Overview of PRIMECAP Management (Trades, Portfolio)'s Recent Transaction
On December 31, 2023, PRIMECAP Management (Trades, Portfolio) executed a significant reduction in its holdings of FedEx Corp (FDX, Financial), a leading global courier delivery services company. The firm sold 174,800 shares, which resulted in a 1.34% decrease in their stake, impacting the portfolio by -0.04%. The shares were traded at a price of $252.97 each. Following the transaction, PRIMECAP Management (Trades, Portfolio)'s total share count in FedEx stood at 12,902,957, representing 2.76% of their portfolio and 5.16% of the company's outstanding shares.
Profile of PRIMECAP Management (Trades, Portfolio)
Founded in 1983 and based in Pasadena, CA, PRIMECAP Management (Trades, Portfolio) is an independent investment management company. The firm is known for its US-focused equity portfolios, catering to institutions and mutual funds. PRIMECAP Management (Trades, Portfolio)'s investment approach is grounded in four key principles: individual decision-making, a commitment to fundamental research, a long-term investment horizon, and a focus on value. The firm employs a multi-counselor investment model, allowing each portfolio manager to independently manage a portion of the fund. PRIMECAP's investment philosophy is to identify undervalued stocks that will outperform the market over a three to five-year horizon, often starting with companies and industries that are currently out of favor.
FedEx Corp Company Overview
FedEx Corp, with its stock symbol FDX, has been a pioneer in the express package delivery industry since its inception in 1973. The company operates various segments, including FedEx Express, FedEx Ground, FedEx Freight, and FedEx Services, contributing to its diverse revenue streams. With a market capitalization of $59.34 billion, FedEx has maintained its position as the world's largest express package provider. The company's business model has evolved over the years, including the strategic acquisition of TNT Express in 2016, further solidifying its global presence.
Transaction Analysis
The trade price of $252.97 per share was close to FedEx's current stock price of $237.47, which is deemed "Fairly Valued" according to the GF Value of $246.64. Since the transaction, the stock has experienced a -6.13% price change, indicating a slight undervaluation. PRIMECAP Management (Trades, Portfolio)'s reduction in FedEx shares has slightly decreased the firm's exposure to the transportation industry, yet FedEx remains a substantial holding, reflecting the firm's long-term confidence in the company's prospects.
FedEx Corp Stock Performance and Valuation
FedEx's stock performance has been robust, with a PE Percentage of 14.07, indicating a reasonable valuation relative to earnings. The stock is currently trading at a price to GF Value ratio of 0.96, suggesting it is fairly priced. Despite a -5.86% YTD performance, the company's long-term growth has been impressive, with a 24,131.63% increase since its IPO.
FedEx Corp Financial Health and Growth Prospects
FedEx's financial health is solid, with a Financial Strength rank of 6/10 and a Profitability Rank of 8/10. The company's Growth Rank is 9/10, reflecting strong growth metrics, including a 39.30% earnings growth over the past three years. FedEx's Piotroski F-Score of 8 indicates a healthy financial situation, and the Altman Z-Score of 2.48 suggests a low risk of financial distress.
Market Context and Other Gurus' Positions
Dodge & Cox remains the largest shareholder among the investment gurus, with a significant stake in FedEx Corp. Other notable investors include HOTCHKIS & WILEY, Bill Gates (Trades, Portfolio), and David Tepper (Trades, Portfolio), indicating a strong interest from the investment community in FedEx's market position and growth potential.
Conclusion
PRIMECAP Management (Trades, Portfolio)'s recent reduction in FedEx Corp shares is a strategic move that aligns with the firm's investment philosophy and portfolio management approach. Despite the reduction, FedEx Corp continues to be a key player in PRIMECAP's portfolio, reflecting confidence in the company's long-term value. With a solid financial foundation and promising growth prospects, FedEx Corp remains an attractive investment for value investors seeking long-term performance.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
