Daruma Capital Management founder Mariko Gordon (Trades, Portfolio) established five new holdings and exited four others in the third quarter.
Managing a concentrated portfolio of 60 positions, Gordon invests in small-cap stocks that offer good value and have an identifiable catalyst. The majority of her current portfolio consists of securities in the technology sector at 22.6%. In 2016, Daruma’s Small-Cap Composite fund returned 14.15%, compared to the S&P 500’s return of 11.96%.
Gordon invested in Monotype Imaging Holdings Inc. (TYPE, Financial), Green Plains Inc. (GPRE, Financial), Healthcare Services Group Inc. (HCSG, Financial), PDF Solutions Inc. (PDFS, Financial) and Heska Corp. (HSKA, Financial).
Monotype Imaging
The investor purchased 1.7 million shares of Monotype for an average price of $18.70 per share, giving it 2.12% portfolio space.
The Massachusetts-based digital typesetting and typeface software developer has a market cap of $1.04 billion; its shares were trading around $24.83 on Tuesday with a price-book (P/B) ratio of 3.28 and a price-sales (P/S) ratio of 4.41.
The Peter Lynch chart below shows the stock is trading above its fair value.
GuruFocus ranked Monotype’s financial strength 6 of 10 and its profitability and growth 8 of 10. The company’s trailing dividend yield is 1.83% and its forward dividend yield is 1.84%.
With her purchase, Gordon became the company’s largest guru shareholder with 4.23% of outstanding shares. Chuck Royce (Trades, Portfolio) and Jim Simons (Trades, Portfolio) also own the stock.
Green Plains
Gordon bought 156,282 shares of Green Plains for an average price of $19.09 per share, expanding the portfolio 0.2%.
The Omaha-based ethanol producer has a market cap of $683.29 million; its shares were trading around $16.6 on Tuesday with a price-earnings (P/E) ratio of 22.74, a P/B ratio of 0.76 and a P/S ratio of 0.19.
According to the Peter Lynch chart below, the stock is trading above its fair value.
GuruFocus ranked Green Plains’ financial strength 5 of 10 and its profitability and growth 4 of 10. The company’s trailing dividend yield and forward dividend yield are both 2.94%. The dividend payout ratio is 56%.
With 7.61% of outstanding shares, Steven Cohen (Trades, Portfolio) is the company’s largest guru shareholder. Royce is also a shareholder.
Healthcare Services Group
Gordon invested in 59,637 shares of Healthcare Services for an average price of $51.31 per share, impacting the portfolio 0.2%.
The Pennsylvania-based health care business services company has a market cap of $3.67 billion; its shares were trading around $50.3 on Tuesday with a P/E ratio of 42.40, a P/B ratio of 9.38 and a P/S ratio of 2.09.
Based on the Peter Lynch chart below, the stock appears to be trading above its fair value.
GuruFocus ranked Healthcare Services’ financial strength 8 of 10 and its profitability and growth 7 of 10. The company’s trailing dividend yield is 1.51% and its forward dividend yield is 1.52%. The payout ratio is 63%.
Of the gurus invested in Healthcare Services, Royce has the largest position with 0.3% of outstanding shares. Columbia Wanger (Trades, Portfolio), Ron Baron (Trades, Portfolio), Simons and Tom Gayner (Trades, Portfolio) are also shareholders.
PDF Solutions
The guru purchased 90,408 shares of PDF Solutions for an average price of $16.14 per share. The trade had an impact of 0.09% on the portfolio.
The California-based software company has a market cap of $504.77 million; its shares were trading around $15.8 on Tuesday with a P/E ratio of 112.85, a P/B ratio of 2.57 and a P/S ratio of 5.10.
The Peter Lynch chart below shows the stock is trading above its fair value.
GuruFocus ranked PDF Solutions’ financial strength 9 of 10 and its profitability and growth 6 of 10. The company does not pay a dividend.
With 1.2% of outstanding shares, Royce is the company’s largest guru shareholder. Simons and Baron also own the stock.
Heska
Gordon invested in 14,291 shares of Heska for an average price of $98.59 per share, giving it 0.08% portfolio space.
The Colorado-based manufacturer of veterinary products has a market cap of $623.47 million; its shares were trading around $86.07 on Tuesday with a P/E ratio of 45.05, a P/B ratio of 6.19 and a P/S ratio of 4.83.
According to the Peter Lynch chart below, the stock is trading above its fair value.
GuruFocus ranked Heska’s financial strength 8 of 10 and its profitability and growth 6 of 10. The company does not currently pay a dividend.
Mario Gabelli (Trades, Portfolio) has the largest position in Heska among the gurus with 0.48% of outstanding shares. Royce is also a shareholder.
During the quarter, Gordon exited her positions in Diebold Nixdorf Inc. (DBD, Financial), Acxiom Corp. (ACXM, Financial), Oxford Industries Inc. (OXM, Financial) and Forward Air Corp. (FWRD, Financial).
Diebold Nixdorf
Gordon sold her 1.7 million-share stake in Diebold for an average price of $21.39 per share. The transaction had an impact of -2.86% on the portfolio. According to GuruFocus data, she has lost 26% on the investment since the fourth quarter of 2013.
The Ohio-based manufacturer of automatic teller machines (ATM) has a market cap of $1.44 billion; its shares were trading around $19.05 on Tuesday with a forward P/E ratio of 11.09, a P/B ratio of 2.54 and a P/S ratio of 0.30.
Simons and Joel Greenblatt (Trades, Portfolio) also exited the stock during the quarter, but Gabelli added to his holding and Richard Pzena (Trades, Portfolio) established a position.
Acxiom
The guru sold her remaining 1.7 million shares of Acxiom for $24.58 per share, impacting the portfolio -2.72%. GuruFocus estimates Gordon gained 9% on the investment since the third quarter of 2013.
The Arkansas-based information technology services company has a market cap of $2.1 billion; its shares were trading around $26.5 on Tuesday with a forward P/E ratio of 31.55, a P/B ratio of 2.81 and a P/S ratio of 2.38.
While Barrow, Hanley, Mewhinney & Strauss trimmed its position, Baron and Simons added to their holdings.
Oxford Industries
Gordon divested 575,742 shares of Oxford Industries for an average price of $61.03 per share, impacting the portfolio by -2.15%. GuruFocus estimates indicate she gained 9% on the investment since the second quarter of 2013.
The Atlanta-based apparel company has a market cap of $1.11 billion; its shares were trading around $65.96 on Tuesday with a P/E ratio of 22.83, a P/B ratio of 2.71 and a P/S ratio of 1.05.
During the quarter, Simons established a position while Greenblatt added to his holding.
Forward Air
Gordon sold 258,442 shares of Forward Air for an average price of $52.75 per share. The transaction had an impact of -0.82% on the portfolio. According to GuruFocus, she has not profited or lost on the investment since it was established in the second quarter of 2015.
The Tennessee-based transportation and logistics company has a market cap of $1.64 billion; its shares were trading around $55.01 on Tuesday with a P/E ratio of 25.94, a P/B ratio of 3.20 and a P/S ratio of 1.57.
Royce and Greenblatt reduced their positions during the quarter.
Disclosure: I do not own any stocks mentioned.
