Dodge & Cox

Dodge & Cox

Last Update: 03-20-2017

Number of Stocks: 182
Number of New Stocks: 5

Total Value: $112,547 Mil
Q/Q Turnover: 4%

Countries: USA
Details: Top Buys | Top Sales | Top Holdings  Embed:

Dodge & Cox Watch

  • Pioneer Investments Exits Wells Fargo, Coca-Cola, Buys Walt Disney

    Pioneer Investment Management operates in wide areas of investment vehicles: mutual funds, single manager hedge funds, funds of hedge funds, structured products, segregated and managed accounts and institutional funds. During the fourth quarter of 2016, the firm traded shares in the following stocks:


    The guru almost closed its stake in Wells Fargo & Co. (WFC). It was reduced by 97.32% with an impact of -0.6% on the portfolio.

      


  • Scott Black Sells Time Warner, Union Pacific, Tegna

    Scott Black (Trades, Portfolio) is the chairman, president, chief investment officer and chief compliance officer at Delphi Management Inc. During the fourth quarter he sold shares in the following stocks:


    The investor exited his position in Time Warner Inc. (TWX) with an impact of -1.52% on the portfolio.

      


  • Microsoft Announces Quarterly Dividend

    Microsoft (NASDAQ:MSFT) has announced a quarterly dividend of 39 cents with an ex-dividend date of May 16 and a payable date of June 8. With the quarterly dividend the firm’s forward dividend yield is now 2.41% which is slightly higher than its trailing 12-month dividend of 2.32%.


    The firm has kept its dividend at 39 cents for the past three quarters.

      


  • The Dodge & Cox Case for Active Investing

    Dodge & Cox (Trades, Portfolio), a mutual fund that can be found among the investing gurus at GuruFocus, is an institutional investor. And, one with a unique style.


    It is a style that has worked. The San Francisco-based firm reports in its year-end message that its flagship Stock Fund had a total return of 21.3% in 2016, well ahead of the 12% posted by the S&P 500 Index.

      


  • Scott Black Continues to Buy Allergan, CVS Health, 6 Others

    Scott Black (Trades, Portfolio) is the chairman, president, chief investment officer and chief compliance officer at Delphi Management Inc. He manages a portfolio composed of 93 stocks with a total value of $171 million. In the third and fourth quarters of 2016 the guru bought shares in the following stocks:


    Southern Missouri Bancorp Inc. (SMBC)

      


  • The Complete List of 4th Quarter 2016 Hedge Fund Letters to Investors

    This wide-ranging list is published here thanks to Vintage Value Investing.


    February 10, 2017

      


  • Will YouTube TV Kill Big Cable?

    YouTube, which has entertained the world with kittens and helped fix innumerable clogged drains, has announced it will launch YouTube TV, a low-cost cable TV service. In other words fewer channels than conventional cable at a lower price. YouTube TV plans to offer some 40 channels for just $35 a month and add a number of features, including a virtual DVR (digital video recorder).


    It’s the latest spinoff from the Alphabet Inc. (NASDAQ:GOOG)(NASDAQ:GOOGL) empire, which wisely purchased YouTube some years ago and has since built it into a powerhouse in its own right. By the end of 2016, fans were watching YouTube 1 billion hours a day.

      


  • Pioneer Investments Boosts JPMorgan, BlackRock, Comcast

    Pioneer Investments (Trades, Portfolio) operates in wide areas of investment vehicles: mutual funds, single manager hedge funds, funds of hedge funds, structured products, segregated and managed accounts and institutional funds. During the fourth quarter the firm bought shares in the following stocks:


    The guru increased its shares in JPMorgan Chase & Co. (JPM) by 107.20% with an impact of 0.97% on the portfolio.

