(GuruFocus, February 24, 2010) In my previous article, I pointed out Jeremy Grantham has concentrated his portfolio on blue-chips in Technololgy, Health Care, Consumer Services and Goods sectors as of December 31, 2009.
Jeremy Grantham Calls the next “Seven Lean Years”
In today’s WSJ.com, there is good write-up on Grantham’s current thinking on the stock market. The article is entitled “A Bear Reawakens After a Bullish Run --GMO's Grantham Warns of a Stock Bubble” and can be assessed here.
According to the article, Jeremy Grantham believe the stocks are likely to move higher, not because the economy has turned the corner and sustainable growth is here to stay, but because the Fed policy and government action are creating another asset bubble. Grantham predicts that this next leg up will be unlike 2009's rally, when low-quality and riskier stocks fared best. But rather, He expects a broader advance, "in which high-quality stocks should hold their own or even outperform."
But in the end, Grantham thinks it will be a false rally. For him, the Standard & Poor's 500-stock index is worth "850 or so; thus any advance from here will make it once again seriously overpriced."
Grantham calls the next several years the next ‘seven lean years”. He forecasts large-cap U.S. stocks to deliver a real return (after inflation) of 1.3% annualized, while small-caps provide a 0.5% return. But The outlook is better for high-quality U.S. stocks, which have an expected yearly return of 6.8%. "For the longer term, the outperformance of high quality U.S. blue chips compared with the rest of U.S. stocks is … nearly certain," Mr. Grantham is quoted saying.
4Q09 Top Purchases
With that understanding in mind, these are his top purchases in 4Q09:
No. 1: Apple Inc. (AAPL), Add: 0.82% of the portfolio - Total: 2,254,543 Shares
Apple Computer, Inc. designs, manufactures and markets personal computers and related personal computing and communicating solutions for sale primarily to education, creative, consumer, and business customers. Apple Inc. has a market cap of $181.67 billion; its shares were traded at around $200.656 with a P/E ratio of 24.5 and P/S ratio of 5. Apple Inc. had an annual average earning growth of 90.5% over the past 5 years.
Grantham upped his AAPL holdings from 1.08 million shares to 2.25 million shares.
No. 2: Express Scripts Inc. (ESRX), Add: 0.32% of the portfolio - Total: 2,368,206 Shares
Express Scripts, Inc. is one of the largest pharmacy benefit management companies in North America. Express Scripts Inc. has a market cap of $24.11 billion; its shares were traded at around $87.75 with a P/E ratio of 25.9 and P/S ratio of 1.1. Express Scripts Inc. had an annual average earning growth of 32.8% over the past 10 years. GuruFocus rated Express Scripts Inc. the business predictability rank of 4.5-star.
Grantham increase ESRX holdings from 1.27 million shares to 2.37 million shares.
No. 3: Merck & Co. Inc. (MRK), Add: 0.88% of the portfolio - Total: 22,956,531 Shares
Merck & Co., Inc. is a global research-driven pharmaceutical company. Merck & Co. Inc. has a market cap of $112.8 billion; its shares were traded at around $36.93 with a P/E ratio of 11.3 and P/S ratio of 4. The dividend yield of Merck & Co. Inc. stocks is 4.2%.
Grantham bought about 7.2 million shares of MRK in 4Q09.
No. 4: Oracle Corp. (ORCL), Add: 0.59% of the portfolio - Total: 62,059,737 Shares
Oracle Corporation is one of the world's suppliers of software for information management. Oracle Corp. has a market cap of $124.13 billion; its shares were traded at around $24.77 with a P/E ratio of 17.2 and P/S ratio of 5.3. The dividend yield of Oracle Corp. stocks is 0.8%. Oracle Corp. had an annual average earning growth of 18.2% over the past 10 years. GuruFocus rated Oracle Corp. the business predictability rank of 3-star.
Grantham bought about 7.2 million shares of ORCL in 4Q09.
No. 5: Petroleo Brasileiro S.A.Petrobras (PBR), Add: 0.3% of the portfolio - Total: 4,444,702 Shares
PETROBRAS-ADR C is an integrated company operating in exploration, production, refining, retailing and transportation of petroleum and its byproducts in Brazil and aboad. Petroleo Brasileiro S.a.petrobras has a market cap of $105.48 billion; its shares were traded at around $41.58 with a P/E ratio of 12.8 and P/S ratio of 0.8. The dividend yield of Petroleo Brasileiro S.a.petrobras stocks is 0.8%. Petroleo Brasileiro S.a.petrobras had an annual average earning growth of 48% over the past 5 years. GuruFocus rated Petroleo Brasileiro S.a.petrobras the business predictability rank of 3-star.
Grantham bought about 1.9 million shares of PBR.
Comments
In 4Q09, Jeremy Grantham focused on purchasing high quality stocks.
