Spiros Segalas (Trades, Portfolio), manager of the Harbor Capital Appreciation Fund, disclosed this week that his fund's top five buys for the second quarter were Tencent Holdings Ltd. (HKSE:00700, Financial), American Tower Corp. (AMT, Financial), Eli Lilly and Co. (LLY, Financial), Netflix Inc. (NFLX, Financial) and Goldman Sachs Group Inc. (GS, Financial).
The Chicago-based fund seeks steady investment growth primarily through investments in the common stock of U.S. companies with a market cap of at least $1 billion. Through rigorous research and visits with top management, Harbor Capital invests in companies with strong balance sheets, sales momentum, high profitability, unique market positions and capable management.
Harbor Capital's $30.17 billion equity portfolio contains 56 stocks as of April 30. The portfolio's top three sectors in terms of weight are technology, consumer cyclical and communication services, representing 34.44%, 22.42% and 15.22% of the equity portfolio.
Tencent
Harbor Capital purchased 7,989,126 shares of Tencent, giving the stake 1.39% weight in the equity portfolio. Shares averaged 321.10 Hong Kong dollars ($41.43) during the quarter.
The Shenzhen, Guangdong-based company operates a wide range of internet services, including social media platform WeChat, online games and utilities. GuruFocus ranks Tencent's profitability 9 out of 10 on several positive investing signs, which include a five-star business predictability rank and profit margins that are outperforming over 85% of global competitors.
Other gurus with holdings in Tencent include Bestinfond (Trades, Portfolio), the Matthews China Fund (Trades, Portfolio) and the Matthews Pacific Tiger Fund (Trades, Portfolio).
American Tower
The fund added 1,532,862 shares of American Tower, increasing the position 2,265.10% and the equity portfolio 1.21%. Shares averaged $236.58 during the quarter.
The Boston-based real estate investment trust owns and operates over 180,000 cell towers around the globe. GuruFocus ranks American Tower's profitability 9 out of 10, driven by a high Piotroski F-score of 7, a 4.5-star business predictability rank and a return on equity that outperforms 98.46% of global competitors.
Eli Lilly
The fund added 2,115,646 shares of Eli Lilly, increasing the holding 89.77% and the equity portfolio 1.08%. Shares averaged $141.78 during the quarter.
The Indianapolis-based company manufactures pharmaceutical products for the treatment of cancer, osteoporosis, diabetes and other maladies. GuruFocus ranks Eli Lilly's profitability 8 out of 10: Although the company's positive investing signs include expanding operating margins and strong returns on equity, its three-year revenue growth rate underperforms 52.09% of global competitors.
Netflix
Harbor Capital added 593,406 shares of Netflix, increasing the position 21.6% and the equity portfolio 0.83%. Shares averaged $375.47 during the quarter.
GuruFocus ranks the Los Gatos, California-based streaming giant's profitability 8 out of 10 on several positive investing signs, which include a 4.5-star predictability rank, a return on assets that outperforms over 83% of global competitors and an operating margin that has increased approximately 18% per year on average over the past five years.
Goldman Sachs
The fund added 1,306,650 shares of Goldman Sachs, increasing the stake 542.94% and the equity portfolio 0.79%. Shares averaged $190.68 during the quarter.
GuruFocus ranks the New York-based investment bank's financial strength 2 out of 10 on the back of equity-to-debt and debt-to-equity ratios underperforming over 89% of global competitors, suggesting high financial leverage. Despite this, net profit margins and returns on equity are outperforming over 64% of global peers.
Disclosure: No positions.
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