      


  • Joel Greenblatt Cuts Hewlett Packard, Walt Disney, Oracle

    Joel Greenblatt (Trades, Portfolio) is known for the invention of Magic Formula Investing, and founder of the New York Securities Auction Corporation (NYSAC). Greenblatt is founder and managing partner of Gotham Asset Management LLC. During the fourth quarter the guru sold shares in the following stocks:


    The investor reduced his shares in Hewlett Packard Enterprise Co. (HPE) by 68.53% with an impact of -0.84% on the portfolio.

      


  • Barrow, Hanley, Mewhinney & Strauss’ Top 3 New Holdings

    Dallas-based investment firm Barrow, Hanley, Mewhinney & Strauss gained 25 new holdings in the final quarter of 2016. The firm’s top three new holdings are Twenty-First Century Fox Inc. (NASDAQ:FOXA), E.I. du Pont de Nemours & Co. (NYSE:DD) and Lowe’s Companies Inc. (NYSE:LOW).


    The firm was founded in 1979. For its equity portfolios, the firm seeks value by investing in stocks with below-market price-earnings (P/E) ratios, below-market price-book (P/B) ratios and above-market dividend yields, regardless of market conditions. For fixed income, the firm defines value as “temporarily mispriced securities with yield-to-maturity advantages over Treasury bonds of comparable maturity.” The firm employs a research-driven, bottom-up approach to select investment prospects.

      


  • Dodge & Cox Comments on Wells Fargo

    While we trimmed Financials on a net basis during the fourth quarter, we opportunistically added to Wells Fargo (NYSE:WFC) (up only 5% for 2016), which detracted from relative performance and was weak among bank stocks due to regulatory infractions and fines. We were disappointed to learn about the bank’s sales practices that resulted in improper account openings, but are convinced Wells Fargo is actively addressing the issues. After a comprehensive review, we believe Wells Fargo’s superior franchise, deep management team, track record of generating higher returns than other banks, and attractive valuation at 1.6 times book value make it an attractive long-term investment opportunity. On December 31, Wells Fargo was a 1.8% position in the Fund.

      


  • Dodge & Cox Comments on AstraZeneca

    AstraZeneca (NYSE:AZN), which is based in the United Kingdom, is a global pharmaceutical company with strengths in treatment for cancer and respiratory, cardiovascular, and infectious diseases. The share price has been under pressure due to recent and upcoming patent expirations for major drugs. Despite this headwind, the long-term growth outlook is favorable because of the company’s robust new drug pipeline, particularly in oncology. AstraZeneca has an attractive position in the revolutionary field of cancer immunotherapy, which harnesses the disease -fighting capabilities of the body’s immune system to reduce and potentially eliminate cancer tumors. With a 4.6% dividend yield, the current valuation is reasonable and does not appear to reflect the potential success of the immunotherapy drug pipeline.

      


  • Dodge & Cox Comments on Bristol-Myers Squibb

    Once a diversified pharmaceutical company facing significant patent expirations (a “cliff”), Bristol-Myers (NYSE:BMY) has transitioned into a focused biopharmaceutical company that is positioned to grow. Many of its competitors responded to their patent cliffs by expanding into other non-drug areas; Bristol-Myers shed its interests in those assets unrelated to the drug business (e.g., medical supply, nutritionals), focused on specialty drugs, and concentrated on only those therapeutic areas that it believed could be profitable over the long term. Its medicines help millions of people fight against such diseases as cancer, cardiovascular disease, hepatitis, HIV/ AIDS, and rheumatoid arthritis.


    In 2016, one of Bristol-Myers’ lead immuno-oncology trials (CheckMate-026) failed and its stock price declined significantly. We think this is a short-term setback, and believe the company’s immuno-oncology business is particularly attractive with its strong pipeline of other drugs, significant growth potential, and reasonable valuation at 20 times forward earnings. After weighing the risks versus the long-term opportunities, we initiated a position in Bristol-Myers, which accounted for 1.3% of the Fund on December 31.

      


  • Dodge & Cox's Stock Fund 4th Quarter Letter to Shareholders

    TO OUR SHAREHOLDERS

      


  • 7 Stocks Outperforming the Market

    According to GuruFocus' All-in-One Guru Screener, the following are some of the stocks that have outperformed the Standard & Poor's 500 Index over the last 12 months and were bought by gurus during the last quarter.


