PRIMECAP Management Company was founded in September 1983 in Pasadena, California. It manages Vanguard’s PRIMECAP Fund, Vanguard Capital Opportunity Fund, and Vanguard PRIMECAP Core Fund. It also manages PRIMECAP ODYSSEY FUNDS. Since 1984, the Vanguard PRIMECAP Fund has gained an average of 14.5% as of Sept. 2008, while the S&P500 gained 11.6%. PRIMECAP was founded by Chairman and Chief Investment Officer Howard Schow, Vice Chairman Mitchell Milias, and President Theo Kolokotrones. As of Aug. 2008, the company has more than $60 billion under management.
PRIMECAP team evaluate securities based on their outlook over a three to five year time horizon, with the intention of holding them considerably longer if their fundamentals warrant it. They believe successful investment decisions rests in correctly appraising the relationship between the fundamental value of a company and the market price of its stock. A company may be valuable because of its free cash flow, its assets, or both; however, a company will be a superior investment only if it is purchased at the right price. PRIMECAP only invest their highest conviction ideas.
At this difficult time for a lot of value investors, PRIMECAP fares well relative to the market. For the 12 months ended 06/30/2008, PRIMECAP Odyssey Stock Fund lost 10.3%, Growth Fund lost 10.41%, Aggressive Growth Fund lost 16.31%, the S&P500 lost 13.12% during the same period. Since 2004, these three funds outperform the market by at least 2% a year.
PRIMECAP Management invests heavily in healthcare and technology stocks, their largest holdings are El Lily (LLY), Potash Corp. of Saskatchewan Inc. (POT), Novartis AG (NVS) etc. They initiated positions in C.H. Robinson Worldwide Inc. (CHRW), Honeywell International Inc. (HON) etc. This is their complete portfolio.
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