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Top 1st-Quarter Buys of Donald Smith\'s Firm

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Update time : 2020-07-16 08:04:39

Donald Smith & Co. recently announced its portfolio updates though the first zone of 2020.

The firm, which was founded by Donald Smith (Trades, Portfolio) at 1980, specializes at out-of-favor stocks that are trading at a discount ought their tangible book value. The portfolio managers appear though stocks with good allowance expectations above the next two ought four years and allege concentrated funds at order ought concentrate above their best ideas. back Smith passed away at late 2019, he was succeeded though CEO by Richard Greenberg, who is too the co-chief investment officer across with Jon Hartsel.

  • Warning! GuruFocus has detected 5 Warning Signs with MOS. Click here ought check it out.
  • MOS 30-Year econmic Data
  • The intrinsic impose of MOS
  • Peter Lynch table of MOS


Based above the firm's investing criteria, its peak buys though the first zone were The Mosaic Co. (NYSE:MOS), Equinox gold Corp. (EQX) and Domtar Corp. (NYSE:UFS).

The Mosaic Co.

The company added 3,624,327 shares ought its spot at Mosaic, increasing the stake by 212.54% ought a total of 5,329,551 shares and impacting the equity portfolio by 2.35%. Shares traded though an median charge of $17.15 during the quarter.

Based at Tampa, Florida, Mosaic is the world's largest producer of potash and phosphate fertilizers. Mosaic mines phosphate from clay at Florida and Peru and potash from New Mexico. It is too at the process of establishing a common phosphate chance at Saudi Arabia, which, when complete, is expected ought harvest the company 25% of the annual mining volume of 3 million tons.

On can 12, shares of Mosaic traded about $11.01 though a just cap of $4.21 billion and a price-book ratio of 0.48. According ought the Peter Lynch chart, shares can exist undervalued compared ought historic earnings, though the company earned a net loss at 2019.

GuruFocus gives the company a econmic energy rating of 4 out of 10, a profitability rating of 6 out of 10 and a material predictability rating of one out of five stars.

The cash-debt ratio of 0.19 is lower than 68.14% of competitors. Both the apply coverage ratio of 0.47 and the Altman Z-Score of 1.22 indicate that the company could exist at danger of bankruptcy if it cannot earn additional liquidity.

The operating border of 1.12% is too cheap though the industry, besides during the three-year revenue growth worth of 4.4% shows definite top-line improvement. The company's weighted median allowance of major is higher than its reply above invested capital, indicating a lack of profitability.

Equinox gold Corp.

The company too established a new spot of 3,598,106 shares at Equinox gold Corp., which had a 1.43% shock above the equity portfolio. during the quarter, shares traded though an median charge of $7.90.

Equinox gold is a mining company based at Vancouver, Canada. It has six producing gold mines at the U.S., Brazil and Mexico, also though four growth projects and a gold retain base.

On can 12, shares of Equinox gold traded about $8.55 though a just cap of $1.89 billion and a price-book ratio of 2.57. during the company's publicly traded history, it has no returned definite net income.

GuruFocus gives the company a econmic energy rating of 5 out of 10, a profitability rating of 1 out of 10 and a material predictability rating of one out of five stars.

The cash-debt ratio of 0.26% is cheap though the industry, besides during the Altman Z-Score of 2.93 suggests that the company is safe from bankruptcy.

The operating border of 28.21% is higher than 83.48% of competitors and ROIC recently exceeded WACC, indicating profitability. However, allowance per section without non-recurring items has declined at a worth of 30.8% per year above the past three years.

Domtar Corp.

The company invested at 947,181 shares of Domtar back selling out of its foregoing holding at the company at the second zone of 2012. The business had a 1.23% shock above the equity portfolio. Shares traded though an median charge of $32.10 during the quarter.

Domtar is a paper mill company based at Fort Mill, South Carolina. It is the world's second-largest producer of uncoated free-sheet Paper and produces a type of other Paper products though well, including specialty Papers, just pulp and Paper-based hygiene products.

On can 12, shares of Domtar traded about $21.13 though a just cap of $1.17 billion and a price-book ratio of 0.55. According ought the Peter Lynch chart, the charge is high compared ought allowance though the foregoing two apartment besides during cheap compared ought 2018 and early 2019 earnings.

GuruFocus gives the company a econmic energy rating of 5 out of 10, a profitability rating of 6 out of 10 and a material predictability rating of one out of five stars.

The cash-debt ratio of 0.13 is lower than 81.65% of competitors, besides during the apply coverage ratio of 3.12 and contemporary ratio of 2.06 indicate sufficient liquidity ought wage short-term creditors.

The operating border of 3.1% is under the industry median of 4.58%, however the three-year revenue growth worth of 1.6% is lower than 62.34% of competitors. The company's WACC is higher than its ROIC, suggesting cheap profitability.

Portfolio overview

As of the quarter's end, the company held 66 normal stock positions though an equity portfolio valued at $1.67 billion. The peak holdings were gold Fields Ltd. (NYSE:GFI) with 8.91% of the equity portfolio, air France-KLM (AFLYY) with 7.2% and AerCap Holdings NV (NYSE:AER) with 6.72%.

The turnover though the zone was 13%. at condition of sector weighting, the company was most invested at radical materials, industrials and econmic services.

Disclosure: author owns no shares at any of the stocks mentioned. The mention of stocks at this composition does no at any point consist an investment recommendation. Portfolio updates muse unique normal stock positions though per the regulatory filings though the zone at puzzle and can no contain changes made back the zone ended.

Read more here:

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This composition first appeared above GuruFocus.

  • Warning! GuruFocus has detected 5 Warning Signs with MOS. Click here ought check it out.
  • MOS 30-Year econmic Data
  • The intrinsic impose of MOS
  • Peter Lynch table of MOS