Amid Portfolio Cuts, Edinburgh Partners Remains Resolute On Favorite Stocks

Edinburgh Partners, one of Scotland’s biggest independent fund management houses, was co-founded by fund management industry veteran Sandy Nairn in 2003. The Edinburgh-based asset manager invests on behalf of a range of clients including pension funds, financial institutions and endowments, with an emphasis on absolute returns over a long-term time horizon. Edinburgh Partners attempts to identify and buy undervalued companies, and then hold these equity investments until share prices reflect those companies’ long-term earnings potential.

As Edinburgh Partners runs a number of long-only, unconstrained equity strategies and employs a long-term and often contrarian approach to investing, retail investors may find it relatively straightforward to mimic this investment firm’s moves. The Edinburgh-based asset manager recently submitted its 13F filing for the second quarter reporting period, which showed that Edinburgh Partners reduced the size of 12 of its positions, while boosting the size of just one position and adding one new addition to its portfolio during the June quarter. As a result, the overall value of the investment firm’s U.S.-focused equity portfolio decreased to $659.36 million from $887.77 million quarter-over-quarter. Are investors pulling money out of the Edinburgh-based asset manager? We can’t say for sure, but what we do know is that the portfolio cuts have not impacted Mr. Nairn’s confidence in his equity positions. With that said, let’s have a look at the asset manager’s five largest equity holdings as of the end of the June quarter, and discuss their performance of late.

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#5. PerkinElmer Inc. (NYSE:PKI)

 – Shares Owned by Edinburgh Partners (as of June 30): 1.23 Million

 – Value of Edinburgh Partners’ Holding (as of June 30): $64.41 Million

Edinburgh Partners trimmed its position in PerkinElmer Inc. (NYSE:PKI) by 29% during the June quarter to 1.23 million shares. The reduced position was valued at $64.41 million at the end of the quarter and accounted for 9.8% of the value of the investment firm’s U.S. equity portfolio. The provider of products, services and solutions to the diagnostics research, environmental, industrial, and laboratory services markets has seen the value of its shares advance by 4% since the beginning of 2016. PerkinElmer’s overall revenue for the first three months of 2016 increased by 2% year-over-year to $538.7 million, reflecting higher revenue driven by its OneSource service offerings within the research market, increased demand in the company’s newborn screening business, as well as an increase in demand in its laboratory services business, and food and environmental business. In late July, the company’s Board of Directors declared a quarterly dividend of $0.07 per share, which equates to an annual dividend yield of 0.50%. Ken Fisher’s Fisher Asset Management owns 685,785 shares of PerkinElmer Inc. (NYSE:PKI) as of the end of the June quarter.

#4. Johnson Controls Inc. (NYSE:JCI)

 – Shares Owned by Edinburgh Partners (as of June 30): 1.48 Million

 – Value of Edinburgh Partners’ Holding (as of June 30): $65.39 Million

The Scottish independent fund management firm reduced its holding in Johnson Controls Inc. (NYSE:JCI) by 470,088 shares during the April-to-June period, ending the second quarter with 1.48 million shares valued at $65.39 million. In late January, Johnson Controls, a global diversified technology and industrial leader offering heating, ventilation and air-conditioning tools, agreed to merge with Ireland-based fire and security provider Tyco International plc (NYSE:TYC). The soon-to-be combined company will maintain Tyco’s Irish legal domicile. The merger is anticipated to be consummated on September 2, sooner than previously planned. The new Treasury Department rules that blocked the mega-merger between Pfizer Inc. (NYSE:PFE) and Allergan plc (NYSE:AGN) were not an impediment to Johnson Controls’ proposed inversion. The combined provider of commercial-building systems will be renamed Johnson Controls International plc. Johnson’s stock has gained 14% year-to-date. John Zaro’s Bourgeon Capital has nearly 89,000 shares of Johnson Controls Inc. (NYSE:JCI) among its holdings as of the end of the second quarter.

The second page of this article will discuss Edinburgh Partners’ three-largest equity holdings as of the end of June.