(GuruFocus, May 12, 2009) Investment Guru John Hussman has revealed his 1Q09 holdings, as reported by GuruFocus.com. As usual, Hussman turn over his portfolio heavily as we see 21 new names in the portfolio of stocks. On the selection on stocks, John Hussman has the following to say in his latest quarterly report:
In that regard, he fits the bill of being a value investor but with a methodology of hedging against market risk. In practice, John Hussman has been bearish about the US market over all during the past decade, yet he has maintained 90% invested in the stock market and use some of the rest of the funds to maintain a hedge again adversary market movements. At this moment, John Hussman thinks the market is modestly overvalued and “ Market action remains quite good on the breadth front, but remains fairly tepid from the standpoint of volume sponsorship.”, as a result, he is still fully hedged.
For the past couple of days, Hussman Strategic Growth Fund has underperformed the general market, as shown by this picture:
The relative underperformance does not concern the fund manager who beat the market in the past one, two, three, four, five, six, seven and eight years. His reading on the performance of the past few days offers some prospective for a long-term investor:
So does he own? In terms sector allocation, his latest filing revealed that he has steadily increased Consumer Services, from 22.8% in 3Q08, to 30.8% in 4Q08, and then as of March 31, 36.1% of his long asset in the sector. He continues to be underweighting Financials (0.5%), Oil & Gas (0%), Telecommunications (0%), Utilities (0.9%) and Basic Material (3.4%). As a matter of fact, John Hussman credit avoiding Financials and Basic Materials for his relative good performance in the past couple of years.
Among the new purchases during 1Q09, two names stand out because they cross the 1% weighting line: Broadcom Corporation (BRCM, Financial) and Humana Inc (HUM, Financial). John Hussman deployed 1.23% and 1.03% of his equity assets in these two companies, respectively.
Broadcom Corporation
Broadcom Corporation is a high-tech company developing highly integrated silicon solutions that enable broadband digital data transmission. The company has designed and developed integrated circuits for some of the most significant broadband communications markets. Broadcom Corp. has a market cap of $10.75 billion; its shares were traded at around $21.89 with a P/E ratio of 46.6 and P/S ratio of 2.3.
John Hussman initiated a position of 2,500,000 shares in the quarter that ended on 03/31/2009.
Humana Inc.
Humana Inc. is a health services company that facilitates the delivery of health care services through networks of providers to its medical members. Humana Inc. has a market cap of $5.27 billion; its shares were traded at around $31.08 with a P/E ratio of 6.2 and P/S ratio of 0.2. Humana Inc. had an annual average earning growth of 18.7% over the past 10 years. GuruFocus rated Humana Inc. the business predictability rank of 2-star.
John Hussman bought 1,600,000 shares in the quarter that ended on 03/31/2009.
Top Five Holdings
Far from evenly distributing his fund among the 100 to 200 stocks he typically own, John Hussman does show favoritism for the stocks he likes. The most weighted stock, Amazon.com weighted 4.06% as of March 31, 2009, far more than the average of less than one percent. It worth noticing that none of the top five holdings is a new position. What’s more, he even added to four of his top five positions:
A brief survey for each of his top five companies:
No. 1: Amazon.com Inc. (AMZN, Financial), Weightings: 4.06% - 2,250,000 Shares
John Hussman started to buy AMZN in the first quarter of 2008.
Amazon.com Inc. seeks to be the world's most customer-centric company where customers can find and discover anything they may want to buy online. Amazon.com Inc. has a market cap of $33.41 billion; its shares were traded at around $77.95 with a P/E ratio of 49.65 and P/S ratio of 1.74.
No. 2: Best Buy Co. Inc. (BBY, Financial), Weightings: 3.73% - 4,000,000 Shares
John Hussman started to buy BBY in the second quarter of 2008.
Best Buy operates in a single business segment selling personal computers and other home office products, consumer electronics, entertainment software, major appliances, and related accessories, principally through its retail stores. Best Buy Co. Inc. has a market cap of $15.79 billion; its shares were traded at around $37.93 with a P/E ratio of 13.22 and P/S ratio of 0.35. The dividend yield of Best Buy Co. Inc. stocks is 1.48%. Best Buy Co. Inc. had an annual average earning growth of 24% over the past 10 years. GuruFocus rated Best Buy Co. Inc. the business predictability rank of 4.5-star.
