May 19, 2024

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The Bruce Fund’s Top 5 3rd-Quarter Trades

The Bruce Fund, co-managed by founder Robert Bruce (Trades, Portfolio) and his son Jeff, revealed in November that its top trades included a new position in Chiasma Inc. (NASDAQ:CHMA), position boosts in Paratek Pharmaceuticals Inc. (NASDAQ:PRTK) and Bausch Health Companies Inc. (NYSE:BHC) and reductions in its Apple Inc. (NASDAQ:AAPL) and NextEra Energy Inc. (NYSE:NEE) holdings.

The Chicago-based fund invests primarily in small and mid-cap stocks, though it will occasionally also invest in large-cap stocks as well as convertible and distressed bonds. As of the quarter end, the fund’s $452 million equity portfolio contains 34 stocks with a turnover ratio of 1{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9}.


The fund’s top two sectors in terms of weight are health care and utilities, representing 32.36{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9} and 30.86{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9} of the equity portfolio.



The fund purchased 450,000 shares of Chiasma, giving the position 0.43{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9} weight in the equity portfolio. Shares averaged $4.79 during the third quarter.


According to GuruFocus, the Needham, Massachusetts-based clinical-stage biotech company has no long-term debt. While the company’s cash increased from 2018 to 2019, the cash on hand declined from 2015 to 2018.


Other gurus with holdings in Chiasma include Steven Cohen (Trades, Portfolio)’s Point72 Asset Management and Jim Simons (Trades, Portfolio)’ Renaissance Technologies.


The fund purchased 312,760 shares of Paratek, increasing the holding 55.2{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9} and the equity portfolio 0.37{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9}. Shares averaged $4.95 during the third quarter.


According to GuruFocus, the Boston-based clinical-stage biotech company’s cash-to-debt ratio of 0.59 underperforms 87.32{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9} of global competitors.


Bausch Health

The fund purchased 65,000 shares of Bausch Health, increasing the stake 4.77{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9} and the equity portfolio 0.22{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9}. Shares averaged $17.23 during the third quarter.


Formerly known as Valeant Pharmaceuticals, the Laval, Quebec-based company produces pharmaceutical products for the dermatology, gastrointestinal and ophthalmology markets. GuruFocus ranks the company’s financial strength 2 out of 10 on several warning signs, which include interest coverage and debt ratios underperforming over 90{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9} of global competitors.



The fund sold 60,000 shares of Apple, trimming the position 17.12{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9} and the equity portfolio 1.28{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9}. Shares averaged $109.02 during the third quarter on a split-adjusted basis: The stock did a four-for-one stock split in August.


GuruFocus ranks the Cupertino, California-based tech giant’s profitability 9 out of 10 on several positive investing signs, which include consistent revenue growth, a high Piotroski F-score of 7 and an operating margin that is outperforming over 95{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9} of global competitors despite declining by approximately 4{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9} per year on average over the past five years.


NextEra Energy

The fund sold 40,000 shares of NextEra Energy, trimming the holding 6{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9} and the equity portfolio 0.56{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9}. Shares averaged $68.93 during the third quarter.


GuruFocus ranks the Juno Beach, Florida-based utility company’s profitability 6 out of 10 on the back of profit margins outperforming over 80{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9} of global competitors despite three-year revenue and earnings growth rates averaging close to the industry median.


Disclosure: The author has no positions in the stocks mentioned. The mention of portfolio trades reflects information as of the September 2020 portfolio date and do not include any trades and hedges made during October to December.

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About the author:

James Li

I am an editorial researcher at GuruFocus. I have a Master’s in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

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