Dodge & Cox was founded in 1930 and is a firm employing a long-term approach and strict price discipline. It has $250 billion in assets under management and returned 11.32% on average annually over the past 20 years, compared to 9.39% for the S&P 500.
The managers discussed their view of market valuations and portfolio positioning in their first quarter fact sheet:
“We believe U.S. equity market valuations are reasonable, although they have increased and are above the long-term average. The S&P 500 traded at 17.5 times forward estimated earnings with a 2.0% dividend yield at quarter end. Corporate balance sheets and cash flows continue to be strong despite modest earnings growth expectations for 2015. We continue to have a positive, albeit more modest, outlook for equities over our three- to five-year investment horizon and remain optimistic about the long-term prospects for corporate sales growth and earnings growth. In our opinion, the Fund’s portfolio is well positioned to benefit from long-term global growth opportunities. Acknowledging that markets can be volatile in the short term, we encourage shareholders to remain focused on the long term.”
The company had low overall turnover in the first quarter of just 4%, with two new stocks purchased for a portfolio of 187 positions. The portfolio was valued at $108.5 billion at quarter-end with the greatest sectors represented being technology at 22.9% of holdings, financial services at 21.5% and health care 16%.
Dodge & Cox’s two first quarter stock selections were: Teck Resources Ltd. (TCK, Financial) and Endo International PLC (ENDP, Financial).
Teck Resources Ltd. (TCK, Financial)
Dodge & Cox purchased 22,071,213 shares of Teck Resources Ltd., a 0.28% portfolio holding. The company’s stock price averaged $14 per share in the first quarter.
Teck Resources Ltd. was continued under the Canada Business Corporations Act in 1978. Teck Resources Ltd. has a market cap of $6.85 billion; its shares were traded at around $11.83 with a P/E ratio of 23.70 and P/S ratio of 1.0. The dividend yield of Teck Resources Ltd. stocks is 4.57%. Teck Resources Ltd. had an annual average earnings growth of 0.60% over the past 10 years.
Endo International PLC (ENDP, Financial)
Dodge & Cox purchased 2,560 shares of Endo International PLC, a less than 0.01% portfolio holding. The company’s stock price average was $84 per share in the first quarter.
Endo International PLC was incorporated in Ireland on Oct. 31, 2013. Endo International Plc has a market cap of $14.74 billion; its shares were traded at around $82.40 with and P/S ratio of 4.10.
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