John Hussman (Trades, Portfolio) is the president of Hussman Strategic Advisors, an advisory firm that manages the Hussman Funds. He manages the Hussman Strategic Growth Fund and the Hussman Strategic Total Return Fund, which invests primarily in U.S. Treasury and government agency securities.
Every week, the investor publishes a commentary on the market that is widely read by money managers and individual investors alike. Hussman has written about a variety of topics, from monetary policy to market valuation.
The fund’s third quarter portfolio included 201 stocks and 36 new positions since the previous quarter. Technology continues to be the dominant sector in the portfolio at 28.5%, followed by healthcare at 17.1%.
New buys
Hussman added 36 new positions to the portfolio during the third quarter; the largest impact to the portfolio was in Caterpillar (CAT, Financial) at 150,000 shares. In the fourth quarter of 2009, Hussman sold out of half a million shares in the company.
Caterpillar manufactures construction and mining equipment, diesel and natural gas engines, and diesel-electric locomotives. The company also provides financial services through Caterpillar Financial Services Corporation.
The company’s dividend yield is close to its three-year high at 2.5%, while the five-year growth rate is 1.8%.
Hussman also added a new holding in Kimberly-Clark (KMB, Financial) with 127,000 shares. He had previously sold out of the position in the first quarter of 2013.
Kimberly-Clark is a Dallas-based company that manufactures household and personal care products such as feminine hygiene, tissue and paper, and baby care products.
As a consumer staples company, diluted earnings per share have increased steadily over the past 10 years, recording at $5.53 per share in FY 2013.
The operating margin has been expanding since FY 2011 and was 15.17% in FY 2013.
Sold out
Hussman sold out of 20 positions during the quarter; the largest impact was in Helmerick & Payne (HP, Financial) with 125,000 shares.
The fund had held the shares since the first quarter 2013 when Hussman purchased the holding for about $62 per share. Hussman sold the shares this quarter at an average price of $106.26; the current price of the stock is $79.45.
Helmerick & Payne is engaged in contract drilling of oil and gas wells. Its U.S. operations drill in several states including Texas, Oklahoma, Wyoming, and Colorado, while its international operations span six countries including Bahrain and United Arab Emirates.
The Peter Lynch chart indicates the company recently became undervalued.
Hussman also sold out of 100,000 shares in Questcor Pharmaceuticals (QCOR, Financial), which develops prescription drugs for central nervous system disorders.
The company’s stock has been up 70% year-to-date, representing a good time to sell the stock at a profit. The fund did exactly that, after purchasing an initial stake of 150,000 shares in the second quarter of 2013.
GuruFocus rates Questcor’s financial strength as 7/10 and its profitability and growth as 6/10.
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