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Gurus Buy Russian, Sell XM And Drillers
John Dobosz 10.10.06, 11:30 AM ET
As the Dow made it official and closed above its old high from January 2000 last week, U.S. stocks gained further strength. The best investors at Marketocracy, however, were more focused on companies based outside of the United States--particularly those in Russia.
With more than $356,000 of fresh guru funds moving into the stock, shares of Moscow-based Wimm-Bill-Dann Foods was the biggest buy for the M100. The Russian dairy and juice producer is up 134% in the past year and last month announced that revenue for the quarter ended June 30 were up 20% while profits were up 450%. Over the past four quarters, WBD has earned $68.75 million and generated operating cash flow of $145.5 million on sales of $1.53 billion. Shares trade at $44, or 28.5 times expected 2006 earnings per share.
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With almost as much gusto, Marketocracy's gurus committed $333,000 of fresh theoretical capital to shares of Russian wireless provider Mobile Telesystems. On Thursday, Russian conglomerate Sistema, which holds a major stake in MBT and only gets 28% of its business outside of telecommunications, said that net profit grew 51% in the first half of 2006. At $38, MBT shares are flat over the past year, but are up 47% from a low of $26 in June. The company has earned $1.07 billion on sales of $5.5 billion in the past year. Both MBT and WBD are now in the top 100 M100 portfolio holdings.
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Gurus also took a shine to China's most popular dot-com search engine, Baidu.com. The site attracted 9.7% of global Internet traffic in the past three months and generated an average of 11.4 page views per user. Gurus scooped up $278,000 worth of BIDU as it drifted below $85 last week. The stock has been in the $85 to $90 range since early September, but it had recovered from below $70 in the first few days of August. The $2.8 billion (market cap) company has only produced $68 million in the past year, but it's profitable, earning $15.5 million. Plus it has no debt.
The M100 also took some chances on possible turnarounds. They bought shares of troubled video and music rental outfit Movie Gallery. Movie Gallery was nearly cut in half on Aug. 10 when it reported a 47-cents-a-share loss instead of the 8-cents-a-share profit Wall Street had been expecting. The company is trying to reduce store count as it struggles with the integration of the 2005 purchase of Hollywood Video. Shares trade at about $2.
Another movie distributor that fell out of bed on Aug. 10 is big screen theater experience company Imax. The company, while also announcing that earnings had tripled, stated that the results of its search to find a buyer had been unsuccessful--at least at the price they were hoping to fetch. The company is still shopping for a buyer but has reduced its expectations. Gurus took a lark.
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As they bought up plays on Russia and a couple of turnarounds, the M100 were busy selling all of their shares of XM Satellite Radio. The company lost another director last week, plus it disappointed Wall Street with its latest subscriber numbers. XM said it picked up 285,000 subscribers in the third quarter, short of the Street's expectation for 316,000. On the tandem bits of bad news, shares fell back below $12.
Gurus also sold off all shares of Swiss eye-care products maker Alcon. The stock is down 14% in the past year and dropped from $117 per share to $109 last week. Trading below both its 200-day and 50-day moving averages, gurus moved on to other opportunities.
In what has become a regular occurrence, the M100 also purged some of their energy holdings last week, this time focusing on independent drillers. Gurus cleaned the decks and sold off all of their shares in Newfield Exploration, Petrohawk Energy and St. Mary Land & Exploration.
Guru Buys
Wimm-Bill-Dann Foods
Mobile Telesystems
Baidu.com
Movie Gallery
Imax
Guru Sells
Newfield Exploration
Petrohawk Energy
St. Mary Land & Exploration
Alcon
XM Satellite Radio
Marketocracy.com tracks more than 60,000 stock portfolios that are run by amateur investors. Of those, the top 100 performing portfolios, the M100, are mirrored in a real life mutual fund, the Masters 100 Fund (MOFQX). Each week, Guru Picks analyzes the buys and sells of this best performing group of investors, known as the M100.
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