Sarah Ketterer (Trades, Portfolio) co-founded Causeway Capital Management in 2001, which now manages $36 billion in assets as of 2014.
Ketterer is the portfolio manager for the fundamental and absolute return strategies and oversees investment research across all sectors. Prior to founding the firm, she worked for the Hotchkis and Wiley division of Merrill Lynch Investment Managers. From 1990 to 1996, Ketterer was a portfolio manager at Hotchkis and Wiley, where she co-founded the international equity product.
The firm specializes in managing global, international, emerging market and absolute return equities. The International Value Fund focuses on companies with market capitalizations greater than $750 million in developed countries. The following chart shows the quarterly performance of the stock for its investor and institutional classes.
As of the fourth quarter, the majority of assets were held in the United Kingdom at 24.8%, followed by 15.3% in Japan and 14.9% in France. During the quarter, Ketterer purchased eight new stocks with a quarter-over-quarter turnover of 19%.
Ketterer’s largest purchase by a large margin was 1,673,024 shares of Qualcomm, which traded for an average $73.20 during the quarter. The stock has a 4% portfolio weighting.
Qualcomm is a leading wireless technology and mobile device chipset company. It develops digital communication technology called code division multiple access, or CDMA.
The stock has declined 5% over the past year and is close to fair valuation according to the Peter Lynch chart.
GuruFocus rates Qualcomm’s business predictability as 3.5 out of 5 stars. The DCF model, which relies on consistent earnings, estimates a fair value of $93.65, giving a margin of safety of 24%. The stock currently trades at $71.40.
EBIT per share in FY 2014 was $4.40, which has increased steadily over time.
The current P/E ratio is 15 and the P/S ratio is 4.49.
Ketterer also purchased 83,000 shares of NetEase for an average price of $95.90. The company accounts for 0.24% of the portfolio.
NetEase operates an interactive online community in China and is a provider of Chinese language content through its online games, internet portal, email, and other services.
The stock has been up 64% over the past year and may be overvalued when compared to the Peter Lynch earnings line.
Preliminary data for FY 2014 estimates EBIT per share will be $5.87, which has grown consistently over time. Over the past five years, earnings have increased more than 18%.
Looking at the balance sheet, NetEase carries no long-term debt, and has a comfortable current ratio of 4.1. A ratio of at least 1 indicates the company is able to cover its short-term obligations.
The current P/E ratio is 19.1 and the P/S ratio is 8.43.
Mobile Telesystems (MBT, Financial)
Ketterer bought 847,250 shares of Mobile Telesystems, which traded for an average price of $11.98 during the quarter. The company has a 0.18% portfolio weighting.
Mobile Telesystems provides telecommunications services including voice and data transmission, internet access, and Pay TV. The company operates primarily in Russia, Ukraine, Turkmenistan, and Armenia.
EBIT per share in FY 2013 was $1.61, which has increased by about 5.4% over the past five years.
The operating margin in 2013 was 25.54%, which has been increasing since 2011. The following graph shows the trend of the margin over time.
The stock has declined 45% over the past year and currently trades at $9.47 with a P/E ratio of 8.4 and P/S ratio of 1.4.
JA Solar Holdings (JASO, Financial)
Ketterer also bought 461,900 for an average price of $8.33 per share. The company accounts for 0.11% of the portfolio.
JA Solar is a China-based manufacturer of high-performance solar power products. In 2009, the company expanded into manufacturing solar modules as well as silicon wafer manufacturing.
The stock has been down 18% over the past year and is undervalued when compared to the Peter Lynch earnings line.
EBIT per share for the trailing 12 months is $1.71, though earnings have been negative at the end of the fiscal year since 2011.
The stock currently trades at $8.77 with a P/E ratio of 8.5 and P/S ratio of 0.3.
Korea Electric Power (KEP, Financial)
Ketterer purchased 81,400 shares of Korea Electric Power for an average price of $21.09 per share. The stock accounts for 0.05% of the portfolio.
The company generates, transmits and distributes electricity in South Korea. As of 2013, the company and its subsidiaries owned 81.5% of the total electricity generation capacity in Korea.
Preliminary data for FY 2014 estimates EBIT per share will be $4.09, a large jump from $0.91 the year before.
The operating margin is also expected to increase from 2.22% to 10.07%.
The stock currently trades at $20.73 with a P/E ratio of 9.4 and P/S ratio of 0.5.
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