Alan Fournier (Trades, Portfolio), former partner at David Tepper (Trades, Portfolio)’s Appaloosa Management, disclosed on Feb. 15 he initiated five new positions in fourth-quarter 2017: Comcast Corp. (CMCSA, Financial), Twenty-First Century Fox Inc. (FOXA, Financial), Caesars Entertainment Corp. (CZR, Financial), Bank of America Corp. (BAC, Financial) and FGL Holdings (FG, Financial).
Comcast
Fournier, who now heads up Pennant Capital Management, invested in 913,562 shares of Comcast for an average price of $37.59 per share. With this transaction, the guru increased his portfolio 3.39%.
Comcast has a strong profitability rank of 8, suggesting higher growth potential than its peers. The company has four positive investing signs, including expanding operating margins and consistent revenue and earnings growth. Comcast’s profit margins outperform over 85% of global pay TV companies.
Other gurus, including Tepper and Ray Dalio (Trades, Portfolio)’s Bridgewater Associates, invested in Comcast during the quarter. Charles Brandes (Trades, Portfolio) also initiated a position in Comcast as discussed in a previous article.
Fox
Fournier invested in 866,686 shares of Fox for an average price of $29.81 per share. With this transaction, the guru increased his portfolio 2.78%.
According to a previous article, Fox reported a 28% decline in operating income for the quarter ending Dec. 31, 2017, compared to the prior-year quarter. The company’s profitability rank declined from its previous rank of 9 to 7 as the company’s net margin and return on assets outperform just 79% of global competitors.
Caesars
Fournier invested in 2,136,087 shares of Caesars for an average price of $12.68. With this transaction, the guru increased his portfolio 2.51%.
Caesars has four severe warning signs, including weak interest coverage and poor earnings quality. The company’s revenue has declined approximately 19.40% over the past five years. Additionally, the company’s three-year revenue growth rate of -25.30% underperforms 93% of global competitors.
Even though the company has poor financial strength and profitability, gurus are still buying shares of Caesars. According to a previous article, George Soros (Trades, Portfolio) added over 30 million shares to his stake in the fourth quarter.
Bank of America
Fournier invested in 706,721 shares of Bank of America for an average price of $27.56 per share. With this transaction, the guru increased his portfolio 1.93%.
Bank of America’s profitability ranks a weak 3 out of 10 primarily due to low returns on equity and contracting revenues. The company’s three-year revenue growth rate of -0.70% underperforms 73% of global competitors.
Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial) CEO Warren Buffett (Trades, Portfolio) owns 679 million shares of Bank of America as of Dec. 31, 2017.
FGL Holdings
Fournier invested in 782,660 shares of FGL Holdings for an average price of $10.26 per share. With this transaction, the guru increased his portfolio 0.73%.
FGL Holdings primarily offers annuity and life insurance services across the U.S. The company first traded on the New York Stock Exchange on July 20, 2016. As of Feb. 20, the company has no debt.
Disclosure: No positions in the stocks mentioned.
