Chris Davis (Trades, Portfolio), leader of Davis Selected Advisors, disclosed his first-quarter 2022 equity portfolio earlier this week.
With a patient, long-term approach, the guru’s Tucson, Arizona-based firm seeks to invest in durable, well managed companies that can be purchased at value prices, preferably when they are out of favor.
Based on these criteria, 13F filings shows Davis established five new positions during the three months ended March 31, exited four stocks and added to or trimmed a number of other existing investments. His most notable trades included the reduction of the Wells Fargo & Co. (WFC, Financial) and American Express Co. (AXP, Financial) stakes and boosts to the Meta Platforms Inc. (FB, Financial), Viatris Inc. (VTRS ) and Coupang Inc. (CPNG, Financial) holdings.
Investors should be aware that the 13F filings do not give a complete picture of a firm’s holdings as the reports only include its positions in U.S. stocks and American depository receipts, but the reports can still provide valuable information. Further, the reports only reflect trades and holdings as of the most-recent portfolio filing date, which may or may not be held by the reporting firm today or even when this article was published.
Wells Fargo
Having reduced the Wells Fargo (WFC, Financial) stake several quarter in a row, Davis curbed it by another 11.34%, selling 4.34 million shares. The transaction had an impact of -0.97% on the equity portfolio. The stock traded for an average price of $53.63 per share during the quarter.
The guru now holds 33.96 million shares, which represent 8.32% of the equity portfolio and remains his largest holding. GuruFocus estimates he has gained 96.43% on the long-held investment.
The San Francisco-based bank has a $161.89 billion market cap; its shares were trading around $42.71 on Friday with a price-earnings ratio of 8.88, a price-book ratio of 1.02 and a price-sales ratio of 2.21.
The GF Value Line suggests the stock is modestly undervalued currently based on historical ratios, past financial performance and future earnings projections.
Wells Fargo’s financial strength was rated 4 out of 10 by GuruFocus as it is being weighed down by weak debt-related ratios.
The company’s profitability fared better with a 6 out of 10 rating, driven by margins and returns on equity, assets and capital that are outperforming at least half of its competitors as well as a moderate Piotroski F-Score of 6 out of 9, meaning operations are typical for a stable company. Steady earnings and revenue growth contributed to its predictability rank of 4.5 out of five stars. According to GuruFocus, companies with this rank return an average of 10.6% annually over a 10-year period.
Of the gurus invested in Wells Fargo, Dodge & Cox has the largest stake with 3.52% of outstanding shares. PRIMECAP Management (Trades, Portfolio), Hotchkis & Wiley, Richard Pzena (Trades, Portfolio), Barrow, Hanley, Mewhinney & Strauss, the T Rowe Price Equity Income Fund (Trades, Portfolio) and Jeremy Grantham (Trades, Portfolio), among others, also have significant positions in the stock.
American Express
Impacting the equity portfolio by -0.97%, the investor trimmed his stake in American Express (AXP, Financial) by 38.83%, selling 1.04 million shares. During the quarter, shares traded for an average price of $180.62 each.
The guru now holds 1.64 million shares total, accounting for 1.55% of the equity portfolio. GuruFocus data shows he has gained 376.90% on the investment so far.
The credit card company, which is headquartered in New York, has a market cap of $119.29 billion; its shares were trading around $158.95 on Friday with a price-earnings ratio of 15.88, a price-book ratio of 5.35 and a price-sales ratio of 2.70.
According to the GF Value Line, the stock is fairly valued currently.
GuruFocus rated American Express’ financial strength 4 out of 10 despite having debt- related ratios that are outperforming versus other financial services players as well as its own history.
The company’s profitability fared better with a 7 out of 10 rating on the back of strong margins and returns that top a majority of industry peers. It also has a high Piotroski F-Score of 8, indicating operations are healthy, and consistent earnings and revenue growth contributed to a five-star predictability rank. GuruFocus research found companies with this rank return an average of 12.1% annually.
With a 20.02% stake, Warren Buffett (Trades, Portfolio) is American Express’ top guru shareholder. Ken Fisher (Trades, Portfolio), Dodge & Cox, First Eagle Investment (Trades, Portfolio), Barrow, Hanley, Mewhinney & Strauss and Bill Nygren (Trades, Portfolio), among others, also have large exposures to the stock.
Meta Platforms
With an impact of 0.78% on the equity portfolio, Davis increased his Meta Platforms (FB, Financial) position by 26.2%, buying 696,057 shares. The stock traded for an average per-share price of $250.52 during the quarter.
The guru now holds 3.35 million shares, making up 3.77% of the equity portfolio and is the 10th-largest holding. GuruFocus says he has gained around 47.85% on the investment.
