Dodge & Cox

Dodge & Cox

Last Update: 01-08-2016

Number of Stocks: 186
Number of New Stocks: 7

Total Value: $99,410 Mil
Q/Q Turnover: 6%

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

Dodge & Cox Watch

  • Dodge & Cox Comments on HP Inc.

    As the leader in printing and personal computer sales globally, HP Inc. (NYSE:HPQ)’s key challenge is declining revenues. Partly due to the stronger U.S. dollar, consensus estimates have the company’s sales declining approximately 10% in 2016. Many investors believe a shrinking market for hardware and ink may be too difficult to overcome; we believe this view of the company’s prospects is too pessimistic. HP’s management is aggressively cutting costs and has plans to introduce more new products. For example, HP has portions of its printing business (e.g., high-end graphics production) that are currently growing and may increase share in the established copier market and in the more nascent 3D print market. Moreover, the company generates robust free cash flow. Trading at seven times forward estimated earnings, HP remains an attractive investment opportunity with strong business prospects given its large valuation discount to the overall market.


    From Dodge & Cox Stock Fund annual commentary for 2015.

      


  • Dodge & Cox Comments on Hewlett Packard Enterprise

    After providing strong returns in 2013 and 2014, Hewlett-Packard was the Fund’s largest detractor from results during 2015. Hewlett-Packard recently split into two entities—Hewlett Packard Enterprise (NYSE:HPE) and HP Inc. (NYSE:HPQ)—which should result in greater focus and flexibility for each company to achieve its strategic goals. To assess secular challenges and evaluate the risks and opportunities of each stand-alone business, we met numerous times with their management teams and competitors and spoke with industry consultants. As a result, we added to the Fund’s positions in both companies. On December 31, Hewlett Packard Enterprise was a 2.5% position and HP Inc. was a 1.8% position in the Fund.


    Hewlett Packard Enterprise, one of the largest vendors in information technology (IT), consists of the enterprise technology infrastructure, software, and services segments of the old Hewlett-Packard. We acknowledge the company faces headwinds: the shift to the cloud has negatively impacted all on-premise IT vendors, continued public cloud adoption will likely erode the company’s market share, and competition is keen. Despite these risks, we believe Hewlett Packard Enterprise is an attractive investment due to its strong market positions across its portfolio (e.g., top provider of servers, number two position in IT services), scale advantages, and opportunities to improve its margin structure. Meg Whitman—the CEO of Hewlett Packard Enterprise—has overseen sound acquisitions (e.g., 3Par), new product launches, and cost reduction programs during her tenures at Hewlett-Packard and eBay. Management is actively cutting costs and retooling its product and service offerings to improve the company’s competitiveness. Margins in the Enterprise Services segment should expand as the company optimizes its contract mix and delivery models. The company trades at a compelling valuation (eight times forward estimated earnings), which is among the lowest in the S&P 500.

      


  • Dodge & Cox Comments on American Express

    American Express (NYSE:AXP)—the largest new purchase in the Fund during 2015—provides charge and credit card products and travel-related services to consumers and businesses worldwide. The company is the number one credit/charge card issuer and merchant acquirer in the United States measured by billed business, and its network is the second largest after Visa. Historically, American Express has generated attractive returns due to its vertical integration and strong value proposition for high-spending customers.


    In 2015, American Express’ stock declined 24%(c) due to concerns that the company’s business model is under pressure: Costco U.S. and JetBlue terminated their exclusive relationships with the card company and the Department of Justice questioned American Express’ ability to enforce rules prohibiting merchants from steering customers to other credit cards. As a result, American Express’ valuation relative to the market is at a historically low level (13 times forward estimated earnings(d)). We initiated a position in the company because we believe these near-term concerns have obscured a long-term investment opportunity. The company has an attractive business model that produces high returns on capital by encouraging more affluent and creditworthy customers to use the company’s credit and charge cards. American Express’ highly perceived rewards program, customer service, and strong brand recognition help attract and retain wealthier customers. The company should benefit from a continued industry shift from paper to plastic payments and growth in its third-party issued cards business. We believe American Express will be able to maintain its strong return on equity and improve profitability in the long run. On December 31, American Express was a 1.4% position in the Fund.

