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James Li
James Li
Articles (1486)  | Author's Website |

Top 5 4th-Quarter Trades of Jerome Dodson's Parnassus Fund

Fund of ESG pioneer releases quarterly portfolio

The Parnassus Fund, part of San Francisco-based Parnassus Funds, disclosed this week that its top five trades during the fourth quarter of 2020 included new holdings in ANGI Homeservices Inc. (NASDAQ:ANGI) and Ncino Inc. (NASDAQ:NCNO) and position reductions in C.H. Robinson Worldwide Inc. (NASDAQ:CHRW), The Trade Desk Inc. (NASDAQ:TTD) and Square Inc. (NYSE:SQ).

Parnassus founder and environmental, social and corporate governance (ESG) pioneer Jerome Dodson (Trades, Portfolio) stepped down this year from his remaining investment responsibilities, which include the Parnassus Endeavor Fund (Trades, Portfolio). Dodson will retain his ownership stake and his role as chairperson of the firm.

The fund seeks long-term capital appreciation through investments in the stock of companies with wide economic moats, a compounding growth component, quality management and low valuations. The fund avoids investing in companies engaging in the extraction, exploration and manufacturing of fossil fuels.

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As of the December quarter's end, the fund's $1.06-billion equity portfolio contains 45 stocks with six new holdings and a turnover ratio of 8%.

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ANGI Homeservices

The fund purchased 2,045,391 shares of ANGI Homeservices, giving the position 2.55% weight in the equity portfolio. Shares averaged $11.63 during the fourth quarter of 2020; the stock is significantly undervalued based on its price-to-GF-Value ratio of 0.65.

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The Golden, Colorado-based company provides home repairing and remodeling services through brands including HomeAdvisor, Angie's List and mHelpDesk. GuruFocus ranks the company's financial strength 6 out of 10: The company has a strong Altman Z-score of 4.11 even though debt ratios underperform over 80% of global competitors.

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Gurus with large holdings in ANGI Homeservices include Jim Simons (Trades, Portfolio)' Renaissance Technologies and Steven Cohen (Trades, Portfolio)'s Point72 Asset Management.

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Ncino

The fund purchased 251,666 shares of Ncino, giving the position 1.72% weight in the equity portfolio. Shares averaged $77.36 during the fourth quarter of 2020.

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The Wilmington, North Carolina-based software provider announced its initial public offering in July 2020. According to GuruFocus, the company has no long-term debt, suggesting good financial strength.

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C.H. Robinson Worldwide

The fund sold 168,970 shares of C.H. Robinson Worldwide, trimming the position 61.17% and the equity portfolio 1.87%. Shares averaged $95.26 during the fourth quarter of 2020.

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GuruFocus ranks the Eden Prairie, Tennessee-based logistics company's profitability 8 out of 10 on the heels of a three-star business predictability rank and an return on assets that outperforms over 93% of global competitors.

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The Trade Desk

The fund sold 25,060 shares of The Trade Desk, trimming the position 46.75% and the equity portfolio 1.41%. Shares averaged $762.58 during the fourth quarter of 2020.

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The Ventura, California-based company provides a technology platform for advertisement buyers. GuruFocus ranks the company's 8 out of 10 on several positive investing signs, which include a return on assets that outperforms over 77% of global competitors and an operating margin that has increased approximately 33% per year on average over the past five years.

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Square

The fund sold 75,324 shares of Square, trimming the position 28.05% and the equity portfolio 1.32%. Shares averaged $196.26 during the fourth quarter of 2020.

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GuruFocus ranks the San Francisco-based payment acquiring software company's financial strength 5 out of 10. Although the company has a strong Altman Z-score of 11, Square's debt ratios underperform over 88% of global competitors.

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Disclosure: No positions.

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About the author:

James Li
I am an editorial researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

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