Tracking Kahn Brothers Portfolio – Q3 2017 Update

This article is a part of a collection that gives an ongoing evaluation of the modifications made to Kahn Brothers’ US inventory portfolio on a quarterly foundation. It relies on Kahn Brothers’ regulatory 13F Form filed on 11/three/2017. Please go to our Tracking Kahn Brothers Portfolio collection to get an thought of their funding philosophy and our final replace for the fund’s strikes throughout Q2 2017.

This quarter, Kahn Brothers’ US lengthy portfolio worth decreased marginally from $656M to $655M. The variety of holdings remained regular at 34. The bigger positions (greater than zero.5% of the portfolio every) remained regular at 20. The largest particular person inventory place is Citigroup which has been within the portfolio since their first 13F submitting in 1999. It accounts for 11.17% of the US lengthy portfolio. Largest 5 positions are Citigroup Inc., New York Times, Merck Inc., BP plc, and BlackBerry. Together, they account for 45.33% of the US lengthy portfolio.

Irving Kahn was a disciple of Benjamin Graham and is the creator of “Benjamin Graham The Father of Financial Analysis”. He was by far the oldest protégé (died 2/26/2015 at age 109) and was one of many closest followers of the unique teachings of Benjamin Graham.

Stake Increases:

Assured Guaranty (AGO): AGO is a 5.2% of the portfolio stake established in Q1 2017 at costs between $36 and $42.50 and doubled final quarter at costs between $37 and $42. There was one other ~16% stake enhance this quarter at costs between $37 and $46. The inventory is now close to the low finish of these ranges at $37.29. For buyers making an attempt to comply with Kahn Brothers, AGO is an effective choice to contemplate for additional badysis.

VOXX International (VOXX): VOXX has been within the portfolio since 2001 when the corporate was named Audiovox. The present place stands at four.77% of the US lengthy portfolio. Recent exercise comply with: Q1 2014 noticed a ~25% stake enhance at costs between $12 and $17. The subsequent 5 quarters noticed an about-turn: a mixed ~25% discount at costs between $7 and $13. There was an virtually one-third enhance final quarter at costs between $four.65 and $eight.90 and that was adopted with one other ~60% stake enhance this quarter at costs between $6.40 and $eight.85. The inventory is now at $6.55. The aggressive build-up signifies a transparent bullish bias.

Note: Kahn Brothers controls ~17% of the enterprise by means of the possession of three.65M shares of VOXX.

Patterson-UTI Energy (PTEN): PTEN is a ~four% of the US lengthy portfolio place first bought in 2009. Most of the present stake was bought in 2010 and 2012 at costs between $13 and $22. The place was lowered by ~55% between Q1 and Q3 2014 at costs between $23 and $38. This fall 2014 noticed an about-turn because the stake was elevated by simply over 40% at costs between $14.25 and $32.50. The exercise had been very minor since. This quarter noticed a ~40% stake enhance at costs between $15 and $22. The inventory at the moment trades at $20.26.

BP plc (BP): BP stake was first bought in 2010. The place remained minutely small for the following two years. The bulk of the present eight.27% (top-five) of the US lengthy portfolio stake was inbuilt 2013 at costs between $40 and $53. Last eleven quarters have seen a mixed ~62% stake enhance at costs between $28.50 and $53. The inventory at the moment trades at $40.56.

Sterling Bancorp (STL): STL is a three.47% of the US lengthy portfolio place. The six quarters by means of Q1 2016 had seen a ~25% discount at costs between $12.50 and $17.75. The inventory at the moment trades at $24.65. The authentic stake is a really long-term place that was established in 2004 (Provident Bancorp on the time). There was a ~9% promoting in Q1 2017 at costs between $22.50 and $25.70. The final two quarters noticed solely marginal exercise.

IDT Corporation (IDT): IDT is a small ~1% portfolio place that noticed a roughly one-third stake enhance final quarter at costs between $12.50 and $17.50. The inventory is now at $12.84. It is a really long-term place that has returned many-fold over time. This quarter noticed a marginal enhance.