    Advanced Micro Devices Inc. (NASDAQ:AMD) with a market cap of $9.19 billion has outperformed the S&P 500 Index by 370.1% over the last 12 months.

      


  • 7 Stocks You Could Buy to Beat the Market

    According to GuruFocus' All-in-One Guru Screener, the following are some of the stocks that have outperformed the Standard & Poor's 500 Index over the last 12 months and were bought by gurus during the last quarter.


    Companhia Siderurgica Nacional ADR (SID) with a market cap of $5.1 billion has outperformed the S&P 500 Index by 390.7% during the last 12 months.

      


  • 7 Cheap Stocks Based on Price-Sales

    According to GuruFocus' All-in-One Screener, the following stocks with market caps above $5 billion look cheap since they are trading with low price-sales (P/S) ratios.


    Twenty-First Century Fox Inc. Class A (FOXA) is trading at about $30 per share with a P/S ratio of 2.08, a trailing 12-month price-earnings (P/E) multiple of 19.76 and an estimated forward P/E multiple of 15.80. The company has a market cap of $55.72 billion, and the stock price has risen at an annualized rate of 5% over the last 10 years.

      


  • Dodge & Cox's Global Stock Fund 4th Quarter Commentary

    The Dodge & Cox Global Stock Fund had a total return of 7.1% for the fourth quarter of 2016, compared to 1.9% for the MSCI World Index. For 2016, the Fund had a total return of 17.1%, compared to 7.5% for the MSCI World.

      


  • Dodge & Cox's Stock Fund 4th Quarter Commentary

    The Dodge & Cox Stock Fund had a total return of 10.7% for the fourth quarter of 2016, compared to 3.8% for the S&P 500 Index. For 2016, the Fund had a total return of 21.3%, compared to 12.0% for the S&P 500.

      


  • Spiros Segalas Buys 4 New Stocks in 4th Quarter

    Spiros Segalas (Trades, Portfolio) of Jennison Associates and the Harbor Capital Appreciation Fund acquired four new holdings in the fourth quarter. Among his new holdings for the final quarter of 2016 are FedEx Corp. (NYSE:FDX), Charter Communications Inc. (NASDAQ:CHTR), Ulta Salon Cosmetics & Fragrance Inc. (NASDAQ:ULTA) and Expedia Inc. (NASDAQ:EXPE).


    Segalas is director, chief investment officer, president and founding member of Jennison Associates. The Harbor fund is subadvised by Jennison. Segalas, who has managed the fund since 1990, seeks long-term growth of capital. According to the fund's prospectus, it invests in midcap to large-cap growth stocks. Segalas looks for companies that have high revenue and earnings growth, improving profitability and strong balance sheets.

      


  • 7 Profitable Companies With Strong Yields

    Thanks to GuruFocus’ All-In-One Screener, I want to highlight stocks that have a five-year growing dividend yield with strong profitability and a long-term track of solid returns and growing asset value.


    Cisco Systems Inc(CSCO) has a dividend yield that has grown by 47.50% during the last five years. The yield is now 3.44% with a payout ratio of 47%. The company has a 10-year’s asset growth rate of 8%, supported by an average return on assets (ROA) over the last 10 years of 9.41%.

      


  • Dodge & Cox Invests in 7 Positions in the 3rd Quarter

    Dodge & Cox manages over $104 billion in separate accounts and mutual funds. The firm employs a team research approach in making investment decisions and the investment decisions are made by the Investment Policy Committee. The firm made the following buys during the third quarter:


    Dodge & Cox established a new position of 32,979,554 shares of Johnson Controls International PLC. (NYSE:JCI). The trade had an impact of 1.3% on the portfolio.