The Menlo Park, California-based social media company formerly known as Facebook has a $531.49 billion market cap; its shares were trading around $196.39 on Friday with a price-earnings ratio of 14.79, a price-book ratio of 4.3 and a price-sales ratio of 4.61.
Based on the GF Value Line, the stock appears to be significantly undervalued currently.
GuruFocus rated Meta Platforms’ financial strength 8 out of 10 due to a comfortable level of interest coverage and a robust Altman Z-Score of 10.06 that indicates it is in good standing. The return on invested capital also exceeds the weighted average cost of capital, suggesting the company is creating value as it grows.
The company’s profitability fared even better, scoring a 10 out of 10 rating. Despite recording a decline in its margins, Meta is supported by strong returns that top a majority of competitors. It also has a moderate Piotroski F-Score of 5. Steady earnings and revenue growth contributed to a 4.5-star predictability rank.
Fisher is Meta’s largest guru shareholder with a 0.41% stake. Other top guru investors include Baillie Gifford (Trades, Portfolio), Dodge & Cox, First Eagle, Chase Coleman (Trades, Portfolio), Ruane Cunniff (Trades, Portfolio), Diamond Hill Capital (Trades, Portfolio), Philippe Laffont (Trades, Portfolio) and Spiros Segalas (Trades, Portfolio).
Viatris
The guru upped his stake in Viatris (VTRS, Financial) by 26.29%, investing in 11.8 million shares. The transaction expanded the equity portfolio by 0.65%. The stock traded for an average price of $13.23 per share during the quarter.
Davis now holds 56.6 million shares, giving it 3.12% space in the equity portfolio. He has lost an estimated 29.62% on the investment so far according to GuruFocus.
The pharmaceutical company headquartered in Canonsburg, Pennsylvania has a market cap of $13.37 billion; its shares were trading around $11.03 on Friday with a price-earnings ratio of 78.76, a price-book ratio of 0.64 and a price-sales ratio of 0.74.
The GF Value Line suggests the stock is fairly valued currently.
Viatris’ financial strength was rated 4 out of 10 by GuruFocus. In addition to poor interest coverage, the low Altman Z-Score of 0.67 warns the company could be at risk of bankruptcy. The ROIC is also eclipsed by the WACC, indicating it struggles to create value.
The company’s profitability fared better with a 6 out of 10 rating even though margins and returns underperform over half of its industry peers. Viatris also has a moderate Piotroski F-Score of 4 out of 9 and, despite a decline in revenue per share in recent years, a one-star predictability rank. GuruFocus data shows companies with this rank return an average of 1.1% annually.
Of the gurus invested in Viatris, Davis has the largest stake with 4.67% of its outstanding shares. The Vanguard Health Care Fund (Trades, Portfolio), Grantham and Francisco Garcia Parames (Trades, Portfolio) also have significant positions in the stock.
Coupang
Davis increased his Coupang (CPNG, Financial) holding by 111.31%, picking up 4.5 million shares. The transaction impacted the equity portfolio by 0.41%. During the quarter, shares traded for an average price of $21.39 each.
The guru now holds 8.65 million shares total, which make up 0.77% of the equity portfolio. He has lost an estimated 58.03% on the investment since the first quarter of 2021 according to GuruFocus.
The South Korean e-commerce company has a $22.69 billion market cap; its shares were trading around $12.83 on Friday with a price-book ratio of 9.19 and a price-sales ratio of 0.64.
The stock, which began trading in the U.S. market in March 2021, has tumbled over 70% since then.
GuruFocus rated Coupang’s financial strength 5 out of 10. The Altman Z-Score of 2.64 indicates the company is under some pressure currently.
The company’s profitability did not fare as well, scoring a 2 out of 10 rating on the back of negative margins and returns that underperform a majority of competitors. Coupang also has a low Piotroski F-Score of 3, meaning operations are in poor shape.
With a 6.26% stake, Baillie Gifford (Trades, Portfolio) is the largest shareholder of the company. Coupang is also held by Lee Ainslie (Trades, Portfolio), Stanley Druckenmiller (Trades, Portfolio), David Abrams (Trades, Portfolio), Bill Gates (Trades, Portfolio)’ foundation trust, Coleman, Ron Baron (Trades, Portfolio), Grantham and Paul Tudor Jones (Trades, Portfolio).
Additional trades and performance
During the quarter, Davis also added to his JD.com Inc. (JD, Financial) stake and reduced the Capital One Financial Corp. (COF, Financial), Applied Materials Inc. (AMAT, Financial), Alphabet Inc. (GOOG, Financial) and Berkshire Hathaway Inc. (BRK.A, Financial) holdings.
The guru’s $19.79 billion equity portfolio, which is composed of 121 stocks, is most heavily invested in the financial services sector at 44.95%.
In 2021, the firm returned 31.46%, significantly outperforming the S&P 500’s 28.7% return.