GuruFocus provides real time information and insights of Investment Gurus such as Warren Buffett and Jeremy Grantham for Premium Members. If you are not a premium member, click here to sign up or upgrade. 7-Day Free Trial is available.
Jeremy Grantham Calls the next “Seven Lean Years”
In today’s WSJ.com, there is good write-up on Grantham’s current thinking on the stock market. The article is entitled “A Bear Reawakens After a Bullish Run --GMO's Grantham Warns of a Stock Bubble” and can be assessed here.
According to the article, Jeremy Grantham believe the stocks are likely to move higher, not because the economy has turned the corner and sustainable growth is here to stay, but because the Fed policy and government action are creating another asset bubble. Grantham predicts that this next leg up will be unlike 2009's rally, when low-quality and riskier stocks fared best. But rather, He expects a broader advance, "in which high-quality stocks should hold their own or even outperform."
But in the end, Grantham thinks it will be a false rally. For him, the Standard & Poor's 500-stock index is worth "850 or so; thus any advance from here will make it once again seriously overpriced."
Grantham calls the next several years the next ‘seven lean years”. He forecasts large-cap U.S. stocks to deliver a real return (after inflation) of 1.3% annualized, while small-caps provide a 0.5% return. But The outlook is better for high-quality U.S. stocks, which have an expected yearly return of 6.8%. "For the longer term, the outperformance of high quality U.S. blue chips compared with the rest of U.S. stocks is … nearly certain," Mr. Grantham is quoted saying.
4Q09 Top Purchases
With that understanding in mind, these are his top purchases in 4Q09:
No. 1: Apple Inc. (AAPL), Add: 0.82% of the portfolio - Total: 2,254,543 Shares
Apple Computer, Inc. designs, manufactures and markets personal computers and related personal computing and communicating solutions for sale primarily to education, creative, consumer, and business customers. Apple Inc. has a market cap of $181.67 billion; its shares were traded at around $200.656 with a P/E ratio of 24.5 and P/S ratio of 5. Apple Inc. had an annual average earning growth of 90.5% over the past 5 years.
Grantham upped his AAPL holdings from 1.08 million shares to 2.25 million shares.
No. 2: Express Scripts Inc. (ESRX), Add: 0.32% of the portfolio - Total: 2,368,206 Shares
Express Scripts, Inc. is one of the largest pharmacy benefit management companies in North America. Express Scripts Inc. has a market cap of $24.11 billion; its shares were traded at around $87.75 with a P/E ratio of 25.9 and P/S ratio of 1.1. Express Scripts Inc. had an annual average earning growth of 32.8% over the past 10 years. GuruFocus rated Express Scripts Inc. the business predictability rank of 4.5-star.
Grantham increase ESRX holdings from 1.27 million shares to 2.37 million shares.
No. 3: Merck & Co. Inc. (MRK), Add: 0.88% of the portfolio - Total: 22,956,531 Shares
Merck & Co., Inc. is a global research-driven pharmaceutical company. Merck & Co. Inc. has a market cap of $112.8 billion; its shares were traded at around $36.93 with a P/E ratio of 11.3 and P/S ratio of 4. The dividend yield of Merck & Co. Inc. stocks is 4.2%.
Grantham bought about 7.2 million shares of MRK in 4Q09.
No. 4: Oracle Corp. (ORCL), Add: 0.59% of the portfolio - Total: 62,059,737 Shares
Oracle Corporation is one of the world's suppliers of software for information management. Oracle Corp. has a market cap of $124.13 billion; its shares were traded at around $24.77 with a P/E ratio of 17.2 and P/S ratio of 5.3. The dividend yield of Oracle Corp. stocks is 0.8%. Oracle Corp. had an annual average earning growth of 18.2% over the past 10 years. GuruFocus rated Oracle Corp. the business predictability rank of 3-star.
Grantham bought about 7.2 million shares of ORCL in 4Q09.
No. 5: Petroleo Brasileiro S.A.Petrobras (PBR), Add: 0.3% of the portfolio - Total: 4,444,702 Shares
PETROBRAS-ADR C is an integrated company operating in exploration, production, refining, retailing and transportation of petroleum and its byproducts in Brazil and aboad. Petroleo Brasileiro S.a.petrobras has a market cap of $105.48 billion; its shares were traded at around $41.58 with a P/E ratio of 12.8 and P/S ratio of 0.8. The dividend yield of Petroleo Brasileiro S.a.petrobras stocks is 0.8%. Petroleo Brasileiro S.a.petrobras had an annual average earning growth of 48% over the past 5 years. GuruFocus rated Petroleo Brasileiro S.a.petrobras the business predictability rank of 3-star.
Grantham bought about 1.9 million shares of PBR.
Comments
In 4Q09, Jeremy Grantham focused on purchasing high quality stocks.
GuruFocus provides real time information and insights of Investment Gurus such as Warren Buffett and Jeremy Grantham for Premium Members. If you are not a premium member, click here to sign up or upgrade. 7-Day Free Trial is available.
