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Today (August 4, 2010) Morningstar published an interview with Brian Rogers. He answered a question on the fund size and the kind of company he feels comfortable in investing:How much do you run altogether--including separate accounts, institutional accounts, and so on? Do you ever run into mid-caps or smaller large-caps that you'd like to buy but find that the fund is simply too big?
When you add up everything, the total comes to roughly $30 billion. Most of our investments are in large-capitalization companies. I've never ventured into the small-cap area even when the fund was very small back in the late 1980s. Approximately 28% of the Equity Income Fund's assets are in companies with market caps below $10 billion, with the vast majority in the large- to mega-cap area.
Given the generally large-cap nature of the fund, we have plenty of room to grow. We've demonstrated that we are very willing to close funds to new investors if we think it is the right thing to do. Should I ever feel as though the Equity Income Fund has become too unwieldy, I will be the first to argue that we close it to additional investors.
The performance of the fund seems to suffer in the recent years. The fund was doing very well during the first half of the 00’s. In early part of the decade, the performance of value and so called “growth” (mostly high-tech) stocks diverged; nowadays, everything tends to go up and down at the same time.
Performance of T. Rowe Price Equity Income Fund
| Year | Return (%) | S&P500 (%) | Excess Gain (%) |
|---|---|---|---|
| 2009 | 25.62 | 26.5 | -0.9 |
| 2008 | -35.75 | -37 | 1.2 |
| 2007 | 3.3 | 5.61 | -2.3 |
| 2006 | 19.14 | 15.79 | 3.3 |
| 2005 | 4.26 | 4.91 | -0.6 |
| 5-Year Cumulative | 3.6 | 2.2 | 1.4 |
| 2004 | 15.05 | 12 | 3.1 |
| 2003 | 25.78 | 28.7 | -2.9 |
| 2002 | -13.04 | -22.1 | 9.1 |
| 2001 | 1.64 | -11.9 | 13.5 |
| 2000 | 13.12 | -9.1 | 22.2 |
| 10-Year Cumulative | 49.8 | -8.1 | 57.9 |
| 1998 | 9.23 | 28.6 | -19.4 |
| 0 | 0 | 0 | 0.0 |
| 0 | 0 | 0 | 0.0 |
These are the large caps that Brian Rogers likes the most:
No. 1: JPMorgan Chase & Co. (JPM), Weightings: 3.21% - 13,700,800 Shares
J.P. Morgan Chase & Co. is a global financial services firm. Jpmorgan Chase & Co. has a market cap of $163.45 billion; its shares were traded at around $41.08 with a P/E ratio of 12.2 and P/S ratio of 1.7. The dividend yield of Jpmorgan Chase & Co. stocks is 0.5%.
Brian Rogers commented on JPMorgan Chase in the Morningstar interview: What do you feel is your information/analytic edge in assessing a giant, widely analyzed company such as J.P. Morgan? What do you know that other investors don't know or don't appreciate?
I don't believe that we have a truly unique information advantage in any company in which we invest. I would say that we have a comparative confidence and valuation advantage. We know J.P. Morgan very well and had a position in the company long before most investors had any reason to have confidence in Jamie Dimon. The company is very well run, conservatively managed, and has the ability to generate very strong earnings growth in the economic recovery. You can look ahead to either dividend decisions or stock-buyback activity intended to help build shareholder value.
No. 2: Chevron Corp. (CVX), Weightings: 2.57% - 5,917,700 Shares
Chevron is the fifth-largest integrated energy company in the world. Chevron Corp. has a market cap of $158 billion; its shares were traded at around $78.66 with a P/E ratio of 9.5 and P/S ratio of 0.9. The dividend yield of Chevron Corp. stocks is 3.7%. Chevron Corp. had an annual average earning growth of 11.5% over the past 10 years. GuruFocus rated Chevron Corp. the business predictability rank of 3-star.
No. 3: General Electric Company (GE), Weightings: 2.55% - 27,636,600 Shares
General Electric is one of the largest and most diversified industrial corporations in the world. General Electric Company has a market cap of $175.09 billion; its shares were traded at around $16.4 with a P/E ratio of 15.1 and P/S ratio of 1.1. The dividend yield of General Electric Company stocks is 2.4%. General Electric Company had an annual average earning growth of 14.1% over the past 10 years. GuruFocus rated General Electric Company the business predictability rank of 4-star.
No. 4: American Express Company (AXP), Weightings: 2.36% - 9,268,400 Shares
American Express Company is primarily engaged in the business of providing travel related services, financial advisory services and international banking services throughout the world. American Express Company has a market cap of $53.58 billion; its shares were traded at around $44.6 with a P/E ratio of 24.1 and P/S ratio of 2.2. The dividend yield of American Express Company stocks is 1.6%.
No. 5: Bank of America Corp. (BAC), Weightings: 2.29% - 24,918,486 Shares
Bank of America Corp. is one of the world's financial services companies. Bank Of America Corp. has a market cap of $124.18 billion; its shares were traded at around $14.34 with and P/S ratio of 0.8. The dividend yield of Bank Of America Corp. stocks is 0.3%.
No. 6: Exxon Mobil Corp. (XOM), Weightings: 2.16% - 5,917,700 Shares
Exxon Mobil Corporation's principal business is energy, involving exploration for, and production of, crude oil and natural gas, manufacturing of petroleum products and transportation and sale of crudeoil, natural gas and petroleum products. Exxon Mobil Corp. has a market cap of $319.77 billion; its shares were traded at around $62.72 with a P/E ratio of 12.2 and P/S ratio of 1. The dividend yield of Exxon Mobil Corp. stocks is 2.8%. Exxon Mobil Corp. had an annual average earning growth of 11.2% over the past 10 years. GuruFocus rated Exxon Mobil Corp. the business predictability rank of 3.5-star.
Read Brian Rogers interview with Morningstarhere.
Check out Brian Rogers’s stock holdings here.
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