According to current portfolio statistics, a Premium feature of GuruFocus, three stocks in the third-quarter 13F equity portfolio of Charlie Munger (Trades, Portfolio)’s Daily Journal Corp. (DJCO, Financial) are trading near 52-week lows as of Thursday: Alibaba Group Holding Ltd. (BABA, Financial), U.S. Bancorp (USB, Financial) and Bank of America Corp. (BAC, Financial).
The vice chairman of Warren Buffett (Trades, Portfolio)’s Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial) studied mathematics at the University of Michigan and earned a juris doctor at Harvard Law School. Munger inspired Buffett to invest in high-quality businesses for the long term based on a four-criteria approach: understandable business, favorable growth prospects, shareholder-oriented management and attractive valuations.
Munger stepped down as chairman of the Los Angeles-based newspaper company in March even though he still focuses on managing the securities portfolio. As of the third-quarter portfolio filing, the $163 million 13F equity portfolio contains five stocks with an 85.10% weight in the financial services sector and a 14.68% weight in the consumer cyclical space.
Investors should be aware 13F filings do not give a complete picture of a firm’s holdings as the reports only include its positions in U.S. stocks and American depository receipts, but the reports can still provide valuable information. Further, the reports only reflect trades and holdings as of the most-recent portfolio filing date, which may or may not be held by the reporting firm today or even when this article was published.
Alibaba
Daily Journal owns 300,000 shares of Alibaba (BABA, Financial), giving the position 14.68% equity portfolio weight.
Shares of Alibaba traded around $74.67, showing the stock is significantly undervalued based on its price-to-GF Value ratio of 0.22 as of Thursday. The stock trades approximately 1.86% above its 52-week low of $71.40. Based on this price-to-GF Value ratio, Alibaba has a GF Value rank of 2 out of 10.
Despite the low GF Value rank of 2 out of 10 and momentum rank of 1 out of 10, Alibaba has a GF Score of 77 out of 100, driven by a growth rank of 10 out of 10, a profitability rank of 9 out of 10 and a financial strength rank of 7 out of 10.
The Chinese e-commerce giant’s profitability ranks 9 out of 10, driven by a 3.5-star business predictability rank and 10 years of profitability over the past decade. Additionally, operating margins are outperforming approximately 79% of global competitors despite declining approximately 18.9% per year on average over the past five years.
The company’s growth ranks 10 out of 10 on the back of three-year revenue and book value per share growth rates outperforming more than 85% of global competitors despite three-year Ebitda and earnings growth rates underperforming over 73% of global cyclical retail companies.
Other gurus with holdings in Alibaba include David Herro (Trades, Portfolio)’s Oakmark International Fund, PRIMECAP Management (Trades, Portfolio) and Ken Fisher (Trades, Portfolio)’s Fisher Investments.
U.S. Bancorp
Daily Journal owns 140,000 shares of U.S. Bancorp (USB, Financial), giving the position 3.45% equity portfolio weight.
Shares of U.S. Bancorp traded around $41.36, showing the stock is modestly undervalued based on its price-to-GF Value ratio of 0.72 as of Thursday. The stock trades approximately 3.14% above its 52-week low. Based on this price-to-GF Value ratio, the company has a GF Value rank of 9 out of 10.
The Minneapolis-based regional bank has a GF Score of 81 out of 100 based on a GF Value rank of 9 out of 100, a growth rank of 8 out of 10, a profitability rank of 7 out of 10, a momentum rank of 5 out of 10 and a financial strength rank of 3 out of 10.
U.S. Bancorp’s profitability ranks 7 out of 10 on several positive investing signs, which include a five-star business predictability rank and 10 years of profitability over the past 10 years. Despite this, returns on assets outperform just over 69% of global competitors.
The bank’s financial strength ranks 3 out of 10 on the back of cash-to-debt and debt-to-equity ratios underperforming more than 67% of global competitors.
Other gurus with holdings in U.S. Bancorp include Buffett’s Berkshire, Chris Davis (Trades, Portfolio)’ Davis Select Advisors and Jeremy Grantham (Trades, Portfolio)’s GMO.
Bank of America
Daily Journal owns 2.3 million shares of Bank of America (BAC, Financial), giving the position 42.49% equity portfolio weight.
Shares of Bank of America traded around $31.60, showing the stock is modestly undervalued based on its price-to-GF Value ratio of 0.81. The stock trades approximately 4.03% above its 52-week low. Based on this price-to-GF Value ratio, Bank of America has a GF Value rank of 7 out of 10.
The Charlotte, North Carolina-based bank has a GF Score of 70 out of 100 based on a momentum rank of 8 out of 10, a GF Value rank of 7 out of 10, a profitability rank of 5 out of 10, a growth rank of 4 out of 10 and a financial strength rank of 3 out of 10.
Bank of America’s financial strength ranks 3 out of 10 on the back of cash-to-debt and debt-to-equity ratios underperforming more than 70% of global competitors.
The bank’s profitability ranks 5 out of 10: Although the stock has 10 years of profitability over the past decade and a net margin that outperforms approximately 62% of global competitors, returns on equity and assets are underperforming over half of global banks.
Other gurus with holdings in Bank of America include Buffett’s Berkshire, Dodge & Cox and PRIMECAP Management (Trades, Portfolio).
