MS Global Franchise Portfolio's Top 5 2nd-Quarter Trades

Fund owned by Morgan Stanley releases quarterly portfolio

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James Li
Sep 15, 2022
Summary
  • Fund trims holdings in Philip Morris and Automatic Data Processing.
  • Top buys include boosts to holdings in Equifax, Danaher and Intercontinental Exchange.
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MS Global Franchise Portfolio (Trades, Portfolio), part of Morgan Stanley (MS, Financial), disclosed this week that its top five trades for the second quarter included the trimming of its stakes in Philip Morris International Inc. (PM, Financial) and Automatic Data Processing Inc. (ADP, Financial) and boosts to its holdings of Equifax Inc. (EFX, Financial), Danaher Corp. (DHR, Financial) and Intercontinental Exchange Inc. (ICE, Financial).

The fund management team follows a distinct and disciplined investment process based on bottom-up stock selection. The team focuses on high-quality companies that have durable franchises, high and sustainable returns on invested capital, high gross margins, sustainable revenues and a capable management team.

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As of June, the fund’s $3.13 billion equity portfolio contains 33 stocks with a quarterly turnover ratio of 4%. The top three sectors in terms of weight are consumer defensive, health care and technology, representing 28.16%, 24.02% and 22.07% of the equity portfolio.

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Investors should be aware that portfolio updates for mutual funds do not necessarily provide a complete picture of a guru’s holdings. The data is sourced from the quarterly updates on the website of the fund(s) in question. This usually consists of long equity positions in U.S. and foreign stocks. All numbers are as of the quarter’s end only; it is possible the guru may have already made changes to the positions after the quarter ended. However, even this limited data can provide valuable information.

Philip Morris

The fund sold 712,578 shares of Philip Morris (

PM, Financial), slicing 22.74% of the position and 1.89% of its equity portfolio.

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Shares of Philip Morris averaged $101.83 during the second quarter; the stock is fairly valued based on Thursday’s price-to-GF Value ratio of 1.02.

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The New York-based tobacco company has a GF Score of 81 out of 100 based on a momentum rank of 10 out of 10, a profitability rank of 8 out of 10 and a rank of 5 out of 10 for financial strength, growth and GF Value.

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Other gurus with holdings in Philip Morris include

First Eagle Investment (Trades, Portfolio) and John Rogers (Trades, Portfolio)’ Ariel Investment.

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Automatic Data Processing

The fund sold 166,805 shares of Automatic Data Processing (

ADP, Financial), trimming 28.15% of the position and 1.07% of its equity portfolio.

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Shares of Automatic Data Processing averaged $219.27 during the second quarter; the stock is fairly valued based on Thursday’s price-to-GF Value ratio of 1.06.

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The Roseland, New Jersey-based payroll and human capital management company has a GF Score of 89 out of 100 based on a growth rank of 10 out of 10, a profitability rank of 9 out of 10, a GF Value rank of 3 out of 10 and a rank of 6 out of 10 for financial strength and momentum.

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Equifax

The fund purchased 207,289 shares of Equifax (

EFX, Financial), expanding the position by 252.85% and its equity portfolio by 1.21%.

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Shares of Equifax averaged $200.72 during the second quarter; the stock is modestly undervalued based on Thursday’s price-to-GF Value ratio of 0.82.

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The Atlanta-based credit bureau company has a GF Score of 84 out of 100 based on a rank of 8 out of 10 for profitability and momentum, a GF Value rank of 7 out of 10, a growth rank of 6 out of 10 and a financial strength rank of 5 out of 10.

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Danaher

The fund added 63,535 shares of Danaher (

DHR, Financial), boosting the position by 10.24% and its equity portfolio by 0.51%.

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Shares of Danaher averaged $260.33 during the second quarter; the stock is fairly valued based on Thursday’s price-to-GF Value ratio of 0.92.

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The Washington, D.C.-based medical research company has a GF Score of 89 out of 100 based on a momentum rank of 10 out of 10, a financial strength rank of 7 out of 10, a GF Value rank of 6 out of 10 and a rank of 8 out of 10 for profitability and growth.

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International Exchange

The fund added 164,254 shares of International Exchange (

ICE, Financial), increasing the position by 15.19% and its equity portfolio by 0.49%.

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Shares of International Exchange averaged $107.30 during the second quarter; the stock is modestly undervalued based on Thursday’s price-to-GF Value ratio of 0.83.

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The Atlanta-based financial exchange operating company has a GF Score of 91 out of 100 based on a growth rank of 10 out of 10, a profitability rank of 9 out of 10 and a rank of 7 out of 10 for momentum and GF Value despite financial strength ranking just 3 out of 10.

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I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours. Click for the complete disclosure
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