Fund managers are required to disclose to the SEC a listing of their holdings each quarter on form 13F-HR. At times however, managers request exclusions of certain holdings in hopes that unwanted attention doesn't drive up the share prices of a company they are in the process of acquiring. While I don't advocate blindly following the purchases of these holdings, I do like to keep up with top managers for investing ideas and to get an idea about their portfolio allocations.
Just a few days ago (April 12th), William Ackman's Pershing Square Capital Management filed an amended form 13F-HR disclosing a $152 million position in Mondelez Internationals (MDLZ) Class A shares. Below is a profile of Mondelez International with fundamental highlights.
Profile and Price Target
Mondelez is a manufacturer of confectionery products that owns the brands of Oreo, Chips Ahoy, Club Social, Halls, Trident, and Lacta, among others. Per morningstar.com, Mondelez holds 15% of the chocolate market, 30% of the gum category, and 7% of the candy aisle worldwide. Mondelez was spun off from Kraft late last year and currently has a market cap of $54.5 billion.
Shares are up 21% YTD and last traded near their 52 week high at $30.63 per share. Analysts seem to feel shares have topped out, mean target prices for 2013 are $30.79 with a median target price of $31.00.
Fundamentals and Highlights
- P/B of 1.7 and P/S of 1.5 trade below the industry averages 2.2 and 1.8 respectively.
- D/E of 0.5 which is below the industry averages 0.9.
- Dividend yield of 2.74%.
- 40% of sales come from high growth developing countries.
- P/E of 35.1 which is above the industry averages 20.0.
- Operating margins of 10.4% and ROE of 9.0 which is below the industry averages 13.9% and 36.2 respectively.
- Mondelez generates 80% of its sales outside of North America which makes it volatile to negative foreign interest rate changes.
- In addition to higher input costs, revenues fell from $54 billion in 2011 to $35 billion in 2012.
Common shares of Mondelez have performed well YTD and come with a compelling 2.74% dividend. However, I personally will not be buying shares due to revenue and cost concerns, both of which have moved in negative directions recently despite the stock's continued rise. Based on this, the P/B, P/S and P/E ratios, I believe shares are slightly overvalued and would look for a pullback before any further consideration.