Dodge & Cox was founded in 1930 by Van Duyn Dodge and E. Morris Cox. The firm employs a team research approach in making investment decisions.The Dodge & Cox team is guided both in what it buys and what it sells by an ongoing search for superior relative value, steering clear of popular choices that come at a price it would rather not pay.
On Dec. 31, the firm made a 21.86% reduction in its FedEx holding with the sale of 3.83 million shares. On the day of the transaction, the shares traded for an average price of $259.62. Overall, the sale had an impact of -0.91% on the portfolio and GuruFocus estimates the firm has gained 84.18% during the lifetime of the holding.
FedEx pioneered overnight delivery in 1973 and remains the world's largest "express" package provider. In fiscal 2020, which ended in May, FedEx derived 51% of revenue from its express division, 33% from ground and 10% from freight. The remainder comes from other services, including FedEx Office, which provides document production and shipping, and FedEx Logistics, which provides global forwarding. FedEx acquired Dutch parcel delivery firm TNT Express in 2016. TNT was previously the fourth-largest global parcel-delivery provider.
On Jan. 11, the stock was trading at $245.69 per share with a market cap of $65.14 billion. According to the GF Value Line, the stock is trading at a modestly overvalued rating.
GuruFocus gives the company a financial strength rating of 4 out of 10, a profitability rank of 8 out of 10 and a valuation rank of 5 out of 10. There is currently one severe warning sign issued for assets growing faster than revenue. The weighted average cost of capital currently outweighs the return on invested capital, meaning the company will destroy value as it grows.
Dodge & Cox is currently the fourth-largest shareholder with 5.18% of shares outstanding. Vanguard Group Inc. (Trades, Portfolio) is the largest shareholder followed by BlackRock Inc. (Trades, Portfolio) and Primecap Management (Trades, Portfolio).
At the end of the third quarter, the firm's portfolio contained 184 stocks, with three new holdings in Credicorp Ltd. (BAP), Stryker Corp. (SYK) and TC Energy Corp (TRP). It was valued at $109.28 billion and has seen a turnover rate of 4%. Top holdings are FedEx, Comcast Corp. (CMCSA, Financial), Alphabet Inc. (GOOG, Financial), Capital One Financial Corp. (COF, Financial) and Johnson Controls International PLC (JCI, Financial).
By weight, the top three sectors represented are financial services (24.96%), technology (18.57%) and health care (15.24%).
Disclosure: Author owns no stocks mentioned.
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