Stocks

Holowesko Stock Picks Returned 26% QoQ – Here Is An Analysis Of The Holdings

I take a closer look at Holowesko Partners’ list of stock holdings where values have increased by 26.1% from the previous quarter.

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Holowesko Partners' Latest Form 13F Filing

Holowesko Partners is a long-short hedge fund founded by Mark Holowesko in 2000. Mr. Holowesko serves as the CEO, Chief Investment Officer, and Director of Holowesko Partners. The onetime Olympic sailor considers himself a value investor that attempts to buy future growth at a discount. Holowesko was previously the Head of Investments at Templeton Global Advisors.

On February 12th, Holowesko Partners filed its quarterly Form 13F regulatory filing. I reviewed the filing to gain a glimpse into the firm's large portfolio.

Holowesko Partners' stock portfolio totals $1.6 billion according to the latest filing. The list value of stock holdings is up 26.1% when compared to the last quarter. As a benchmark, the S&P 500 was up 6.1% over the same period. Not bad!

Quarter-over-Quarter Turnover (QoQ Turnover) measures the level of trading activity in a portfolio. Holowesko Partners' QoQ Turnover for the latest quarter was 30.2%, so the firm appears to trade a significant percent of its portfolio each quarter.


Holowesko Partners' Largest Holdings

The Ideas section of finbox.io tracks top investors and trending investment themes. You can get the latest data on the holdings discussed below at the Holowesko Partners page. The following table summarizes the firm's largest holdings reported in the last filing:

Holowesko Partners Largest Holdings
Ticker Name Holding ($mil) % Of Portfolio
SEE SEALED AIR CORP NEW $186.0 11.7%
WFC WELLS FARGO CO NEW $145.1 9.2%
XOM EXXON MOBIL CORP $132.3 8.4%
FLR FLUOR CORP NEW $117.3 7.4%
JD JD COM INC $109.2 6.9%
AXP AMERICAN EXPRESS CO $102.3 6.5%
SLB SCHLUMBERGER LTD $94.8 6.0%

The seven positions above represent 56.1% of the firm's total portfolio. Sealed Air Corp is the hedge fund's largest position representing 11.7% of the portfolio.


Holowesko Partners' 7 Largest Purchases

I also used finbox.io to find Holowesko Partners's largest buys last quarter. Here's the list of the biggest stock purchases determined by comparing the last two filings:

Holowesko Partners 7 Largest Purchases
Ticker Name Purchased ($mil) % Of Portfolio
SLB SCHLUMBERGER LTD $94.8 6.0%
SEE SEALED AIR CORP NEW $58.0 11.7%
NVDA NVIDIA CORP $52.2 5.3%
AIG AMERICAN INTL GROUP INC $43.8 2.8%
JD JD COM INC $39.9 6.9%
QCOM QUALCOMM INC $39.0 2.6%
AAPL APPLE INC $23.8 4.4%

The largest stock purchase for the quarter was Schlumberger. Holowesko Partners increased its position in the company by $94.8 million and the stock now represents 6.0% of the firm's portfolio.


Holowesko Partners' 7 Biggest Sells

Here's the list of biggest position reductions determined by comparing the last two filings:

Holowesko Partners 7 Biggest Sells
Ticker Name Sold ($mil) % Of Portfolio
BAC BANK AMER CORP $45.5 5.5%
GLW CORNING INC $38.3 0.3%
JNJ JOHNSON & JOHNSON $38.2 3.0%
KR KROGER CO $31.6 2.5%
WSM WILLIAMS SONOMA INC $15.0 3.0%
AZN ASTRAZENECA PLC $12.9 3.3%
M MACYS INC $11.9 2.5%

The largest stock sale for the quarter was Bank of America. Holowesko Partners reduced its position in the company by $45.5 million and the stock now represents 5.5% of the firm's portfolio. Shares of Bank of America are up 17.9% over the last three months so Holowesko is simply taking some chips off the table.


Holowesko Partners' Most Undervalued Holdings

To determine which stocks are trading below their intrinsic value, aka "fair value" I used the finbox.io Fair Value estimates. I also wanted to blend in some indication of which stocks might be ready to make a move up soon because they're popular with Wall Street analysts.

I calculated an average using the finbox.io fair value upside and analyst upside to create a blended upside which I then used to rank the most undervalued holdings.

Here are the top 7 stocks based on my calculations:

Holowesko Partners Most Undervalued Holdings
Ticker Name Upside (finbox.io) Upside (Analyst Target) Blend Upside
CHL CHINA MOBILE LIMITED 48.1% 43.2% 45.6%
SKM SK TELECOM LTD 46.1% 29.5% 37.8%
JD JD COM INC 21.9% 15.6% 18.8%
GILD GILEAD SCIENCES INC 24.9% 10.1% 17.5%
XOM EXXON MOBIL CORP 18.4% 14.8% 16.6%
SLB SCHLUMBERGER LTD 7.9% 23.8% 15.8%
AZN ASTRAZENECA PLC 16.4% 13.9% 15.1%

China Mobile Ltd. (NYSE: CHL) appears to be the most undervalued stock in the fund. The company has a blended upside of 45.6% relative to its current trading price. Value investors may want to take a deeper dive into the valuation of the company.


Holowesko Partners' Low P/E Ratio Stocks

The P/E Ratio indicates the multiple of earnings stock investors are willing to pay for one share of the company. A low P/E can indicate either that a company may currently be undervalued or that the company is doing exceptionally well relative to its past trends. The following table summarizes the firm's holdings with the lowest P/E multiple.

Holowesko Partners Low P/E Ratio Stocks
Ticker Name Holding ($mil) % Of Portfolio
SKM SK TELECOM LTD 7.1x 0.0%
SEE SEALED AIR CORP NEW 7.5x 11.7%
GILD GILEAD SCIENCES INC 8.9x 5.5%
GLW CORNING INC 10.3x 0.3%
M MACYS INC 10.5x 2.5%
CHL CHINA MOBILE LIMITED 12.3x 0.3%
ERJ EMBRAER S A 12.5x 4.9%

The cheapest stock that Holowesko Partners owns is SK Telecom (NYSE: SKM) which currently trades at 7.1x earnings.

Managers with more than $100 million in qualifying assets under management are required to disclose their holdings to the SEC each quarter via 13F filings. Qualifying assets include long positions in U.S. equities and ADRs, call/put options, and convertible debt securities. Shorts, cash positions, foreign investments and other assets are not included. It is important to note that these filings are due 45 days after the quarter end date. Therefore, Holowesko Partners' holdings above represent positions held as of December 31st and not necessarily reflective of the fund's current stock holdings.

However, most can agree that with thousands of stocks traded on U.S. exchanges, doing thorough research on each one is nearly impossible for smaller investors. Leveraging the resources of the largest hedge funds on Wall Street can be a powerful way to narrow down the list.


Author: Matt Hogan

Expertise: Valuation, financial statement analysis

Matt Hogan is a co-founder of finbox.io. His expertise is in investment decision making. Prior to finbox.io, Matt worked for an investment banking group providing fairness opinions in connection to stock acquisitions. He spent much of his time building valuation models to help clients determine an asset’s fair value. He believes that these same valuation models should be used by all investors before buying or selling a stock.

His work is frequently published at InvestorPlace, Benzinga, ValueWalk, AAII, Barron's, Seeking Alpha and investing.com.

Matt can be reached at matt@finbox.io.

As of this writing, I did not hold a position in any of the aforementioned securities and this is not a buy or sell recommendation on any security mentioned.