Shah Capital Management’s Top Stock Picks for Q4

Himanshu Shah thought it was wise to buy Avon Products, Inc. (NYSE:AVP) on a low, as the stock has been trending lower for a long time now. Shah Capital now holds 2.81 million shares, a 1,000% increase over the quarter, worth some $9.14 million. One of the world’s top manufacturer and seller of beauty products, Avon has a market cap of $1.68 billion and pays an annual dividend of $0.24 per share, which represents a juicy 6.2% yield. The stock, however, has been heading south since mid-2013 and has shed nearly 60% of its value so far this year. Donald Yacktman is a big fan of Avon Products, Inc. (NYSE:AVP), having increased his investment in the company by 8% to amass 38.3 million shares during the second quarter – the largest position among the funds we follow. During the second quarter, hedge fund sentiment towards the stock has worsened, with the number of funds invested falling to 26, from 32 at the end of March. The value of their aggregate positions decreased by 30% to 420 million.

Shah seems to have changed his mind about Petroleo Brasileiro SA – Petrobras (ADR) (NYSE:PBR) during the second quarter. Whereas in the second quarter he had reduced his position by 17%, now he decided to boost it by 157% to 1.95 million shares valued at $8.51 million. Falling oil prices have significantly affected Petroleo Brasileiro’s revenues, which fell to $26 billion in the second quarter, down by 29% year-over-year. The company also posted a profit of $0.03 per share, down from $0.17 reported for the 2014 second quarter. The third quarter revenues are expected to decrease to $22.9 billion, while earnings are estimated at $0.06 per share. Elite funds hold only a small fraction of Petroleo Brasileiro SA – Petrobras (ADR) (NYSE:PBR)’s common stock, namely 1.3% of its shares, which were valued at $760 million at the end of June. The number of funds holding a position fell to 31 at the end of June, compared to 35 at the end of the first quarter. Billionaire Ken Fisher was among the fund managers that actually decided to step up their interest and has increased his stake by 12% to 9.64 million shares reported as of the end of September.

Shah Capital’s top 5 stock picks for the third quarter is ended by Coeur Mining Inc (NYSE:CDE), a company that operates several gold and silver mines across North and South America as well as Australia. According to the fund’s latest 13F filing, Shah increased the holding by 51% to amass 2.20 million shares, a position worth in excess of $6.21 million. The slump in the gold and silver markets have hurt Coeur Mining Inc (NYSE:CDE)’s bottom line, as revenues fell significantly and profits turned negative. For the second quarter, Coeur Mining posted a loss of $0.12 per share and analysts expect things to have gotten worse in the third quarter, estimating a loss of $0.26 per share, with the company set to publish the report on November 2. At the end of June, Gilchrist Berg and his fund, Water Street Capital, held the largest stake in Coeur Mining among the hedge funds we track: 1.46 million shares, up by 2% over the second quarter. He is one of the 14 fund managers who had this stock in their portfolio and together they held just 5.1% of the company. The value of their combined holdings fell by 26% to $39.7 million.

Disclosure: none