As of Wednesday, GuruFocus’ Buffett-Munger strategy has returned approximately 17.69% year to date, outperforming the Standard & Poor’s 500 Index benchmark return of 13.97% over the same period. The five top-performing stocks in the portfolio are MasTec Inc. (MTZ, Financial), Nova Measuring Instruments Ltd. (NVMI, Financial), J2 Global Inc. (JCOM, Financial), CarMax Inc. (KMX, Financial) and CDW Corp. (CDW, Financial).
Buffett warns that coronavirus pandemic is not over
The Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial) CEO said in a CNBC special interview that although the coronavirus pandemic sent the U.S. gross domestic product down more than 31% during the first quarter of 2020, the pandemic “is not over,” adding that the coronavirus and its impact to society remains unpredictable.
Buffett also warned that the biggest lesson he learned from the Covid-19 pandemic is that “people do not know as much as they think they know,” adding that society “has a terrible time preparing for” remote things that can occur without warning.
Buffett and Munger’s interview comes as the U.S. stock market remains significantly overvalued based on Buffett’s market indicator. As of Wednesday, the ratio of total market to the sum of gross domestic product and total assets of the Federal Reserve stands at 149.6%. Based on current market levels, the implied market return per year ranges from -5.6% in the pessimistic case of reversion to 70% of the median market level to 1.6% in the optimistic case of reversion to 130% of the median market level.
GuruFocus’ Buffett-Munger strategy has outperformed the benchmark in the year to date
GuruFocus’ Buffett-Munger strategy has returned 17.69% in the year to date. On an annualized basis, the strategy has returned 44.17% over the past 12 months, outperforming the S&P 500 benchmark return of an annualized 40.22% over the same period.
Buffett and Munger listed four key criteria of good companies at fair prices: understandable business, favorable growth prospects, shareholder-friendly management and attractive valuations. Table 1 lists the number of Buffett-Munger stocks as of Wednesday for each GuruFocus subscription region.
| Region | USA | Asia | Europe | Canada | UK / Ireland | Oceania | Latin America | Africa | India |
| Number of Buffett-Munger Stocks | 22 | 90 | 92 | 5 | 27 | 3 | 35 | 2 | 35 |
Table 1
MasTec
Shares of MasTec (MTZ, Financial) traded around $105.39, up approximately 54.30% year to date. The stock is significantly overvalued based on Wednesday’s price-to-GF Value ratio of 1.87.
GuruFocus ranks the Coral Gables, Florida-based engineering and construction company’s profitability 7 out of 10 on several positive investing signs, which include a return on equity that outperforms more than 87% of global competitors and an operating margin that has increased more than 30% per year on average over the past five years.
Gurus with holdings in MasTec include Ronald Muhlenkamp (Trades, Portfolio)’s Muhlenkamp & Co. and Steven Scruggs (Trades, Portfolio)’ FPA Queens Road Small Cap Value Fund.
Nova Measuring Instruments
Shares of Nova Measuring Instruments (NVMI, Financial) traded around $102.09, up approximately 46.46% year to date. The stock is significantly overvalued based on Wednesday’s price-to-GF Value ratio of 2.29.
GuruFocus ranks the Israel-based semiconductor equipment company’s profitability 8 out of 10 on several positive investing signs, which include a high Piotroski F-score of 7 and an operating margin that has increased approximately 24.5% per year on average over the past five years and is outperforming more than 85% of global competitors.
Gurus with large holdings in Nova Measuring Instruments include Jim Simons (Trades, Portfolio)’ Renaissance Technologies and Chuck Royce (Trades, Portfolio)’s Royce Investment Partners.
J2 Global
Shares of J2 Global (JCOM, Financial) traded around $138.13, up approximately 41.83% year to date. The stock is modestly overvalued based on Wednesday’s price-to-GF Value ratio of 1.18.
GuruFocus ranks the Los Angeles-based software company’s profitability 9 out of 10 on several positive investing signs, which include a five-star business predictability rank, a high Piotroski F-score of 7 and an operating margin that outperforms more than 90% of global competitors.
CarMax
Shares of CarMax (KMX, Financial) traded around $130.55, up approximately 38.31% year to date. The stock is modestly overvalued based on Wednesday’s price-to-GF Value ratio of 1.14.
GuruFocus ranks the Richmond, Virginia-based car dealer’s profitability 7 out of 10 on the back of a five-star business predictability rank despite a low Piotroski F-score of 3 and an operating margin that has declined approximately 10% per year on average over the past five years and is underperforming over 55% of global competitors.
CDW
Shares of CDW (CDW, Financial) traded around $176.47, up approximately 34.40% year to date. The stock is significantly overvalued based on Wednesday’s price-to-GF Value ratio of 1.37.
GuruFocus ranks the Chicago-based software company’s profitability 8 out of 10, driven by a high Piotroski F-score of 7 and an operating margin that has increased approximately 2.2% per year on average over the past five years despite outperforming just over 59% of global competitors.