      


  • Dodge & Cox Comments on Schneider Electric

    Schneider Electric (XPAR:SUNV), a 2.2% position in the Fund, is a global leader in electrical products, systems, and services such as low- and medium-voltage gear, factory automation equipment and systems, and uninterruptible power supply solutions for data centers. While incorporated in France, Schneider derives only 27% of its revenues from Western Europe and more than 40% of its sales come from emerging markets. Thus, Schneider is a prime example that a company’s domicile does not always reflect its true revenue exposure. Schneider’s stock performed poorly in 2015 (down 21% in U.S. dollars) due to lower than expected construction and industrial activity, driven in large part by a slowdown in China, Russia, and Brazil.

      


  • Dodge & Cox Comments on Itau Unibanco

    Itau Unibanco (NYSE:ITUB), Brazil’s leading bank, has strong market positions in consumer credit and payments and is exposed to under-penetrated areas of the financial market that are poised to grow over the next three to five years. Brazil’s struggling economy and sharp currency depreciation weighed substantially on Itau Unibanco’s stock during 2015 (down 41%(e) in U.S. dollars). We conducted both on-the-ground and other due diligence with company management and government officials to evaluate economic and company-specific concerns. What we found reaffirmed our view that Itau’s management has proactively managed credit risk by reducing exposures and raising provisions. Management is focused on enhancing shareholder value and has a solid track record of capital allocation. Beyond this cycle, management is investing for the future and strengthening Itau’s competitive advantage. For example, Itau continues to invest in online access to better serve the needs of affluent customers and more efficiently handle payments and transactions for its retail customer base. At 1.6 times tangible book value, Itau trades at a 10-year low valuation. While political and macroeconomic instability has plagued Brazil, we believe Itau is an attractive long-term investment opportunity and added to the holding. On December 31, Itau was a 1.7% position in the Fund.


    From Dodge & Cox International Stock Fund year-end letter 2015.

      


  • Dodge & Cox Stock Fund Annual Letter 2015

    To Our Shareholders

      


  • Stocks in the Spotlight

    Indexes had a nice rebound along with oil on Tuesday on renewed optimism that oil producers will look to curb production in the near future. The problem with this is twofold. For one, Saudi Arabia has been pretty adamant that it plans to keep producing oil in order to preserve market share. Second, more supply is set to hit the market, this time from Iran whose sanctions have been lifted. Neighboring Iraq is also set to increase its oil production from 3.8 million barrels per day to 4 million plus.


    The main stock to watch on Wednesday, Jan. 27, will be Apple (NASDAQ:AAPL) whose shares are down after hours after it reported better-than-expected earnings but missed analyst estimates on revenue. Earnings came in at $3.28 per share on $75.9 billion in revenue vs. analyst expectations of $3.23 per share on revenue of $76.54 billion.

      


  • Dodge & Cox Global Stock Fund 4th Quarter Commentary

    The Dodge & Cox Global Stock Fund had a total return of 3.5% for the fourth quarter of 2015, compared to 5.5% for the MSCI World Index. For 2015, the Fund had a total return of –8.1%, compared to –0.9% for the MSCI World.


    Market Commentary

      


  • Still a Guru Favorite

    Are the gurus right about Bank of America (NYSE:BAC)?


    There are only a few companies that are more widely held by GuruFocus' gurus. Two of these are banks as well: Wells Fargo (NYSE:WFC) and Citigroup (NYSE:C). Meanwhile lots of gurus have been selling out of Bank of America over the past quarter while the stock is within 20% of its 52-week high and only 2.3% above its 52-week low. Today, the bank reported solid earnings that beat expectations.

      


  • Dodge & Cox Stock Fund 2015 Commentary

    The Dodge & Cox Stock Fund had a total return of 4.6% for the fourth quarter of 2015, compared to 7.1% for the S&P 500 Index. For 2015, the Fund had a total return of -4.5%, compared to 1.4% for the S&P 500.


    Market Commentary

      


  • Dodge & Cox Continues to Buy Shell, Coach, Cisco

    Dodge & Cox was founded in 1930 by Van Duyn Dodge and E. Morris Cox. The firm manages a portfolio of 186 stocks with a total value of $99.4 billion. The following are the stocks he has been buying for at least the last two quarters.


