Jump to content

TRW & Oakmark


Recommended Posts

I was just reading this last night and found it interesting......looks like we may be too late: (from the 12-31-2011 Oakmark Select Fund Letter to Shareholders)


"We eliminated one holding, Bristol Myers-Squibb, and used the proceeds to acquire TRW Automotive. Bristol was a good long-term holding for the Fund, providing both capital appreciation and an above-average annual dividend. Last year, that dividend attracted the interest of yield-hungry investors and made it one of the Fund's best performers. Rather than paying a dividend, TRW has been using its cash flow to pay off debt. We consider debt repayment and share repurchase to be just as valuable to shareholders as a dividend, but currently dividends are more in favor. In July, TRW’s price was more than twice that of Bristol, but when concerns grew about a cyclical downturn in Europe, TRW stock fell sharply. During the past quarter, Bristol’s stock price exceeded TRW’s price. In our estimate, TRW shares are worth a lot more than their $33 price. We forecast that TRW’s EPS will exceed $7 within a couple of years, and with its debt paid down, the company will soon put that cash to work to reduce its share base, further increasing EPS."


The link to the full letter is as follows:




Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Create New...