Glenn Greenberg Brave Warrior Advisors of ( Trades , Portfolio ) recently disclosed updates to its 13F portfolio for the fourth quarter of 2022, which ended December 31.
The firm was originally founded as Chieftain Capital Management in 1984, and when the partners split into two separate firms in 2010, Greenberg’s firm was renamed Brave Warrior Investors. Greenberg likes to have a highly concentrated portfolio, which he considers a “defense against ignorance,” since the more companies you own, the less you know about each one. It prefers to invest in companies that have little competition, a high return on invested capital, a strong balance sheet and attractive valuations.
Brave Warrior Advisors’ top fourth-quarter trades included new positions in F&G Annuities & Life Inc., according to its latest 13F filing. (FG, Financial) and AutoNation Inc. (AN, Financial), a reduction in Elevance Health Inc. (PRINCIPLE, Financial) and the sale of its entire stake in Valvoline Inc. (Tourism Office, financial).
Investors should be aware that 13F reports do not provide a complete picture of a guru’s holdings. They include only a snapshot of long equity positions in US-listed stocks and US depository receipts at the end of the quarter. They do not include short positions, non-ADR international holdings or other types of securities. However, even this limited file can provide valuable information.
F&G Annuities and Life
Brave Warrior Advisors initiated a new stake in F&G Annuities & Life (FG, Financial) worth 6,032,140 shares, giving the stake a 3.80% weight in the equity portfolio based on the quarter’s average share price of $20.38.
Formerly known as Fidelity and Guaranty Life Insurance Company, F&G is an insurance company that offers annuities and life insurance. Headquartered in Des Moines, Iowa, the company has approximately 800,000 customers.
F&G recently split from its parent company, Fidelity National Financial (FNF, Financial), on December 1, 2022. Because Greenberg’s company owned stock in the parent company, it received the F&G position as a special dividend. Therefore, we still don’t have much information about the company as an independent entity. It looks cheap on paper with a forward price-to-earnings ratio of 5.95 and a price-to-sales ratio of 0.27.
AutoNation
The firm also bought 230,468 shares of AutoNation (AN, Financial), giving the new participation a weight of the variable income portfolio of 0.78%. During the quarter, the stock traded at an average price of $110.58.
AutoNation is an American automobile dealership chain that offers new and used vehicles and related services, both through its brick-and-mortar dealerships and through its website.
While the auto industry anticipates a possible slowdown due to the weakening economy, AutoNation spent its windfall from the recent boom in auto sales wisely by buying stocks aggressively, showing its commitment to increase shareholder value. The three-year share buyback ratio is an incredible 11.4%. The GF Value chart rates the stock as reasonably valued.
Elevation Health
The firm reduced its investment in Elevance Health (PRINCIPLE, Financial) by 26.68% for a remaining stake of 872,415 shares, with a 4.98% reduction in the variable income portfolio. The stock traded at an average price of $507.74 during the quarter.
Elevance is primarily engaged in the health insurance business. Offers medical, pharmaceutical, dental, behavioral health, long-term care and disability insurance plans. The company aims to transform itself from a traditional health benefits organization to what it calls a “trusted health partner for life,” integrating not only physical health but also behavioral health, the social health and long-term care.
The company’s sector outlook may appear generally positive due to an aging population, but the company recently issued weak guidance alongside its Q4 2022 earnings report in light of the fact that the largest some of its recent growth has come from Medicaid, which is expected to decline. when pandemic-era protections end and millions of Americans lose coverage. After the phase-out process is completed around the end of 2023, we are likely to expect a steeper decline in earnings for Elevance and other Medicaid partners.
valves
Greenberg’s company divested its stake of 5,451,901 shares in Valvoline (Tourism Office, Financial), which previously held 4.78% of the variable income portfolio. Shares averaged $30.25 each during the quarter.
Valvoline manufactures and distributes its brand of automotive oil, additives and lubricants, and also owns the Valvoline Instant Oil Change and Valvoline Express Care automotive service chains. The 150-year-old company has also been a leader in electric vehicle fluids for two decades.
Despite historical prosperity, the company’s results have been in decline in recent years. Analysts estimate a rebound in earnings, while revenue remains mostly flat. Valvoline plans to sell its global products business to Saudi Aramco (Or: 2222, Financial) for $2.65 billion in cash and become a pure retail company with cash to invest in growth, although the possibility that the company’s brand value has been eroded is a concern.
See also
Greenberg’s other notable deals during the quarter included additions to Asbury Automotive Group Inc. (ABG, Financial) and Apollo Global Management (APO, financial) and reductions in Lithia Motors Inc. (SHOCK, Financial) and Fidelity National Financial. You can check the company’s full operations here.
As of its latest 13F, the firm held shares of 26 common stocks in a stock portfolio valued at $3.17 billion. The top holding was Apollo Global Management with 15.96% of the equity portfolio, followed by Elevance Health with 14.10% and Fidelity National Financial with 10.94%.
In terms of sector allocation, the company has by far the highest weighting in financial services, followed by healthcare and consumer discretionary.