      


  • Dodge & Cox Sells Symantec, Walmart, Microsoft

    Van Duyn Dodge and E. Morris Cox founded Dodge & Cox in 1930. The firm manages a portfolio with a total value of $106.414 billion. During the third quarter the guru’s largest sells were the following:


    Its stake in EMC Corp. (EMC) was closed with an impact of -2.05% on the portfolio.

      


  • Donald Yacktman Invests in Bank of America, Berkshire

    Donald Yacktman (Trades, Portfolio) is the president and co-chief investment officer of Yacktman Asset Management Co. He is also a co-manager for the Yacktman Fund (Trades, Portfolio). During the third quarter the guru’s largest buys were the following:


    His stake in Twenty-First Century Fox Inc. Class A (FOXA) was raised by 18.80% and with an impact of 1.59% on the portfolio. It is a diversified media and entertainment company. It operates in five business segments: Cable Network Programming, Television, Filmed Entertainment and Other Corporate and Eliminations. First quarter income from continuing operations attributable to stockholders was $827 million or 44 cents per share compared to $678 million or 34 cents per share reported in the same quarter of a year before, and revenue increased 7% year over year.

      


  • Hotchkis & Wiley Trims Corning, Microsoft, Exits HP

    HOTCHKIS & WILEY was formed in Los Angeles in 1980 and has focused exclusively on finding and owning undervalued companies that have a significant potential for appreciation. During the third quarter the guru’s largest sells were the following:


    The firm reduced its stake in Corning Inc. (GLW) by 31.63% with an impact of -1.24% on the portfolio.

      


  • Paul Singer Invests in Technology, Oil in 3rd Quarter

    Elliott Management’s Paul Singer (Trades, Portfolio) acquired 12 new holdings in the third quarter. Of these, his top three new holdings are Dell Technologies (NYSE:DVMT), Encana Corp. (NYSE:ECA) and Marathon Petroleum Corp. (NYSE:MPC).


    Singer founded Elliott Management in 1977 and currently serves as CEO. He is known for being an activist investor in underperforming companies. Recently, his firm challenged Samsung to reshape its ownership structure and was behind Bass Pro Shops' recent acquisition of Cabela’s.

      


  • John Griffin Gains 3 Positions in 3rd Quarter

    John Griffin (Trades, Portfolio), president of Blue Ridge Capital, previously worked with Julian Robertson (Trades, Portfolio) at Tiger Funds before founding Blue Ridge in 1996. The fund seeks absolute returns using a long/short equity approach that invests in companies with strong performance relative to their industry and shorts those with fundamental problems. Griffin usually takes long positions, a trend that continued during the third quarter of 2016. The guru took stakes in three companies and added to two others.


    Citigroup Inc. (NYSE:C)

      


  • Andreas Halvorsen’s Top 3 New Holdings

    Andreas Halvorsen (Trades, Portfolio), founding partner and CEO of Viking Global Investors, acquired 23 new holdings in the third quarter. His top three new holdings are Bank of America Corp. (NYSE:BAC), LyondellBasell Industries (NYSE:LYB) and Universal Health Services Inc. (NYSE:UHS).


    Halvorsen purchased 25,110,973 shares in Bank of America for an average price of $14.89 per share. The transaction impacted the portfolio by 1.7%.

      


  • 9 Stocks First Eagle Keeps Buying

    First Eagle Investment is an independent company with approximately $98 billion in assets under management. In both the second and third quarters the guru bought shares in the following stocks:


    MetLife Inc. (MET)

      


  • Ken Fisher Boosts Goldman Sachs, Reduces Citigroup

    Ken Fisher (Trades, Portfolio) is the chief executive officer and chief investment officer of Fisher Investments.The guru’s largest third-quarter trades are the following:


    The guru increased his stake in Goldman Sachs Group Inc. (NYSE:GS) by 693.08%, with an impact of 0.52% on the portfolio.

