The Vanguard Health Care Fund (Trades, Portfolio) disclosed in a regulatory filing that its top trades during the third quarter included the closure of its positions in Viatris Inc. (VTRS, Financial) and Universal Health Services (UHS, Financial), a reduction to its holding in Vertex Pharmaceuticals Inc. (VRTX, Financial), a new holding in GSK PLC (LSE:GSK, Financial) and a boost to its holding in DexCom (DXCM, Financial).
Managed by Jean Hynes, the fund seeks long-term capital appreciation by investing in stocks broadly representing the health care industry. As of September, the fund’s top industries in terms of weight are drug manufacturers, biotechnology, health care plans and medical devices and instruments, with weights of 38.53%, 20.60%, 14.96% and 12.97%.
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.
Viatris
The fund sold all 55,233,099 of its shares of Viatris (VTRS, Financial), trimming 1.3% of its equity portfolio.
Shares of Viatris averaged $9.84 during the third quarter; the stock is fairly valued based on its price-to-GF-Value ratio of 0.92.
The Canonsburg, Pennsylvania-based drug manufacturer has a GF Score of 68 out of 100 based on a profitability rank of 6 out of 10, a financial strength rank of 4 out of 10, a growth rank of 3 out of 10 and a rank of 5 out of 10 for momentum and GF Value.
Viatris’ profitability ranks 6 out of 10 on the back of operating margins outperforming more than 63% of global competitors despite returns on equity and assets outperforming just over half of global drug manufacturers.
Universal Health Services
The fund sold all 1,622,122 shares of Universal Health Services (UHS, Financial), trimming 0.37% of its equity portfolio.
Shares of Universal Health Services averaged $103.34 during the third quarter; the stock is significantly undervalued based on its price-to-GF-Value ratio of 0.68 as of Friday.
The King of Prussia, Pennsylvania-based acute care hospital company has a GF Score of 94 out of 100. Even though the company's financial strength ranks just 5 out of 10, Universal Health Services has a growth rank of 10 out of 10, a momentum rank of 7 out of 10 and a rank of 9 out of 10 for profitability and GF Value.
Universal Health Services’ profitability ranks 9 out of 10 on several positive investing signs, which include a five-star business predictability rank, a high Piotroski F-score of 7 out of 9 and a gross profit margin that outperforms approximately 92% of global competitors.
Vertex Pharmaceuticals
The fund sold 465,866 shares of Vertex Pharmaceuticals (VRTX, Financial), paring 10.37% of the position and 0.29% of its equity portfolio.
Shares of Vertex averaged $287.72 during the third quarter; the stock is fairly valued based on its price-to-GF-Value ratio of 0.98.
The Boston-based biotech company has a GF Score of 85 out of 100 based on a growth rank of 10 out of 10, a financial strength rank of 9 out of 10, a profitability rank of 7 out of 10, a GF Value rank of 5 out of 10 and a momentum rank of 3 out of 10.
GSK PLC
The fund invested in 8,482,455 shares of GSK PLC (LSE:GSK, Financial), giving the position a 0.29% equity portfolio weight. Shares averaged 15.25 British pounds ($17.35) during the third quarter; the stock is fairly valued based on its price-to-GF-Value ratio of 0.91.
The U.K.-based drug manufacturer has a GF Score of 79 out of 100 based on a profitability rank of 8 out of 10, a growth rank of 7 out of 10, a GF Value rank of 5 out of 10 and a rank of 4 out of 10 for financial strength and momentum.
Gurus with holdings in GSK’s U.S.-based shares (GSK, Financial) include Dodge & Cox, Ken Fisher (Trades, Portfolio)’s Fisher Investments and Jim Simons (Trades, Portfolio)’ Renaissance Technologies.
DexCom
The fund added 2,009,208 shares of DexCom (DXCM, Financial), boosting the position by 183.7% and its equity portfolio by 0.38%.
Shares of DexCom averaged $84.70 during the third quarter; the stock is modestly undervalued based on its price-to-GF-Value ratio of 0.89.
The San Diego-based medical device company has a GF Score of 75 out of 100 based on a growth rank of 7 out of 10, a financial strength rank of 6 out of 10, a profitability rank of 4 out of 10 and a rank of 5 out of 10 for momentum and GF Value.
DexCom’s profitability ranks just 4 out of 10 on the heels of having just three years of positive operating income over the past 10 years even though profit margins and returns are outperforming more than 60% of global competitors.