IDW (beforehand CTM) Media (OTCQX:IDWM): The authentic IDW place is from the spinoff of CTM Media from IDT Corporation in 2009. The zero.58% stake noticed a really minor enhance this quarter.

Stake Decreases:

MBIA Inc. (MBI): MBI has been within the portfolio since 2007. The majority of the present 5.76% place was bought through the monetary disaster in 2008 and 2009 at low costs. Q1 2014 noticed a ~20% stake enhance at costs between $11 and $15, however the next quarters noticed a mixed ~24% lower at costs between $eight and $13. The sample reversed in Q2 2015: a ~75% enhance at costs between $5 and $9.81 and that was adopted with one other ~30% enhance within the following quarter at costs between $5.50 and $7.70. The inventory at the moment trades at $6.98. There was a one-third promoting this quarter at costs between $eight and $10.50.

Citigroup Inc. (C): C is Kahn’s largest place. It is a really long-term holding and was a small place in Kahn Brothers’ first 13F submitting in 1999. The stake was adjusted over the next years, though by 2006 the place nonetheless accounted for lower than zero.1% of the US lengthy portfolio. The stake was elevated after the monetary disaster at a cost-basis within the 30s. Recent exercise comply with: the 5 quarters from Q3 2014 to Q3 2015 noticed an general stake discount of ~20% at costs between $47 and $59. The final eight quarters have seen solely minor exercise. The inventory at the moment trades at $74.05 and it stands at 11.17% of the US lengthy portfolio

The New York Times Company (NYT): NYT is a top-three 9.32% of the US lengthy portfolio place. The place was first bought in 2006 and the majority of the present stake was inbuilt 2011 and 2012 at costs between $5.75 and $10.75. The 9 quarters by means of Q2 2016 had seen a mixed ~20% discount at costs between $11.50 and $16.50. The inventory at the moment trades at $17.45. Last 5 quarters have additionally seen minor trimming.

Merck & Co. Inc. (MRK): MRK is the third-largest place at ~9% of the 13F portfolio. It was a really small stake first bought in 2000. The place has fluctuated over time, however the bulk of the present stake was bought in 2009 at costs between $24 and $38. The place has since been offered down by roughly 40% over the past eight years by means of minor trimming virtually each quarter. The inventory at the moment trades at ~$56.

BlackBerry Ltd. (BB): BB was a really small ~zero.5% of the US lengthy portfolio place established in Q3 2013 at costs between $eight and $10.84. Q2 2014 noticed a 270% stake enhance at costs between $7.15 and $10.12. The 5 quarters by means of Q1 2016 noticed the place greater than double at costs between $6 and $11. There was one other ~40% enhance in Q2 2016 at costs between $6.29 and $eight.09. It is at the moment a top-five place at 7.58% of the US lengthy portfolio and the inventory is at $10.95. Last two quarters have seen marginal trimming.

GlaxoSmithKline plc (GSK): GSK is a big 6.33% of the portfolio place. It was a really small zero.41% of the portfolio stake as of Q3 2015. That authentic place was elevated by roughly eighteen-times over the following six quarters at costs between $37.50 and $45. The inventory is at the moment under that vary at $36.15. There was a ~three% trimming this quarter.

Seaboard Corporation (SEB): SEB is one other very long-term place that was lowered considerably over the past sixteen years. The place measurement was ~29Ok shares in 1999 and accounted for round ~2% of the US lengthy portfolio. The large share worth appreciation within the interim has resulted within the present stake accounting for five.43% of the US lengthy portfolio regardless that the position-size was lowered by greater than two-thirds to ~7.89Ok shares: the inventory was a twenty-bagger throughout this era. The final main shopping for was in Q1 2014 when there was a 28% stake enhance at costs between $2,450 and $2,795. The 5 quarters by means of Q3 2015 had seen a mixed ~24% discount at costs between $2,380 and $four,640. Last 12 months additionally noticed an ~11% trimming. The inventory at the moment trades at ~$four,430. There was a ~10% additional trimming over the past three quarters.

