Causeway Capital Management, the Los Angeles-based firm founded by Sarah Ketterer (Trades, Portfolio) and Harry Hartford in 2001, seeks to achieve superior risk-adjusted returns by investing in mispriced equities in both developed as well as emerging markets.
Implementing quantitative and value-oriented methods, the guru and her team look for potential investment opportunities among mid- and large-cap companies. Each stock also receives a risk score based on the additional volatility or risk it adds to the portfolio. The investment team then enters positions in the stocks with the highest expected risk-adjusted return that also have a lower price-earnings ratio and higher dividend yield than the market.
As of the end of the first quarter, the industrial sector had the largest representation in Ketterer’s $4.17 billion 13F equity portfolio with a weight of 36.33%.
Further, the industrials space may offer good value opportunities currently as the sector has gained 10.83% year to date.
According to GuruFocus portfolio data, Ketterer’s industrials holdings as of the three months ended March 31 were Ryanair Holdings PLC (RYAAY, Financial), Canadian National Railway Co. (CNI, Financial), RELX PLC (RELX, Financial) and Carrier Global Corp. (CARR, Financial).
Investors should be aware 13F filings do not give a complete picture of a firm’s holdings as the reports only include its positions in U.S. stocks and American depository receipts, but they can still provide valuable information. Further, the reports only reflect trades and holdings as of the most-recent portfolio filing date, which may or may not be held by the reporting firm today or even when this article was published.
Ryanair
In the first quarter, Ketterer boosted her stake in Ryanair (RYAAY, Financial) by 20.07% to 9.24 million shares. The stake accounts for 20.90% of the equity portfolio as the largest holding. GuruFocus estimates she has gained 33.77% on the investment so far.
The Irish airline, which is a low-cost carrier operating predominately in secondary airports, has a $24.18 billion market cap; its shares were trading around $106.15 on Thursday with a price-earnings ratio of 18.40, a price-book ratio of 2.87 and a price-sales ratio of 1.50.
The GF Value Line suggests the stock is significantly undervalued currently based on its historical ratios, past financial performance and analysts’ future earnings projections.
At 73 out of 100, the GF Score indicates the company is likely to have average performance going forward. While it received high ratings for profitability, financial strength and momentum, the growth and value ranks were low.
Of the gurus invested in Ryanair, Ketterer has the largest stake with 4.06% of its outstanding shares. Baillie Gifford (Trades, Portfolio), David Herro (Trades, Portfolio) and the Causeway International Value (Trades, Portfolio) Fund also have notable positions in the stock.
Canadian National Railway
The guru upped her stake in Canadian National Railway (CNI, Financial) by 11.69% during the quarter. With a weight of 13.38% in the equity portfolio, she now holds 4.73 million shares total. It is now her second-largest holding. GuruFocus data shows Ketterer has lost an estimated 3.19% on the investment to date.
The Canadian railroad company, which provides freight services in Canada and parts of the U.S., has a market cap of $78.07 billion; its shares were trading around $117.70 on Thursday with a price-earnings ratio of 19.71, a price-book ratio of 4.98 and a price-sales ratio of 6.02.
According to the GF Value Line, the stock is modestly undervalued currently.
The GF Score of 92 implies the company has high outperformance potential, driven by solid ratings for profitability, growth, value and momentum and a more moderate financial strength rank.
With an 8.28% stake, Bill Gates (Trades, Portfolio)’ foundation trust has the largest position in Canadian National. Other top guru investors include Jim Simons (Trades, Portfolio)’ Renaissance Technologies, Ray Dalio (Trades, Portfolio)’s Bridgewater Associates and Jeremy Grantham (Trades, Portfolio).
RELX
The investor trimmed her RELX (RELX, Financial) holding by 2.59% during the quarter. She now holds 682,880 shares, which represent 0.53% of the equity portfolio. GuruFocus data shows she has gained an estimated 8.87 % on the investment thus far.
The London-based company, which provides information-based analytics and decision tools for professional and business customers, has a $63.29 billion market cap; its shares were trading around $33.37 on Thursday with a price-earnings ratio of 32.18, a price-book ratio of 13.35 and a price-sales ratio of 6.55.
Based on the GF Value Line, the stock appears to be fairly valued currently.
The GF Score of 85 means the company has good outperformance potential on the back of high profitability and momentum ratings and more moderate growth, financial strength and value ranks.
Simons’ firm is the largest guru shareholder of RELX with a 0.10% stake. Dalio’s firm also owns the stock.
Carrier Global
Ketterer reduced her Carrier Global (CARR, Financial) position by 4.03% to 1.38 million shares. The stock occupies 1.52% of the equity portfolio. GuruFocus found she has gained an estimated 18.74% on the investment over its lifetime.
Headquartered in Florida, the HVAC company, which was spun off of United Technologies Corp. in 2020, has a market cap of $38.54 billion; its shares were trading around $46.16 on Thursday with a price-earnings ratio of 15.59, a price-book ratio of 4.74 and a price-sales ratio of 1.84.
The GF Value Line suggests the stock is fairly valued currently.
The GF Score of 76 indicates the company is likely to have average performance going forward. Although it received moderate ratings for four of the criteria, the momentum rank is high.
Holding a 1.78% stake, Dodge & Cox is Carrier’s largest guru shareholder. The stock is also being held by Ken Fisher (Trades, Portfolio), PRIMECAP Management (Trades, Portfolio), Diamond Hill Capital (Trades, Portfolio), Simons’ firm and several other gurus.
