The portfolio had a good month in August, as the portfolio was up nearly 5% for the month, outperforming the Nasdaq, Dow, and S&P 500. August was a month of light volume and not much volatility and I am very confident trading levels will pick up in September and throughout the rest of the year. In the portfolio, holdings were pretty active as there were a few acquisitions, a couple of earnings reports, and one company raised their dividend as well. As the portfolio is full of powerful companies, there are always things happening which are eventful, and I know several companies are presenting at investment conferences during the month.
Recent Noteworthy Events of the Portfolio Holdings
1. Liberty Interactive- Owner of QVC, Bodybuilding.com, Provide Commerce, Buyseasons.com, Backcountry.com, and large passive minority positions in other large, well known internet based business like the Home Shopping Network.
Liberty Interactive reported earnings on August 8, 2012 which were pretty solid-http://ir.libertyinteractive.com/releasedetail.cfm?ReleaseID=699087
Liberty also completed their split off of Liberty Ventures with dividend to all shareholders-
Liberty Ventures has large passive equity positions in Expedia.com, Tripadvisor.com, Interval Leisure Group, Tree.com, and a great deal of cash, as well as other passive equity holdings.
Finally, Liberty will be presenting at the Goldman Sachs conference on Wednesday September 5, 2012-
2. ICONIX (NASDAQ:ICON)- Owner of a broad range of well known brands like OP, Mossimo, Joe Boxer, Peanuts, and Sharper Image. They have a business model which outsources everything except licensing to the largest retailers in the world. In addition, they have partnerships set up to expand and grow their businesses in the largest emerging markets in the world-China, India, and Brazil. They also grow through acquisitions and by using debt wisely.
Iconix will be presenting at the Goldman Sachs conference on Thursday September 6, 2012-
3. Quest Diagnostics- Quest Diagnostics is the largest health care diagnostic testing company in the United States, and the company's announced earnings on July 19 which were not as good as what Wall Street expected- (http://finance.yahoo.com/news/quest-diagnostics-reports-second-quarter-103000668.html.)
The company generates over a billion dollars per year in cash and has a non capital intensive business, which allows for management to search for acquisitions, make share repurchases, and raise the dividend.
4. Intuit- Owner of the QuickBooks, TurboTax, Mint.com, and GoPayment businesses, INTU generates over a billion dollars per year in cash and almost all of it is free cash flow. The company is expanding its different businesses in different geographic regions, including the U.K., India, Canada, and Asia. The company recently raised their dividend to 17 cents a share in each quarter. The balance sheet is strong with debt and cash of about one billion each.
Intuit reported earnings on August 21 that were a little light on revenues and met the EPS expectations. The company decided to sell their web sites division and completed the acquisition of Demandforce.
5. Starbucks - Largest coffee and tea company in the world, expanding the business into juice, as well as growing their presence in China. The stock released earnings which disappointed Wall Street and the stock suffered its worst day in 12 years- http://finance.yahoo.com/news/starbucks-reports-record-third-quarter-200400916.html I believe it would be the biggest gift in the world if the stock fell to attractive levels again to buy more shares.
Liberty Media - Another stock of Liberty Media, the assets inside the holding company structure include Starz Media, the Atlanta Braves, 40% ownership of Sirius Satellite (NASDAQ:SIRI), almost 20% ownership of Live Nation (NYSE:LYV), 16% ownership of Barnes & Noble, and a few other non controlling positions of small public and private. Starz generates about 300-400 million dollars of cash flow per year and has little debt, and LMCA has almost 2.5 billion dollars of cash (after debt considerations, $1 billion), so there is much to be speculated as LMCA has plenty of firepower to do what it wants to do.
Liberty Media announced earnings on August 8, 2012, and have increased their position in Sirius (SIRI) to over 49% and are ready to take control of the company. In addition, they will spin off the Starz division into a new company. They also bought back almost $100 million of LMCA stock.
VCA Antech- Second largest owner of animal hospitals in the United States, also owns the laboratories for diagnostic testing of animals. The most recent earnings report disappointed Wall Street and the stock has retreated quite a bit since the last earnings report- http://finance.yahoo.com/news/vca-antech-inc-reports-second-200000382.html Still, a very strong company and the stock is a candidate for more purchases.
Here is a link to their most recent presentation: http://seekingalpha.com/article/602131-vca-antech-s-management-presents-at-bank-of-america-merrill-lynch-health-care-conference-transcript?source=yahoo
IAC Interactive- Owner of Ask.com, Match.com, Meetic, Service Magic, Vimeo, CollegeHumor.com, and the Daily Beast, among other web sites. The company reported another excellent quarter: http://finance.yahoo.com/news/iac-reports-q2-results-113000272.html
The company bought back more shares and doubled the dividend at the most recent earnings report. In addition, they recently announced the acquisition of About.com and Datehookup.com.
Moneygram International- Second largest money transfer and bill payment company behind Western Union. The position is really a private equity strategic investment as Goldman Sachs and Thomas Lee Partners own 75% of the common equity and eventually will want a much better return than where the stock price currently trades at. Management has been growing distribution points of presence almost 20% per year and now has over 200K locations to offer services in all areas of the world, particularly in emerging markets like Russia, Brazil, India, and the Middle East. Management has also added mobile transfer to the portfolio. The stock has done very little for the last three years but the business is not capital intensive, is growing 5-8% per year, and at some point the majority owners would like to be able to monetize their positions. They reported another good quarter last week.
Here is a link to the most recent Moneygram earnings report http://finance.yahoo.com/news/moneygram-international-reports-second-quarter-100000558.html
Here is a link to their most recent presentation at the JP Morgan Conference: http://seekingalpha.com/article/592131-moneygram-international-s-ceo-presents-at-40th-annual-j-p-morgan-global-technology-media-and-telecom-conference-transcript?source=yahoo
British Petroleum- An ownership position in the second integrated oil company in the world. Largest explorer in the Gulf of Mexico and has exploration activities all over the world. BP recently reopened their largest fields in the Gulf of Mexico, and the 4th quarter should bring all operations in exploration and production to a complete restoration. As such, look for BP to start to improve their barrels of production beginning in the last quarter and continuing on into 2013.
Quidel Corporation: Health care and diagnostic company which makes influenza tests and is expanding their product line into strep throat, graves disease, and other molecular assays. Their most recent earnings report was better than expected- http://finance.yahoo.com/news/quidel-reports-second-quarter-2012-200500979.html
Quidel recently presented at the Cannacord Conference- http://seekingalpha.com/article/806891-quidel-s-ceo-presents-at-canaccord-genuity-32nd-annual-growth-conference-transcript?source=yahoo
Unilever: A massive food company based in the UK that gets over half of it's nearly 50 billion dollars of sales in the emerging markets of Asia and Africa. The company pays a dividend of 3.7% and has the goal of doubling its sales by 2020. Here is a link to their most recent earnings report, which showed very good top line growth for a company as large as Unilever- http://seekingalpha.com/article/751241-unilever-management-discusses-q2-2012-results-earnings-call-transcript?source=yahoo
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