In mid July, Cantillon Capital Management, an asset management firm run by William Von Mueffling and his team, filed their 13F for the second quarter of 2012. These filings disclose many of a fund’s long equity positions in U.S. stocks as of the end of the quarter (so this one covers Cantillon’s holdings from the end of June) and we believe that they can be useful sources of information for investors.
Number one
There was little change in Cantillon’s holdings of Google Inc (NASDAQ:GOOG), during Q2, as the fund closed June with about 410,000 shares in its portfolio. Google Inc (NASDAQ:GOOG) is valued at 17 times forward earnings estimates, as Wall Street analysts expect the company to continue growing its earnings as the Motorola Mobility acquisition continues to be integrated and the advertising operations continue to be a star business. Google Inc (NASDAQ:GOOG) did grow its net income by 16% in its last quarterly report compared to the first quarter of 2012, and we’d be interested in looking at it as a potential growth stock.
The best of the rest
Von Mueffling and his team reported owning 6.7 million shares of Analog Devices, Inc. (NASDAQ:ADI) at the end of the quarter. Recent reports have shown little change in the company’s financials relative to a year ago, yet markets like the $15 billion market cap semiconductor company enough that they have bid up its valuation to trailing and forward P/Es of 23 and 19 respectively. While that is a bit pricy, we’d note that Analog Devices, Inc. (NASDAQ:ADI) does have a sizable cash hoard with over $4 billion in cash on its balance sheet, and a current dividend yield of almost 3%.
The Coca-Cola Company (NYSE:KO) remained one of Cantillon’s top picks between April and June at 7.2 million shares. Investors hungry for defensive stocks- Coca-Cola’s beta is 0.3, and while the 2.7% dividend yield is not particularly high it’s at least somewhat interesting- like the soda company, and as a result it trades at 21 times its trailing earnings. However, net income has been down and so we don’t think that The Coca-Cola Company (NYSE:KO) is a good value at this time; in addition, we’d imagine that investors looking for a low-beta stock could find one with a higher yield.
The fund reduced its holdings of Priceline.com Inc (NASDAQ:PCLN) but the online travel company remained one of its largest positions by market value. Priceline.com Inc (NASDAQ:PCLN) continues to grow strongly. with revenue up 26% in the first quarter of 2013 versus a year earlier and net margins actually improving to the point where earnings were up 34%. The market price has already incorporated a good deal of future earnings growth into the valuation, with a trailing P/E of 32, and surely growth has to slow sometime, but we’d still want to take a closer look at the company.
According to the 13F, von Mueffling increased his stake in Baidu.com, Inc. (ADR) (NASDAQ:BIDU) to a total of about 2.4 million shares. Revenue growth has been quite high at Baidu.com, Inc. (ADR) (NASDAQ:BIDU), and while margins have been shrinking the company still experienced 9% profits growth in its most recent quarterly report compared to the same period in the previous year. With the stock falling 12% in the last year, the trailing P/E is now 20. We’d have to check on the reasons for the weaker margins but at that valuation Baidu could also be a potential growth play.
Final thoughts
Clearly, William Von Mueffling has a bit of a favored interest in tech-focused companies. Google Inc (NASDAQ:GOOG), his largest equity holding, is on a roll in 2013 and is making its way ever-closer to that vaunted $1,000 mark, while Chinese search giant Baidu offers solid growth at a reasonable price. Priceline is the most exciting play in the online travel space, and Analog Devices, Inc. (NASDAQ:ADI) has been a respectable semiconductor stock year-to-date. Coca-Cola is the only exception, but if you’re going to go non-tech, why not go with the world’s biggest soft drink company?
Disclosure: none