      


  • Tom Gayner Acquires Google, Facebook, Amazon

    Tom Gayner (Trades, Portfolio) is the executive vice president and chief investment officer of Markel Corp. (NYSE:MKL) and president of Markel Gayner Asset Management Inc. During the third quarter the guru’s largest buys were the following:


    The guru raised his stake in Alphabet Inc. Class C (GOOG) by 46.23% with an impact of 0.31% on the portfolio.

      


  • Richard Pzena Buys Capital One, Hilton, Wesco

    Richard Pzena (Trades, Portfolio) of Pzena Investment Management acquired 12 new holdings in the third quarter. His top three new holdings are Capital One Financial Corp. (NYSE:COF), Hilton Worldwide Holdings Inc. (NYSE:HLT) and Wesco Aircraft Holdings Inc. (NYSE:WAIR).


    Pzena founded his firm in 1995 in New York City. Pzena seeks classic value through buying good companies at low prices. The firm focuses on companies that are underperforming their historically demonstrated earnings power.

      


  • David Carlson Sells Baidu, LinkedIn, Amazon

    David Carlson (Trades, Portfolio) is chief investment officer of U.S. Equities and a senior portfolio manager responsible for the management of the U.S. Premier Growth Equity and U.S. Equity Select strategies, Elfun Trusts mutual fund and the Damon Runyon equity portfolio. During the third quarter the guru’s largest trades were the following:


    He reduced his stake in Baidu Inc. ADR (BIDU) by 50% with an impact of -1.43% on the portfolio.

      


  • Dodge & Cox Stock Fund 3rd Quarter Commentary

    The Dodge & Cox Stock Fund had a total return of 8.8% for the third quarter of 2016, compared to 3.9% for the S&P 500 Index. For the nine months ending September 30, 2016, the Fund had a total return of 9.5%, compared to 7.9% for the S&P 500.

      


  • 7 Stocks With Growing Yields and Steady Assets

    Thanks to GuruFocus’ All-In-One Screener, I want to highlight stocks that have a five-year growing dividend yield with strong profitability and a long-term track of solid returns and growing asset value.


    Agrium Inc. (AGU) has a dividend yield that during the last five years has grown by 105.20%. The yield is now 3.91% with a payout ratio of 56%. The company has a 10-year asset growth rate of 21% supported by a current ROA of 5.14% that during the last 10 years has had an average value of 6.67%.

      


  • Railroad Companies Offer High Margin Potential

    As of Sept. 21, several companies in the railroad industry have an efficient business operation. Two companies, Canada Pacific Railway Ltd. (NYSE:CP) and Union Pacific Corp. (NYSE:UNP), have a selling, general & administrative expense to gross profit ratio of about 30%, which suggests durable competitive advantage. With low SGA expenses, these companies have potential for high profit margins.


    The efficiency ratio

      


  • 10 Stocks Dodge & Cox Keep Buying

    Dodge & Cox was founded in 1930 by Van Duyn Dodge and E. Morris Cox. The firm manages a portfolio composed of 178 stocks with a total value of $101,253 million. In both the first and second quarters, the firm bought shares in the following stocks.


    Apple Inc. (AAPL)

      


  • Dodge & Cox Trims Hewlett Packard Enterprise Stake

    Dodge & Cox, a firm that invests primarily in a diversified portfolio of equity securities, trimmed its stake in Hewlett Packard Enterprise (NYSE:HPE) by 7,747,840 shares for an average price of $17.51 per share during the second quarter.


    The trade had a -3.46% impact on Dodge & Cox’s portfolio. It now owns 216,321,878 shares of Hewlett Packard.

      


  • Dodge & Cox Exits Time Warner Cable, Buys MetLife

    Dodge & Cox was founded in 1930, by Van Duyn Dodge and E. Morris Cox. During the second quarter the guru’s most heavily weighted trades were as follows:


    The guru closed its stake in Time Warner Cable Inc. (TWC) with an impact of -3.65% on the portfolio.

      


  • Apache Announces Discovery of Oil in West Texas

    Apache Corp. (NYSE:APA), an independent energy company, announced the discovery of 2 billion to 3 billion barrels of oil in a West Texas field on Wednesday.


