Ginu Thomas manages the Discount to Intrinsic Value model with a value-based approach to investing. He looks for undervalued positions that are not likely to have significant declines in value in future years. Once undervalued positions reach intrinsic value, they will be sold.
The top holding in the model is Transocean Ltd (NYSE: RIG) which, according to the company’s website, is the largest offshore drilling company in the world. RIG’s net revenues grew from $6.4 billion in 2007 to $12.7 billion in 2008 then dropped to $11.6 billion in 2009. By quarter three 2010 the company had reported a total revenue of $7.4 billion for the year. The company’s total liabilities fell from $21.8 billion in 2007 to $18.6 billion in 2008, then to $15.9 billion in 2009. They started to rise again in 2010, reaching $18.3 billion by quarter three of 2010. Shareholder equity rose from $16.5 billion in 2008 to $20.6 billion in 2009.
Another top holding in the model is Cisco Systems Inc (NASDAQ: CSCO). CSCO’s price to earnings ratio is significantly lower than many of their competitors’ and their net revenues grew from $36.1 billion in 2009 to $40 billion in 2010. Their total liabilities grew as well, from $27.3 billion in 2009 to $34.8 billion in 2010. Shareholder equity has increased, rising from $38.6 billion in 2009 to $44.3 billion in 2010.
The last top holding in the Discount to Intrinsic Value model is National Financial Partners Corp (NYSE: NFP), a financial services company focused on providing estate planning, wealth management and wealth transfer solutions to high net worth individuals. NFP’s net revenues fell from $1.2 billion in 2008 to $948.3 million in 2009. By the third quarter of 2010, they had reported $697.7 million in net revenues for the year. Their total liabilities fell from $730.3 million in 2008 to $523.9 million in 2009 but their shareholder equity also fell—dropping from $788.2 million in 2008 to $340 million in 2009.
