In the fourth quarter of 2021, which ended on Dec. 31, a Santa Claus rally driven by higher-than-expected retail sales helped push U.S. stock indexes to new record highs. The S&P 500 surpassed 4,790, the Nasdaq 100 topped 16,570 and the Dow Jones Industrial Average beat the 36,480 mark.
So what were the value investing gurus buying during this period? According to GuruFocus’s Hot Picks, a Premium feature which allows investors to screen for the stocks that had the highest number of guru buys or sells based on the most recent regulatory filings, the five most popular stocks among gurus during the quarter (as determined by net buys) were Comcast Corp. (CMCSA, Financial) (22 buys, 12 sells, 10 net buys), Citigroup Inc. (C, Financial) (18 buys, 8 sells, 10 net buys), American Tower Corp. (AMT, Financial) (11 buys, 1 sell, 10 net buys), Rivian Automotive Inc. (RIVN, Financial) (10 buys, 0 sells, 10 net buys) and Amazon.com Inc. (AMZN, Financial) (22 buys, 14 sells, 8 net buys).
Comcast
Comcast (CMCSA, Financial) is an American telecommunications conglomerate that operates through two main segments: Comcast Cable, which provides video, high-speed internet and phone plans to residences under the XFINITY brand, and NBCUniversal, which owns a portfolio of television news and entertainment assets.
During the quarter, 22 gurus were buying shares of Comcast while 12 gurus sold the stock, resulting in 10 net buys. As of the quarter’s end, 40 gurus held the stock in their portfolios. As we can see in the below chart, gurus were mostly selling the stock until the fourth quarter.
The top guru shareholder is Dodge & Cox with 1.87% of shares outstanding, followed by First Eagle Investment (Trades, Portfolio) with 2.65% and Nelson Peltz (Trades, Portfolio) with 0.44%.
During the quarter, shares of Comcast traded for an average price of $52. As of Feb. 25, the stock trades around $47.01 with a 52-week range of $44.27 to $61.80. According to the GF Value Line, the stock is fairly valued.
A leader in the internet and cable businesses for decades, Comcast is one of the old giants that is still going strong, even if growth has slowed down in recent years due to cord-cutting as more cable customers switch fully to streaming services. It is still growing both its top and bottom lines at a 7% clip and offers a dividend yield of 2.12%. Even though the cable business is dying, Comcast’s high-speed internet revenue has surpassed its cable revenue.
Citigroup
Citigroup (C, Financial) is a U.S. global bank major based in New York. It has approximately $2.26 trillion in total assets and provides a wide range of traditional, corporate and investment banking services and other financial services.
During the quarter, 18 gurus were buying shares of Citigroup while eight sold the stock, resulting in 10 net buys. As of the quarter’s end, 29 gurus held the stock in their portfolios. Gurus were mostly bullish on the stock in the second half of 2021.
Hotchkis & Wiley is the top guru shareholder of the stock with 1.04% of shares outstanding, followed by ValueAct Holdings with 0.70% and Richard Pzena (Trades, Portfolio) with 0.57%.
During the quarter, shares of Citigroup traded for an average price of $66.33. As of Feb. 25, the stock trades around $62.14 with a 52-week range of $57.59 to $80.29. According to the GF Value Line, the stock is modestly undervalued.
As a bank major, Citigroup has suffered the industry-wide beatdown due to record low interest rates. While interest rates are expected to be raised again in 2022, Citigroup in particular may have a brighter future due to its ongoing transformation plan under CEO Jane Fraser. The company intends to exit its consumer banking franchises in 13 markets to free up capital for its digital transformation.
American Tower
American Tower (AMT, Financial) is a wireless and broadcast communications infrastructure real estate investment trust. Headquartered in Boston, the REIT owns and operates communication infrastructure.
During the quarter, 11 gurus were buying shares of American Tower while one sold the stock, resulting in 10 net buys. As of the quarter’s end, 15 gurus held the stock in their portfolios. Gurus have consistently been bullish on the stock for the past couple of years.
The guru with the largest holding in American Tower is Chuck Akre (Trades, Portfolio) with 1.54% of shares outstanding, followed by Ken Fisher (Trades, Portfolio) with 0.44% and Elfun Trusts (Trades, Portfolio) with 0.06%.
During the quarter, shares of American Tower traded for an average price of $273.26. As of Feb. 25, the stock trades around $232.89 with a 52-week range of $197.50 to $303.72. According to the GF Value Line, the stock is modestly undervalued.
REITs in general are hailed as solid and safe investments due to the strength of the real estate market and the fact that these companies have to distribute at least 90% of their taxable income to shareholders as dividends. American Tower owns much of the infrastructure that is essential to modern communications, and since it has a miniature monopoly over each site owned, operators have to pay up.
Rivian Automotive
Founded in 2009 and headquartered in Irvine, California, Rivian Automotive (RIVN, Financial) is an electric vehicle automaker and automotive technology company. Its focus is on trucks and sport utility vehicles, and it just began producing vehicles in 2021.
During the quarter, 10 gurus were buying shares of Rivian. Since the company went public during the fourth quarter, there is not yet any data available on guru sells, though we can see it was the most popular initial public offering buy among top fund managers.
The top guru shareholder of Rivian is Philippe Laffont (Trades, Portfolio) with 3.91% of shares outstanding. The second-largest holding belongs to George Soros (Trades, Portfolio) with 2.20% and the third-largest to Ron Baron (Trades, Portfolio) with 0.65%.
During the quarter, shares of Rivian traded for an average price of $114.72. As of Feb. 25, the stock trades around $63.38 with a range of $50 to $179.46 since its IPO. The stock is down more than 35% since it went public in November 2021.
Deliveries of its R1T electric pickup truck are currently slow and are going to those who made their reservations early, mostly company employees. Rivian has yet to begin full-scale production, but the fact that it has delivered some vehicles means that it does have a product to sell and isn’t all hot air. The company’s trucks and sedans have the opportunity to be a first-mover in the U.S.
Amazon.com
Amazon.com (AMZN, Financial) is a multinational e-commerce giant based in Seattle. Its vast network allows it to deliver many products to customers within one or two days, giving it tremendous pricing power. The company also has cloud computing, digital streaming, artificial intelligence and other tech operations.
During the quarter, 22 gurus were buying shares of Amazon while 14 sold the stock, resulting in eight net buys. As of the quarter’s end, 47 gurus held the stock in their portfolios. The below chart shows gurus being mostly bullish on the stock in 2021, except for a selloff in the third quarter.
During the quarter, shares of Amazon traded for an average price of $3,427.48. As of Feb. 25, the stock trades around $3,075.77 with a 52-week range of $2,707.04 to $3,773.07. According to the GF Value Line, the stock is modestly undervalued.
Amazon’s growth was slowing down before the pandemic, and while Covid-19 and the resulting spike in popularity for e-commerce threw that out of investors’ minds for a while, the reality is that the company has gotten large enough to where future growth will have less of an impact percentage-wise. High growth numbers are an undeniable component that factors into the valuation that investors are willing to pay for a stock. However, Amazon’s competitive advantages aren’t going anywhere, and there’s still room for higher growth with Amazon Web Services and other tech and entertainment ventures.
