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Microsoft Corp. (MSFT)
According to the screener, 55 Gurus hold Microsoft, which makes it the most-owned stock of the fourth quarter, with a combined almost 480 million shares. Ron Muhlenkamp has assigned the biggest portion of his portfolio to it, at 5.4 percent, while Dodge & Cox owns the most shares outstanding, at 0.81 percent.
With a market cap of $234.58 billion, Microsoft’s shares have declined almost 1.5 percent over the past five years, to trade for $28.01 on Thursday afternoon.
Over the same span, it grew its revenue at 8.8%, EBITDA at 5.6%, free cash flow at 17.6% and book value at 20.2%, on average per year.
Microsoft has been active in innovating new products, with the releases of Windows 8, Windows Phone 8 and Windows Surface tablet all occurring in the fourth quarter. New Windows devices, such as the Surface Pro and new version of Office, are still to come. The company also announced today that its free webmail system is done with beta testing and set to compete with Google (GOOG)’s Gmail, the web’s most popular email service.
Diamond Hill Capital, a Microsoft holder, remarked on the stock in their third quarter Select Fund commentary:
“Software company Microsoft Corp. (MSFT) continued to produce modest operating income growth and attractive cash generation. However, the stock declined slightly during the quarter as investors remained focused on the company's release of Windows 8 in October and whether the company can generate any momentum in mobile devices.”
Microsoft is currently valued with a P/E of 15.36, P/B of 3.4, with a dividend yield of 3 percent.
Apple Inc. (AAPL)
Apple was the second most popular stock among Gurus in the quarter, with 48 holding a combined 15.9 million shares. The largest weighting is held by David Einhorn, who has invested 10.9 percent of his portfolio in the company. Frank Sands has the largest stake in the company, with 3.6 million shares, representing 7.7 percent of his portfolio.
In the past five years, Apple shares gained 269 percent, after tumbling since the latter half of 2012, reflected in its broad 52-week range of $435 to $705.07.
Apple has seen non-stop growth in the past several quarters, including a record 47.8 million iPhones and 22.9 million iPads sold in the fourth quarter, contributing to record $54.4 billion and net profit of $13.1 billion, or $13.81 per diluted share.
Investors worry that the growth could slow if the company is unable to reproduce its pattern of bringing groundbreaking, must-have products to the market. The company is also expecting between $41 billion and $43 billion in revenue for the second quarter, slightly higher than $39.2 billion in revenue for its year-ago result. Its gross margins will also be affected, as it is expected to be between 37.5 percent and 38.5 percent, compared to 47.4 percent a year previously.
Without mentioning specifics, Tim Cook, Apple’s CEO, addressed the uncertainty surrounding new products in January, “We’re very confident in our product pipeline as we continue to focus on innovation and making the best products in the world.”
Apple has a market cap of $430.44 billion, and is valued with a P/E of 10.43, P/B of 3.4 and P/S of 2.6, with a dividend yield of 1.7 percent.
Wells Fargo (WFC)
Over 753 million shares of the third most-held stock, Wells Fargo (WFC), are in the portfolios of 47 Gurus. Warren Buffett is by far the largest shareholder of the bank, owning 8.36 percent of its outstanding shares, for 20 percent of his total assets managed.
Over the past five years, Wells Fargo shares have gained 18.36%. With a $185.1 billion market cap, Wells Fargo trades for $35.14 on Tuesday.
In addition to reporting a 24 percent year-over-year increase to record net income of $5.1 billion, and a 7 percent increase in revenue to $21.9 billion in the fourth quarter, Wells Fargo increased its dividend three cents to 25 cents per share on Jan. 22. The slashed its dividend during the financial crisis of 2009, and the Federal Reserve approved an increase in March 2012.
“The dividend increase approved by our board today was included in our 2012 Capital Plan and reflected the confidence we have in our company’s performance,” Wells Fargo chairman and CEO John Stumpf said. “We remain committed to returning more capital to our shareholders. We requested an increase in capital distributions in our 2013 Capital Plan as compared to our 2012 plan, subject to review and non-objection by the Federal Reserve Board.”
Wells Fargo also replaced Coca Cola (KO) as Warren Buffett’s largest holding at Berkshire Hathaway (BRK.A)(BRK.B) in the fourth quarter.
The bank is valued with a P/E of 10.45, P/B of 1.2 and P/S of 2.2, and has a dividend yield of 2.6 percent.
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