T Rowe Price Equity Income Fund (Trades, Portfolio) manager John Linehan seeks long-term capital appreciation through investments in undervalued stocks with potential for high dividend yields. During the third quarter, Linehan added 12 new positions to the portfolio. The top six positions based on portfolio impact are DowDuPont Inc. (DWDP, Financial), American International Group Inc. (AIG, Financial), Kimberly-Clark Corp. (KMB, Financial), Brighthouse Financial Inc. (BHF, Financial), Delta Air Lines Inc. (DAL, Financial) and GlaxoSmithKline PLC (GSK, Financial).
DowDuPont
Linehan invested in 5.8 million shares of DowDuPont, a combination of chemical company Dow Chemical and agricultural company DuPont. The diversified chemical and materials company’s share price averaged $65.88 during the quarter. The fund manger boosted the portfolio 1.93% with this transaction.
DowDuPont’s financial strength and profitability both rank 5 out of 10, suggesting modest growth potential. The company has strong Altman Z-scores and Beneish M-scores even though its Piotroski F-score is a poor 4 out of 9.
DowDuPont’s dividend yield outperforms 83% of global competitors even though it languishes near a 10-year low of 1.46%.
AIG
Linehan invested in 3.615 million shares of AIG for an average price of $62.31. The fund manager increased the portfolio 1.07% with this transaction.
American International Group has a financial strength rank of 3, suggesting potential financial distress. The company currently has a 0.08% probability of financial distress according to the All-in-one Screener. Additionally, AIG’s profit margins underperform over 80% of global competitors, implying low growth potential compared to other insurance companies.
Kimberly-Clark
The T. Rowe Price Group Inc. (TROW, Financial) equity income fund manager added 1.36 million shares of Kimberly-Clark at an average price of $122.23. With this transaction, Linehan increased the portfolio 0.77%.
Kimberly-Clark manufactures common personal care products like Huggies diapers and Kleenex. The company has a profitability rank of 8, driven by strong profit margins and an excellent Piotroski F-score of 8. Additionally, Kimberly-Clark’s dividend yield of 3.25% outperforms 79% of global competitors.
Brighthouse Financial
Linehan added 1,624,225 shares of Brighthouse Financial for an average price of $59.98 per share. With this transaction, the fund manger increased the portfolio 0.47%.
Brighthouse Financial, a life insurance company, consists of MetLife Inc.’s (MET, Financial) former U.S. retail business. The company’s financial strength ranks 4 out of 10 despite having $1.47 in cash per $1 in debt.
Delta Air Lines
Linehan invested in 1.525 million shares of Delta for an average price of $49.87. With this transaction, the fund manger increased his portfolio 0.35%.
Delta’s profit margins outperform over 80% of global airlines, suggesting good growth potential compared to competitors. The Atlanta-based airline’s revenue and operating margin increased approximately 5.10% and 28.30% per year over the past five years.
Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B) CEO Warren Buffett (Trades, Portfolio) currently owns 53,110,395 shares of Delta.
GlaxoSmithKline
Linehan added 1.675 million American depository receipt (ADR) shares of GlaxoSmithKline, a British pharmaceutical manufacturer. GSK shares averaged $40.62 during the quarter and the guru increased his portfolio 0.33% with the transaction.
GlaxoSmithKline’s profitability ranks 6 out of 10, driven by a 221.39% return on equity and operating margins that outperform 65% of global competitors. The company also has a strong dividend yield of 4.98%, which ranks higher than 95% of global drug manufacturers.
See also
John Linehan also invested in TransCanada Corp. (TRP, Financial), Akzo Nobel NV (XAMS:AKZA), C.H. Robinson Worldwide Inc. (CHRW), Hewlett Packard Enterprise Co. (HPE, Financial), The Hershey Co. (HSY) and Westar Energy Inc. (WR).
You can export a guru’s trades and portfolio with our user-defined GURUG function. For example, the following GURUG function exports Linehan’s new buys from 2017:
=GURUG(“T Rowe Price Equity Income Fund”,”BUY”,”2017”)
Disclosure: The author has no positions in the stocks mentioned.