    The area, being referred to as “Alpine High,” is located near the Davis Mountains in Reeves County and has been previously overlooked due to the belief it would not be fit for hydraulic fracturing. According to Apache, the find could be worth at least $8 billion and has the potential to become one of the biggest energy finds of the past decade.

      


  • Westport's Top 7 Transactions in 2nd Quarter Were Reductions

    Westport Asset Management (Trades, Portfolio)’s top seven transactions in the second quarter were reductions of stakes in its portfolio.


    In its largest transaction of the quarter, the firm sold nearly 30% of its holding in Universal Health Services Inc. (NYSE:UHS), a Pennsylvania-based hospital management company, selling 170,564 shares for an average price of $131.77 per share. The deal had a -3.33% impact on the portfolio.

      


  • Bill Gates Foundation Traded in 2 Companies in 2nd Quarter

    Bill Gates (Trades, Portfolio)’ Bill & Melinda Gates Foundation reduced three positions and added to two in the second quarter.


    The foundation sold more than 7% of its stake in Warren Buffett (Trades, Portfolio)’s and Charlie Munger (Trades, Portfolio)’s Berkshire Hathaway (NYSE:BRK.B), the Omaha, Nebraska-based conglomerate. The foundation sold 5 million shares for an average price of $142.94 per share. The transaction had a -4.13% impact on the portfolio.

      


  • 6 Stocks With Growing Yields

    Thanks to GuruFocus’ All-In-One Screener, we can highlight stocks that have a five-year growing dividend yield with strong profitability and a long-term track record of solid returns and growing asset value.


    Agrium Inc. (AGU) has a dividend yield that during the last five years has grown by 105.20%. The yield is now 3.86% with a payout ratio of 56%. The company has a 10-year asset growth rate of 21%, supported by return on assets (ROA) of 15% that during the last 10 years has had a median value of 6.67%.

      


  • Joel Greenblatt Buys Fox, ConAgra and Intuit

    During the second quarter, Joel Greenblatt (Trades, Portfolio) of Gotham Asset Management LLC acquired three new holdings. They are Twenty-First Century Fox Inc. (NASDAQ:FOXA), ConAgra Foods Inc. (NYSE:CAG) and Intuit Inc. (NASDAQ:INTU).


    Greenblatt is the founder and portfolio manager of Gotham Asset Management. He is the creator of Magic Formula Investing, which emphasizes high return on capital (ROC) and earnings yield. He also founded the New York Securities Auction Corp. (NYSAC) and is an adjunct professor at Columbia Business School. The firm holds stock in 935 companies and is worth $8.3 million. The turnover rate is 35%.

      


  • Akre Capital Buys Fortive, Sells Arlington

    During the second quarter, Akre Capital Management LLC acquired one new holding and sold out of another. The fund bought Fortive Corp. (NYSE:FTV) and sold Arlington Asset Investment Corp. (NYSE:AI).


    Chuck Akre (Trades, Portfolio) founded Akre Capital, where he serves as CEO, in 1989. The fund is team managed. Their investment philosophy is called the “three-legged stool” approach. This approach examines a company’s growth in book value over time, its management and its ability to reinvest its free cash flow in a manner that continues to earn above-average returns. The fund holds stock in 27 companies with a toal size of $4.9 billion. The turnover rate is 16%.

      


  • 6 Stocks Trading Below the Peter Lynch Value

    According to GuruFocus' All-in-One Screener, several gurus are focusing on stocks whose Peter Lynch fair value is far above the current price. The following stocks are trading with wide margins of safety and at least five gurus are shareholders.


    Ryanair Holdings PLC ADR. (RYAAY) is trading at about $72 per share, and the Peter Lynch value gives the stock a fair price of $98.5, giving investors a margin of safety of 25%.