No. 3: Panera Bread Company (PNRA, Financial), Weightings: 3.43% - 2,500,000 Shares
John Hussman started to buy PNRA in 3Q08.
Panera Bread Company operates a retail bakery-cafe business and franchising business under the concept names Panera Bread Company and Saint Louis Bread Company. Panera Bread Company has a market cap of $1.64 billion; its shares were traded at around $52.92 with a P/E ratio of 21.6 and P/S ratio of 1.26. Panera Bread Company had an annual average earning growth of 20% over the past 5 years.
No. 4: Johnson & Johnson (JNJ, Financial), Weightings: 3.43% - 2,650,000 Shares
John Hussman initiated a position in JNJ in 1Q08.
Johnson & Johnson is engaged in the manufacture and sale of a broad range of products in the health care field in many countries of the world. Johnson & Johnson has a market cap of $152.17 billion; its shares were traded at around $54.98 with a P/E ratio of 12.08 and P/S ratio of 2.39. The dividend yield of Johnson & Johnson stocks is 3.35%. Johnson & Johnson had an annual average earning growth of 12.5% over the past 10 years. GuruFocus rated Johnson & Johnson the business predictability rank of 4.5-star.
No. 5: AstraZeneca PLC (AZN, Financial), Weightings: 3.27% - 3,750,000 Shares
John Hussman started to have a position in AZN in 2Q08.
AstraZeneca PLC is one of the top five pharmaceutical companies in the world based on sales. AstraZeneca PLC has a market cap of $53.27 billion; its shares were traded at around $36.14 with a P/E ratio of 7.66 and P/S ratio of 1.69. The dividend yield of AstraZeneca PLC stocks is 5.67%. AstraZeneca PLC had an annual average earning growth of 12.2% over the past 10 years. GuruFocus rated AstraZeneca PLC the business predictability rank of 2-star.
Stocks are ultimately a claim to a long-term stream of future cash flows. In my view, the key elements of investment success are to purchase those cash flows at reasonable prices, and to respect the information conveyed by market action. Market action can provide information about the risk preferences of investors, the pressure on investment yields, and the prospects for business conditions and the economy as a whole.
In that regard, he fits the bill of being a value investor but with a methodology of hedging against market risk. In practice, John Hussman has been bearish about the US market over all during the past decade, yet he has maintained 90% invested in the stock market and use some of the rest of the funds to maintain a hedge again adversary market movements. At this moment, John Hussman thinks the market is modestly overvalued and “ Market action remains quite good on the breadth front, but remains fairly tepid from the standpoint of volume sponsorship.”, as a result, he is still fully hedged.
For the past couple of days, Hussman Strategic Growth Fund has underperformed the general market, as shown by this picture:
The relative underperformance does not concern the fund manager who beat the market in the past one, two, three, four, five, six, seven and eight years. His reading on the performance of the past few days offers some prospective for a long-term investor:
This gap in performance between stocks that we own and stocks that we don't own (but are still in the indices we use to hedge) is known as a “basis widening.” These generally leave us feeling like we've been on the rack in a Medeival dungeon. But we've seen these before, and they often reverse themselves over the course of a few days or weeks.
So does he own? In terms sector allocation, his latest filing revealed that he has steadily increased Consumer Services, from 22.8% in 3Q08, to 30.8% in 4Q08, and then as of March 31, 36.1% of his long asset in the sector. He continues to be underweighting Financials (0.5%), Oil & Gas (0%), Telecommunications (0%), Utilities (0.9%) and Basic Material (3.4%). As a matter of fact, John Hussman credit avoiding Financials and Basic Materials for his relative good performance in the past couple of years.
Among the new purchases during 1Q09, two names stand out because they cross the 1% weighting line: Broadcom Corporation (BRCM, Financial) and Humana Inc (HUM, Financial). John Hussman deployed 1.23% and 1.03% of his equity assets in these two companies, respectively.
Broadcom Corporation
Broadcom Corporation is a high-tech company developing highly integrated silicon solutions that enable broadband digital data transmission. The company has designed and developed integrated circuits for some of the most significant broadband communications markets. Broadcom Corp. has a market cap of $10.75 billion; its shares were traded at around $21.89 with a P/E ratio of 46.6 and P/S ratio of 2.3.