    LM Ericsson Telephone Co. (ERIC)

      


  • Berkshire Hathaway, China Mobile, Novartis, Oracle, PetroChina Near 52-Week Lows

    According to GuruFocus list of 52-week lows, these Guru stocks have reached their 52-week lows.


    Berkshire Hathaway Inc. reached the 52-week low of $197,800

      


  • High Dividend Yield Ratios Are Hallmarks of Many Dodge & Cox Stakes

    Ten of the existing stakes in Dodge & Cox's portfolio provide high dividend yields for the company. The firm reduced its positions in six in the third quarter.


    Dodge & Cox was founded in 1930 by Van Duyn Dodge and E. Morris Cox and employs a team research approach in making investment decisions. The investment decisions are made by the Investment Policy Committee.

      


  • Larry Robbins Buys Cigna, Monsanto and Sells Out McDonald's

    Glenview Capital Management, founded in 2000 by Larry Robbins (Trades, Portfolio), is a privately held investment management firm. Robbins’ investments are primarily focused on the U.S. with a smaller amount of exposure in Western Europe.


    The following are his most notable trades during the third quarter.

      


  • Paul Singer Sells Juniper and Fox, Sells Out Family Dollar Stores

    Paul Singer (Trades, Portfolio) founded Elliot Management in 1977, which manages more than $24 billion in assets. Almost 37% of the firm’s portfolio is in the oil and gas industry, notably Hess Corp. (NYSE:HES) and Anadarko Petroleum Corp. (NYSE:APC).


    He manages a portfolio composed of 56 stocks with total value of $5.124 billion. The following are the top sales during the last quarter.

      


  • Highlights From HP's Final Combined Earnings Call

    Hewlett-Packard (NYSE:HPQ) reported its last earnings announcement as a combined company on Nov. 24. Results for the business continued to reflect weak personal computer sales and challenging industry competition in enterprise technology. Revenue for the full year was down 7% at $103.4 billion. EPS for the year was also lower, down 4% at $3.59.


    HP Inc.

      


  • John Burbank Jumps in Alphabet, Dollar Tree and Sells Rite Aid, NRG

    John Burbank is the chief investment officer of Passport Capital LLC, the global investment firm he founded in 2000. He manages a portfolio composed of 119 stocks with a total value of $5.55 billion. The following are his largest trades during the third quarter.


    The investor reduced his stake in Liberty Global PLC (LBTYK) by 62.48% with an impact of -3.09% on the portfolio.

      


  • Stocks With the Highest Dividend Yield in Berkowitz’s Portfolio

    Bruce Berkowitz (Trades, Portfolio) is the founder and the managing member of Fairholme Capital Management. He focuses investments on companies that have exceptional management, generate free cash and are cheaply priced.


    Berkowitz will also invest in mediocre companies trading at a significant discount to intrinsic value where there exists a catalyst. I've selected the stocks with highest dividend yields in Berkowitz’s portfolio.

      


  • Dodge & Cox Comments on Express Scripts

    Over the past decade, Express Scripts (NASDAQ:ESRX) has been a significant beneficiary of three industry trends: increased generic penetration, mail order pharmacy growth, and industry consolidation. The past round of mergers—CVS/Caremark, Express Scripts/Medco Health Solutions (Medco), and SXC Health Solutions/Catalyst Health—has created an oligopolistic market structure where the top three players now control over 65% of industry volumes.


    Following its merger with Medco in 2012, Express Scripts became the largest PBM in the United States. The company now generates over $100 billion in annual revenue and manages 1.3 billion claims, or 30 percent of all U.S. prescription claims. Today, the company operates three vertically integrated businesses: a basic pharmacy benefit manager, a mail order pharmacy, and a specialty pharmacy. Express Scripts has achieved measurable growth by providing patients with generic drugs. With multiple equivalent treatments available, the company has used its buying power to save money for customers and generate profits; its mission is well aligned with customers looking to reduce health care and pharmacy cost trends. This strategy has boosted generic drug penetration to high levels.

      


  • Dodge & Cox Global Stock Fund 3rd Quarter Commentary

    The Dodge & Cox Global Stock Fund had a total return of –13.1% for the third quarter of 2015, compared to –8.4% for the MSCI World Index. For the nine months ended September 30, 2015, the Fund had a total return of –11.2%, compared to –6.0% for the MSCI World.


    Market Commentary

      


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