A Look At The Stocks Howard Marks Keeps Buying

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Mar 09, 2015
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"I try every chance I get to convince people that, in investing, there's no such thing as a good idea ... or a bad idea. Anything can be a good idea at one price and time, and a bad one at another," Howard Marks of Oaktree Capital Management LP said in one of his notes he sends out to shareholders.

Marks writes memos to Oaktree clients, outlining his points of view on the market, investing and the economy. Because the memos are so insightful and well written, they have become quite popular. Even Warren Buffett (Trades, Portfolio) has commented on how much he enjoys reading them.

Howard Marks (Trades, Portfolio) of Oaktree Capital Management LP currently owns 85 stocks in his portfolio with a quarter over quarter turnover of 37%.

55.1% of his portfolio consists of stocks in the ETF, options, preferred sector and 14.6% of his portfolio are stocks in the Consumer Cyclical sector.

Here's a look at some of the stocks Marks keeps buying and hold the highest convictions in his portfolio.

Dynegy Inc

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Since Q42012, Marks has purchased 11,455,598 shares of Dynegy Inc (DYN, Financial) at an average price of $22.21 a share and sold 1,305,886 shares at an average price of $30.83 a share.

DYN is 3.3% of Marks's overall portfolio. He currently owns 10,149,712 shares, valued at $308.04 million.

Dynegy's main business is in the production and sales oif electric energy. The company has 16 power plants in six different states.

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The Peter Lynch earnings line is at $8.30, which indicates the stock may be overvalued, as it is currently trading at $27.02 a share.

The P/S ratio of 1.18 is currently close to the three-year low of 1.19, which is a good sign.

The P/B ratio is currently 1.32.

Ally Financial Inc

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Since Q2 of 2014, Marks has purchased 9,328,530 shares of Ally Financial Inc (ALLY, Financial) at an average price of $24.42 a share. The stock consists of 2.4% of his overall portfolio and is valued at $220.3 million.

Ally Financial is an independent, automotive financial services firm that was founded in 1919.

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The stock is currently trading at $21.12. The Lynch earnings line is at $27.80, which indicates the stock may be undervalued.

The P/E ratio of 11.50 is close to the one-year low of 11.20, which is a good sign.

The P/S ratio is 2.19, and the P/B ratio is 0.72.

Taiwan Semiconductor Manufacturing Co Ltd

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Marks purchased 4,912,445 shares of Taiwan Semiconductor Manufacturing Co Ltd (TSM, Financial) at an average price of $19.13 a share and sold 24,661 shares at an average price of $16.28 a share since Q3 of 2010.

Marks currently has 4,887,784 shares in his portfolio, valued at ~$109.4 million. The stock consists of 1.2% of his portfolio.

The company was incorporated in 1987 and manufactures, sells, packages and tests computer-aided designs of integrated circuits as well as other semiconductor devices.

The stock is currently trading at $24.07 a share. According to the DCF calculator, the stock has an intrinsic value of 24.43 and a margin of safety at 0%. The stock may be slightly undervalued.

Operating income is currently at $8.52 billion, with an operating margin at 40.39% and expanding, which is a good sign.

The current P/E ratio is 16.93.

BRF SA

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Marks purchased 2,292,713 shares of BRF SAÂ (BRFS, Financial) at an average price of $23.65 a share over a three-year period since 2Q of 2012.

The shares in his portfolio are vaued at $53.5 million and consist of 0.57% of his overall portfolio.

BRFS is a food production company with a focus on the production and sales of poultry, pork, beef cuts, milk and other dairy products, as well as processed food products.

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The stock is currently trading at $20.66 a share. The Lynch earnings line is at $12.80, which indicates the stock may be overvalued.

Two warning signs investors should watch out for are the P/B ratio of 2.75 because it is close to the 10-year high of 3.86 and the P/S ratio of 1.33 because it is close to the 10-year high of 1.9.

Vale SA

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Marks purchased 6,875,572 shares of Vale SAÂ (VALEPR, Financial)Â at an average price of $12.37 a share and sold 156,900 shares at an average price of $13.20 a share.

He currently owns 6,718,672 shares, valued at $48.8 million. The stock consists of 0.52% of his overall portolio.

Vale SA researches, produces and sells iron ore and pellets, nickel, fertilizer, copper, coal, mananese, ferroalloys, cobalt, platnium group and precious metals.

The stock is currently trading at $10.92 a share.

The P/B ratio of 0.71 is currently at its ten-year low and the P/S ratio is 1.11 is close to the five-year low of 1.00.

Other stocks with the highest convictions include:Petroleo Brasilerio SA Petrobras (PBR, Financial), Cemex SAB de CV (CX, Financial), Trina Solar Ltd (TSL, Financial), JD.com Inc (JD, Financial), Anglogold Ashanti Ltd (AU, Financial).

"Do you dare to be different? Do you dare to be wrong? And do you dare to look wrong? Because you have to dare to be all three of those in order to have a shot at great results," Marks said.

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