The Parnassus Fund disclosed this week its fourth-quarter 2021 portfolio using regulatory portfolio filings, reporting that its top five trades included the closure of its positions in Western Digital Corp. (WDC, Financial), StoneCo Ltd. (STNE, Financial) and Teleflex Inc. (TFC, Financial) as well as new holdings in Teradyne Inc. (TER, Financial) and Five9 Inc. (FIVN, Financial).
Parnassus Founder Jerome Dodson (Trades, Portfolio) stepped down from his fund management duties in 2020, though he still remains board chairman of the San Francisco-based firm.
The fund seeks long-term capital appreciation by investing in companies with wide economic moats, quality management teams and attractive valuations. Parnassus’ contrarian approach seeks companies that are out of favor with the majority of investors. Additionally, the fund avoids companies engaged in the extraction, exploration and manufacturing of fossil fuels.
As of December 2021, Parnassus Fund’s $1.08 billion equity portfolio contains 42 stocks with a quarterly turnover ratio of 7%. The top three sectors in terms of weight are technology, consumer cyclical and health care, representing 36.99%, 17.07% and 16.14% of the equity portfolio.
Western Digital
Parnassus sold all 506,393 shares of Western Digital (WDC, Financial), trimming the equity portfolio by 2.65%.
Shares of Western Digital averaged $57.59 during the fourth quarter; the stock is modestly overvalued based on Friday’s price-to-GF Value ratio of 1.21.
GuruFocus ranks the San Jose, California-based data storage solutions company’s profitability 7 out of 10 on the back of profit margins and returns outperforming more than 71% of global competitors.
Gurus with holdings in Western Digital include Steven Cohen (Trades, Portfolio)’s Point72 Asset Management and PRIMECAP Management (Trades, Portfolio).
StoneCo
The fund sold its 545,524 shares of StoneCo (STNE, Financial), trimming 1.75% of its equity portfolio. Shares averaged $24.95 during the fourth quarter; the stock is significantly undervalued based on Friday’s price-to-GF Value ratio of 0.32.
GuruFocus ranks the Brazilian fintech software company’s financial strength 4 out of 10 on several warning signs, which include a low Piotroski F-score of 2, a weak Altman Z-score of 1.04 and interest coverage and debt ratios that are underperforming more than 73% of global competitors.
Gurus with holdings in StoneCo include Warren Buffett (Trades, Portfolio)’s Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial), Steve Mandel (Trades, Portfolio)’s Lone Pine and Ron Baron (Trades, Portfolio)’s Baron Funds.
Teleflex
Parnassus sold all 48,316 shares of Teleflex (TFX), curbing 1.68% of its equity portfolio.
Shares of Teleflex averaged $339.07 during the fourth quarter; the stock is modestly undervalued based on Friday’s price-to-GF Value ratio of 0.82.
GuruFocus ranks the Wayne, Pennsylvania-based medical supplies company’s profitability 7 out of 10 on several positive investing signs, which include a high Piotroski F-score of 7 and profit margins and returns that outperform more than 71% of global competitors.
Teradyne
Parnassus purchased 153,772 shares of Teradyne (TER, Financial), giving the position 2.28% equity portfolio weight. Shares averaged $141.64 during the fourth quarter; the stock is significantly overvalued based on Friday’s price-to-GF Value ratio of 1.44.
GuruFocus ranks the North Reading, Massachusetts-based semiconductor company’s profitability 8 out of 10 on several positive investing signs, which include a high Piotroski F-score of 8 and profit margins and returns that are outperforming more than 92% of global competitors.
Five9
The fund purchased 158,235 shares of Five9 (FIVN, Financial), giving the position 1.97% equity portfolio weight. Shares averaged $147.34 during the fourth quarter; the stock is modestly undervalued based on Friday’s price-to-GF Value ratio of 0.81.
GuruFocus ranks the San Ramon, California-based intelligent cloud software company’s financial strength 3 out of 10 on several warning signs, which include debt ratios underperforming more than 90% of global competitors despite the company having a high Altman Z-score of 5.72.
