Dreman Value’s Most Eye-Popping Moves of Q3 in Ford, Magna, More

Dreman Value Management LLC was founded in 1997. It follows contrarian value investment strategy. The firm undertakes bottom-up approach and mainly invests in shares with low P/E ratio. The firm’s invests heavily in finance stocks, which constitute more than a third of its portfolio. It also holds investments in the information technology and energy sectors.
Dreman Value Management has a well diversified portfolio and holds shares in various companies such as Johnson Controls International plc Ordinary Share (NYSE:JCI), Ford Motor Company (NYSE:F), Manulife Financial Corporation (USA) (NYSE:MFC), Magna International Inc. (NYSE:MGA) and Express Scripts Holding Company (NASDAQ:ESRX). This article discusses the fund’s strategy regarding these shares.

Imitating hedge funds and other institutional investors can help identify some of the most profitable stocks on the market. However, our extensive research that covered the period between 1999 and 2012, showed that the best approach is to follow these investors into their small-cap stocks. Our backtests showed that the 15 most popular small-cap stocks among hedge funds managed to generate a monthly alpha of 81 basis points, versus an alpha of 0.7 percentage points posted by their top 50 large-cap picks (see more details here).

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Johnson Controls International plc Ordinary Share (NYSE:JCI) stock has gained 46% this year so far. The stock accounted for 1.27% of Dreman Value Management portfolio in the June quarter. For the quarter ended on 30th September, 2016, the investment fund disposed its holding of the stock and sold the entire holding of 46,283 shares. Of the hedge funds in our database, 32 funds held $1.088 billion worth of Johnson Controls’ shares in their portfolio at the end of the June quarter, which equaled to 3.80% of the outstanding shares. Johnson Controls International reported its adjusted earnings for the fourth quarter at $1.21 per share, beating market estimates of $1.02 per share. Its revenue at $10.2 billion, which also surpassed consensus estimates of $10.06 billion.

stock lost 5% this year so far. However, the company also offers dividend yield of 4.8%. Dreman Value Management trimmed its holding of the stock by 46% during the September quarter to 84,090 shares. The market value of the holding stood at $1.015 million and formed 0.62% of Dreman Value Management’s portfolio. 31 hedge funds from our database have positions in Ford Motor Company, with total holdings of about $685 million as on the end of June quarter, amounting to about 1.4% of the company’s outstanding stock. In terms of news concerning the company, Ford Motor Company recently announced that it plans to invest $195 million over the course of 5 years in India. Ford Motor Company will set up a technology and business center in city of Chennai in India. Seeing as the country will be a giant market in the future, Ford has already invested $2 billion in India so far.