by Tim Melvin | November 15, 2013 9:30 am
The flood of 13F filings has begun in advance of this week’s deadline. Among the early filers is Michael Price, the once well-known and widely followed value investor. Price compiled an incredible track record at the Mutual Series Funds before selling the operation to Franklin Templeton (BEN[1]) and then retiring a few years later.
Since then, Price has run MFP Investors — a fund that manages his money as well as a money for a few outside investors. He learned the craft of value investing from one of the founding father of value investing: Max Heine, the founder of the Mutual Shares Fund that Price later managed. Price no longer attracts the media attention he once did, but he is still an extraordinary stock picker, and I steal ideas from him frequently.
Price appears to share my enthusiasm for smaller bank stocks, as he currently own 19 small regional and community banks. He has been buying them consistently over the past few years, and I think he sees the same consolidation wave and shareholder value increase in the future that I do. He added to one position this quarter, buying more shares of Clifton Savings Bank (CSBK[2]), the mutual holding company for the 11-branch bank in northern New Jersey. It looks like the bank trades for 1.9 times book value, but after the second-step conversion process is completed, the shares will trade at a slight discount to book. The bank is in excellent condition with an equity-to-assets ratio of almost 18 and nonperforming assets at just 0.53% of total assets.
Price’s new buys in the quarter were Oenok (OKE[3]), Dolby Labs (DLB[4]) and T-Mobile (TMUS[5]). I don’t find any of those particularly exciting at current levels, but I’m willing to acknowledge that Michael Price is a lot smarter than I am and probably sees value I am missing in these stocks. What I find much more interesting was that Price was doing a lot more selling than buying[6] in the third quarter.
He started or added to 13 positions while reducing or eliminating 28 positions. Notable reductions include Bank of America (BAC[7]) where he sold 41% of his shares, reduced his holdings of Citigroup (C[8]) by 27% and reduced in his Sandridge Energy (SD[9]) position by 58%. Some of his sales were arbitrage or takeover stakes, but he did a lot more selling than buying in the quarter. This is in line with the recent comments made by several noted investors that it is getting harder to find bargain stocks.
I will leave it to everyone else to follow the big hedge fund stars to see who bought or sold the most shares of Apple (AAPL[10]) and Google (GOOG[11]) in the third quarter. I prefer to follow the value types who are not in the day-to-day headlines but have done an outstanding job of making money over long periods of time.
As of this writing, Tim Melvin did not hold a position in any of the aforementioned securities.
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