Smith & Co. has $3.6 billion under management. Over 30 years since inception compounded annualized return has been 15.3%. Over the last 10 years our annualized return is 12.1% versus -0.4% for the S&P 500.
Mr. Smith was awarded a B.S. in Finance and Ac-counting by the University of Illinois, an MBA by Harvard University and a J.D. from UCLA Law School and was admitted to the Bar Association of California. He volunteered for Ben Graham in UCLA to conduct a study on low P/E strategy.
Donald Smith is a deep-value manager employing a strict bottom-up approach. He invests in stocks of out-of-favor companies selling at discounts to tangible book value. He looks for companies in the bottom docile of price-to-tangible book ratios and a positive outlook for earnings potential over the next 2-4 years.
Read the Graham and Doddsville newsletter Fall 2010 for the interview with Donald Smith. These are his top holdings as of 6/30/2010. His Q3 portfolio will be updated in 1-2 weeks.
No. 1: Dillard's Inc. (DDS, Financial), Weightings: 5.49% - 6,609,664 Shares
Dillard's Inc. is one of the nation's largest fashion apparel and home furnishings retailers. Dillard's Inc. has a market cap of $1.82 billion; its shares were traded at around $28.46 with a P/E ratio of 16 and P/S ratio of 0.3. The dividend yield of Dillard's Inc. stocks is 0.6%.
No. 2: Tesoro Corp. (TSO, Financial), Weightings: 5.34% - 11,834,323 Shares
Tesoro was founded in 1968 as a company primarily engaged in petroleum exploration and production. Tesoro Corp. has a market cap of $2.01 billion; its shares were traded at around $14.17 with and P/S ratio of 0.1. Tesoro Corp. had an annual average earning growth of 11.8% over the past 10 years.
No. 3: JetBlue Airways Corp. (JBLU, Financial), Weightings: 4.75% - 22,384,931 Shares
JetBlue Airways is a low-fare, low-cost passenger airline, which provides high-quality customer service primarily on point-to-point routes and is based in New York's John F. Jetblue Airways Corp. has a market cap of $2.14 billion; its shares were traded at around $7.54 with a P/E ratio of 23.6 and P/S ratio of 0.6. Jetblue Airways Corp. had an annual average earning growth of 6.3% over the past 10 years.
No. 4: Yamana Gold Inc. (AUY, Financial), Weightings: 4.35% - 10,927,008 Shares
Yamana Gold is a Canadian gold producer with significant gold production, gold and copper-gold development stage properties, exploration properties and land positions in all major mineral areas in Brazil. Yamana Gold Inc. has a market cap of $8.6 billion; its shares were traded at around $11.71 with a P/E ratio of 23.8 and P/S ratio of 7.2. The dividend yield of Yamana Gold Inc. stocks is 0.8%. Yamana Gold Inc. had an annual average earning growth of 105.9% over the past 5 years.
No. 5: CNA Financial Corp. (CNA, Financial), Weightings: 4.23% - 4,281,597 Shares
CNA Financial Corporation is an insurance holding company whose primary subsidiaries consist of property/casualty and life insurance companies. Cna Financial Corp. has a market cap of $7.71 billion; its shares were traded at around $28.48 with a P/E ratio of 8.2 and P/S ratio of 0.9.
No. 6: Pinnacle West Capital Corp. (PNW, Financial), Weightings: 3.93% - 2,797,073 Shares
Pinnacle West Capital is engaged, through its subsidiaries, in the generation, transmission, and distribution of electricity and selling energy, products and services; in real estate development; and in venture capital investment. Pinnacle West Capital Corp. has a market cap of $4.6 billion; its shares were traded at around $42.14 with a P/E ratio of 15.7 and P/S ratio of 1.4. The dividend yield of Pinnacle West Capital Corp. stocks is 4.9%.
