Pzena Reduces Stake in General Cable
In the second half of 2014, guru Richard Pzena (Trades, Portfolio), the founder and co-chief investment officer of Pzena Investment Management, LLC, added a stake in General Cable Corp (BGC), a Kentucky-based manufacturer and distributor of copper, aluminum and optical fiber cables, to his portfolio.
Pzena started out with a 741,319-share investment in BGC (for an average price of $21.88) in the third quarter, then added nearly 2 million shares in the fourth quarter when the average price was $13.99 per share, bringing his stake to 2,662,468 shares. That made BGC nearly the 50th-largest holding by volume in Pzena's portfolio when 2014 drew to a close.
Industrial stocks are not his preference - that sector has a 7.3% weighting in his portfolio - but, if Pzena had continued to invest in BGC at that rate, the company might have been in the top 20 holdings in his portfolio heading into the second quarter of 2015, but Pzena sold nearly 365,000 shares in the first quarter of 2015 for an average price of $17.23 per share. That dropped the stake to about 58th in Pzena's portfolio.
Incorporated in 1927, BGC's products are designed for the energy, construction, industrial, specialty and communications markets, and it sells those products under several brand names including Anaconda, GenSPEED, BICC, Brand Rex, Carol, Gepco, NextGen, NSW, PDIC, Phelps Dodge International Corporation and Silec. The company employs more than 14,000 people on six continents.
Since its incorporation, the company has been involved in some high-profile projects, among them:
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In 1935, BGC supplied all the power transmission cable from the Hoover Dam to Los Angeles.
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The company produced four-fifths of the battlefield communication cable used by the Allies in World War II.
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In 1971, it supplied power and communications cable linking NASA's mission control facilities with launch facilities in Florida.
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In 1972, the company made and installed underground transmission cable at the Dallas-Fort Worth International Airport.
At the end of the fourth quarter, BGC reported adjusted earnings per share of $0.15 and adjusted operating income of $46 million. Its operating income was $14 million. For 2014, adjusted operating cash flow was $212 million, and operating cash flow was $134 million
General Cable has a market cap of $875.3 million and an enterprise value of $2.06 billion. Its P/E is 0, its Price/Book is 1.9, and its Price/Sales is 0.1.
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This article first appeared on GuruFocus.