      


  • Dodge & Cox Comments on Goldman Sachs

    Goldman Sachs (NYSE:GS) (2.5% of the Fund) is a leading global investment bank, securities broker, and investment manager that provides financial services to a diversified client base that includes corporations, financial institutions, governments, and high-net-worth individuals. Since the financial crisis, Goldman Sachs has deleveraged its balance sheet, shed risky assets, and increased its liquidity. As European competitors (e.g., Credit Suisse, UBS, Royal Bank of Scotland) continue to cut costs and retreat from investment banking, Goldman has an opportunity to further increase its market share in many key businesses. While regulatory requirements have increased, this should reduce the probability of large trading losses. Finally, although market turns can be sudden and difficult to predict, Goldman Sachs has demonstrated an ability to remain profitable: over the past 16 quarters, its return on common equity has averaged an impressive 10%.


    Continuing macroeconomic uncertainty has led to diminished primary debt and equity issuance and weaker secondary market trading conditions. Many of Goldman Sachs’ key clients, such as hedge funds and active asset managers, are experiencing net asset outflows. In this period of slower activity, the company has maintained its global network while downsizing naturally through attrition. The weak operating environment and concerns about Brexit have weighed on the stock, which was down 17% during the first half of 2016. However, after carefully analyzing the company’s risks and opportunities, we recently added to Goldman Sachs because it is an increasingly dominant player, has a highly profitable business, and trades at an attractive 0.9 times tangible book value.

      


  • Dodge & Cox Comments on Union Pacific

    While scores of railroads once operated in the United States, the industry is now concentrated: there are two major railroad lines east of the Mississippi and two in the West. We recently initiated a position in Union Pacific (NYSE:UNP), which owns an irreplaceable railroad franchise covering 23 western states.


    The North American railroad industry has many attractive characteristics: companies operate in regional duopolies and have high recurring revenue, substantial ability to control their costs, and extremely high barriers to entry. Union Pacific has the opportunity to increase its earnings as a result of growth in its domestic intermodal business, as well as a construction and housing recovery in the West. In addition, continued growth of the Mexican economy and increased trade with the United States should benefit its U.S.-Mexico business. With low leverage and a projected reduction in capital expenditures, management has the ability to increase share buybacks over our investment horizon.

      


  • Dodge & Cox Comments on Bank of America

    The largest bank in the United States by deposits, Bank of America (NYSE:BAC) has leading positions in the lines of business that comprise the majority of its revenues, including consumer banking and wealth management. Since the financial crisis, Bank of America has gained market share in its core businesses and navigated ever tougher regulatory requirements, while increasing capital and liquidity. As a part of its restructuring plan, management has simplified the business, reduced expenses, and implemented a more customer-focused strategy. Longer term, improved fundamentals and potential cyclical tailwinds (e.g., additional loan growth, higher rates, increased capital markets activity) could produce a significantly higher return on assets, as well as multiple expansion, dividend increases, and/or share repurchases.


    Bank of America—trading at 0.8 times tangible book value and nine times forward earningsb—has one of the lowest valuations among its peers. While a prolonged low interest-rate environment would continue to pressure net interest margins and profitability, we believe the bank’s inexpensive valuation, strong business franchises, and capable management team make it a compelling investment opportunity. Hence, we added to the Fund’s position in Bank of America, which comprised 3.2% of the Fund on June 30.

      


  • Dodge & Cox Stock Fund 2nd Quarter Shareholder Letter

    Market Commentary


    During the first half of 2016, global equity markets were volatile and the U.S. equity market emerged as one of the best performing developed markets. In January and February, concerns about China’s economic outlook, low oil prices, and the trajectory of the global economy led to a steep decline in equity prices. The U.S. market rebounded sharply and was approaching an all-time high until the United Kingdom voted on June 23 to leave the European Union (“Brexit”), triggering a “flight to safety.” Following the vote, global equity markets declined sharply, U.S. government bonds rallied, and the U.S. dollar strengthened significantly against several major currencies, especially the British pound. The S&P 500 subsequently recovered to end the first half of the year up 4%.

      


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