Hologic Inc. (HOLX): HOLX is a really long-term place. In 1999, the place measurement was at 1M shares and by 2003 the stake had elevated to ~1.8M shares and accounted for round 6% of the US lengthy portfolio. Since then, the place has been considerably lowered (after accounting for 3 2-for-1 inventory splits in 2005, 2008, and 2009). Recent exercise comply with: Q1 2017 noticed a ~22% promoting at costs between $39 and $43 and that was adopted with one other comparable discount over the past two quarters at costs between $36.50 and $46.50. The present place remains to be pretty giant at four.10% of the US lengthy portfolio. The inventory is now at $39.56 and has appreciated round 35-times through the holding interval.

New York Community Bancorp (NYCB): NYCB is a ~four% of the US lengthy portfolio stake. It is a really long-term place that was first bought in 2000. The stake was constructed as much as a big ~10% place (over 1.4M shares) by 2003, and in 2004, the place was doubled. Since then, the stake had been saved largely regular, though changes occurred yearly. 2015 noticed a ~18% general discount at costs between $15.50 and $19 whereas final 12 months noticed one other ~20% discount at costs between $13.79 and $17.18. The inventory at the moment trades at $12.59. There was ~13% additional promoting over the past three quarters at costs between $11.70 and $16.50.

Pfizer Inc. (PFE): PFE is a ~three% of the US lengthy portfolio place. This was a really small stake first bought in 2000. Most of the present place was bought in 2007 at costs between $23 and $28. In Q1 2014, the stake was elevated by ~11% at costs between $29.50 and $32.75. The seven quarters by means of Q1 2016 had seen a one-third discount at costs between $28 and $36. The final six quarters had additionally seen a ~60% promoting at costs between $30 and $37. The inventory at the moment trades at $35.55. There was a marginal discount this quarter.

Straight Path Communications (STRP): The spinoff from IDT was a really small 1.32% portfolio stake as of Q1 2017. Last quarter noticed a ~400% return because of a bidding warfare between Verizon Communications (VZ) and AT&T (T) – Verizon finally agreed on an acquisition worth of $184 per share (all-stock) in comparison with ~$36 quoted on the finish of Q1. Despite Kahn Brothers promoting ~75% of their place over the past two quarters, the stake remains to be at 1.55% of the portfolio because of the big worth acquire.

Note: Straight Path’s spectrum holdings thought-about very invaluable to carriers (5G plans) have been the primary motive for the bidding warfare.

Trinity Place Holdings (TPHS): The very small ~1% place noticed an ~eight% trimming this quarter.

Kept Steady:

Nam Tai Property Inc. (NTP): The 2.42% of the US lengthy portfolio NTP stake noticed a ~10% discount in Q2 2016 at costs between $5.28 and $6.14. That was adopted with one other ~40% promoting in This fall 2016 at costs between $7.15 and $9.50. The authentic place was a ~2% stake established in 2001. The final main shopping for was in Q3 2015: ~24% enhance at costs between $four.25 and $6.38. The inventory at the moment trades at $12.40.

Note: Kahn Brothers controls ~5.four% of the enterprise by means of their possession of 1.98M shares of NTP.

Note: Other very small positions (lower than zero.5% of the portfolio every) within the portfolio embody AT&T (T), Astoria Financial (AF), Bank of America (BAC), Bristol-Myers Squibb (BMY), Chevron (CVX), Comcast (CMCSA), Exxon Mobil (XOM), Genie Energy Ltd. (GNE), IBM Corporation (IBM), Monsanto (MON), Navient (NAVI), Novartis (NVS), Old Republic (ORI), and Zedge Inc. (ZDGE). GNE and ZDGE are spinoffs of IDT.

The spreadsheet under highlights modifications to Kahn’s US inventory holdings in Q3 2017:

Kahn Brothers

Disclosure: I’m/we’re lengthy BAC, BB, BP.

I wrote this text myself, and it expresses my very own opinions. I’m not receiving compensation for it (aside from from Seeking Alpha). I’ve no enterprise relationship with any firm whose inventory is talked about on this article.

Editor’s Note: This article discusses a number of securities that don’t commerce on a serious U.S. trade. Please concentrate on the dangers related to these shares.


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