John Hussman initiated a position of 2,500,000 shares in the quarter that ended on 03/31/2009.
Humana Inc.
Humana Inc. is a health services company that facilitates the delivery of health care services through networks of providers to its medical members. Humana Inc. has a market cap of $5.27 billion; its shares were traded at around $31.08 with a P/E ratio of 6.2 and P/S ratio of 0.2. Humana Inc. had an annual average earning growth of 18.7% over the past 10 years. GuruFocus rated Humana Inc. the business predictability rank of 2-star.
John Hussman bought 1,600,000 shares in the quarter that ended on 03/31/2009.
Top Five Holdings
Far from evenly distributing his fund among the 100 to 200 stocks he typically own, John Hussman does show favoritism for the stocks he likes. The most weighted stock, Amazon.com weighted 4.06% as of March 31, 2009, far more than the average of less than one percent. It worth noticing that none of the top five holdings is a new position. What’s more, he even added to four of his top five positions:
A brief survey for each of his top five companies:
No. 1: Amazon.com Inc. (AMZN, Financial), Weightings: 4.06% - 2,250,000 Shares
John Hussman started to buy AMZN in the first quarter of 2008.
Amazon.com Inc. seeks to be the world's most customer-centric company where customers can find and discover anything they may want to buy online. Amazon.com Inc. has a market cap of $33.41 billion; its shares were traded at around $77.95 with a P/E ratio of 49.65 and P/S ratio of 1.74.
No. 2: Best Buy Co. Inc. (BBY, Financial), Weightings: 3.73% - 4,000,000 Shares
John Hussman started to buy BBY in the second quarter of 2008.
Best Buy operates in a single business segment selling personal computers and other home office products, consumer electronics, entertainment software, major appliances, and related accessories, principally through its retail stores. Best Buy Co. Inc. has a market cap of $15.79 billion; its shares were traded at around $37.93 with a P/E ratio of 13.22 and P/S ratio of 0.35. The dividend yield of Best Buy Co. Inc. stocks is 1.48%. Best Buy Co. Inc. had an annual average earning growth of 24% over the past 10 years. GuruFocus rated Best Buy Co. Inc. the business predictability rank of 4.5-star.
No. 3: Panera Bread Company (PNRA, Financial), Weightings: 3.43% - 2,500,000 Shares
John Hussman started to buy PNRA in 3Q08.
Panera Bread Company operates a retail bakery-cafe business and franchising business under the concept names Panera Bread Company and Saint Louis Bread Company. Panera Bread Company has a market cap of $1.64 billion; its shares were traded at around $52.92 with a P/E ratio of 21.6 and P/S ratio of 1.26. Panera Bread Company had an annual average earning growth of 20% over the past 5 years.
No. 4: Johnson & Johnson (JNJ, Financial), Weightings: 3.43% - 2,650,000 Shares
John Hussman initiated a position in JNJ in 1Q08.
Johnson & Johnson is engaged in the manufacture and sale of a broad range of products in the health care field in many countries of the world. Johnson & Johnson has a market cap of $152.17 billion; its shares were traded at around $54.98 with a P/E ratio of 12.08 and P/S ratio of 2.39. The dividend yield of Johnson & Johnson stocks is 3.35%. Johnson & Johnson had an annual average earning growth of 12.5% over the past 10 years. GuruFocus rated Johnson & Johnson the business predictability rank of 4.5-star.
No. 5: AstraZeneca PLC (AZN, Financial), Weightings: 3.27% - 3,750,000 Shares
John Hussman started to have a position in AZN in 2Q08.
AstraZeneca PLC is one of the top five pharmaceutical companies in the world based on sales. AstraZeneca PLC has a market cap of $53.27 billion; its shares were traded at around $36.14 with a P/E ratio of 7.66 and P/S ratio of 1.69. The dividend yield of AstraZeneca PLC stocks is 5.67%. AstraZeneca PLC had an annual average earning growth of 12.2% over the past 10 years. GuruFocus rated AstraZeneca PLC the business predictability rank of 2-star.
