The Harbor Capital Appreciation Fund (Trades, Portfolio) disclosed its equity portfolio for the first quarter of 2023 last week.
Part of Chicago-based Harbor Funds, the fund, which was previously managed by the late Spiros Segalas, primarily invests in companies with market caps of at least $1 billion at the time of purchase. It focuses on companies that have strong balance sheets and earnings performance, good sales momentum and growth outlook, a history of high profitability, a unique market position and a capable, committed management team.
Based on these criteria, the fund established seven new positions, sold out of four stocks and added to or trimmed a number of other existing investments during the three months ended Jan. 31. Notable trades included new stakes in AstraZeneca PLC (AZN, Financial) and Thermo Fisher Scientific Inc. (TMO, Financial), a boost to the Nvidia Corp. (NVDA, Financial) holding and reduced bets on Tesla Inc. (TSLA, Financial) and Salesforce Inc. (CRM, Financial).
Investors should be aware NPORT-P filings, like 13Fs, 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 they 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.
AstraZeneca
The fund invested in 3.27 million shares of AstraZeneca PLC (AZN, Financial), allocating 0.98% of the equity portfolio to the stake. The stock traded for an average price of $66.99 per share during the quarter.
It previously sold out of the stock in the first quarter of 2021.
The U.K.-based pharmaceutical company, which focuses on treatments for gastrointestinal issues, Type 2 diabetes, cancer and respiratory issues, among others, has a $216.42 billion market cap; its shares were trading around $69.68 on Monday with a price-earnings ratio of 66.04, a price-book ratio of 6.34 and a price-sales ratio of 9.15.
The GF Value Line suggests the stock is fairly valued currently based on historical ratios, past financial performance and analysts’ future earnings projections.
At 88 out of 100, the GF Score indicates the company has good outperformance potential. While AstraZeneca received high ratings for profitability, growth and momentum, the financial strength and GF Value ranks were more moderate.
Of the gurus invested in AstraZeneca, PRIMECAP Management (Trades, Portfolio) has the largest stake with 1.45% of its outstanding shares. Ken Fisher (Trades, Portfolio), Jim Simons (Trades, Portfolio)’ Renaissance Technologies, Steven Cohen (Trades, Portfolio) and the T Rowe Price Equity Income Fund (Trades, Portfolio) also have notable positions.
Thermo Fisher Scientific
Harbor Capital picked up 348,533 shares of Thermo Fisher Scientific (TMO, Financial), dedicating 0.91% of the equity portfolio to the position. Shares traded for an average price of $549.60 each during the quarter.
The company headquartered in Waltham, Massachusetts, which provides medical diagnostics and research solutions, has a market cap of $218.81 billion; its shares were trading around $567.71 on Monday with a price-earnings ratio of 32.20, a price-book ratio of 5.04 and a price-sales ratio of 4.97.
According to the GF Value Line, the stock is modestly undervalued currently.
The GF Score of 94 implies the company has high outperformance potential, driven by high ratings for growth, momentum and profitability as well as more moderate financial strength and GF Value ranks.
With a 0.93% stake, PRIMECAP is the company’s largest guru shareholder. Other top guru investors include Fisher, the Vanguard Health Care Fund (Trades, Portfolio) and Baillie Gifford (Trades, Portfolio).
Nvidia
Impacting the equity portfolio by 1.09%, the Appreciation Fund increased its Nvidia (NVDA, Financial) holding by 25.83%, or 1.21 million shares. The stock traded for an average per-share price of $162.50 during the quarter.
As its fourth-largest position, the fund now holds a total of 5.92 million shares, which occupy 5.29% of the equity portfolio. GuruFocus estimates it has gained 224.14% on the investment over its lifetime.
The Santa Clara, California-based semiconductor chip manufacturer has a $681.30 billion market cap; its shares were trading around $275.83 on Monday with a price-earnings ratio of 158.52, a price-book ratio of 30.78 and a price-sales ratio of 25.67.
Based on the GF Value Line, the stock appears to be modestly overvalued currently.
The GF Score of 93 means the company has high outperformance potential on the back of solid ratings for profitability, growth, financial strength and momentum. The GF Value rank, however, was low.
Baillie Gifford (Trades, Portfolio) is the company’s largest guru shareholder with a 0.70% stake. Fisher, Philippe Laffont (Trades, Portfolio), PRIMECAP, Frank Sands (Trades, Portfolio) and Mairs and Power (Trades, Portfolio) also have large holdings.
Tesla
The fund curbed the Tesla (TSLA, Financial) stake by 38.24%, selling 2.88 million shares. The transaction had an impact of -3.06% on the equity portfolio. During the quarter, the stock traded for an average price of $159.88 per share.
Harbor Capital now holds 4.66 million shares total, which represent its sixth-largest holding with a weight of 3.69%. GuruFocus estimates it has gained 569.71% on the long-held investment.
The electric vehicle manufacturer headquartered in Austin, Texas has a market cap of $615.01 billion; its shares were trading around $194.37 on price-earnings ratio of 53.65, a price-book ratio of 13.76 and a price-sales ratio of 8.33.
The GF Value Line suggests the stock is significantly undervalued currently.
The company is likely to have average performance going forward due to its GF Score of 77. Despite raking in high ratings for financial strength and GF Value, the other three categories were more moderate.
Holding a 0.85% stake, Baillie Gifford (Trades, Portfolio) is the company’s largest guru shareholder. Tesla is also being held by Ron Baron (Trades, Portfolio), PRIMECAP, Catherine Wood (Trades, Portfolio), Laffont, Simons’ firm, Jefferies Group (Trades, Portfolio) and many others.
Salesforce
The Salesforce (CRM, Financial) position was slashed by 56.88%, or 2.09 million shares. The transaction had an impact of -1.59% on the equity portfolio. During the quarter, shares traded for an average price of $144.78 each.
The fund now holds a total of 1.59 million shares, giving it _% space in the equity portfolio. GuruFocus data shows it has gained roughly 48.82% on the investment.
The San Francisco-based tech company, which provides customer relationship management software and applications that are focused on sales, customer service and analytics, has a $196.56 billion market cap; its shares were trading around $196.56 on Monday with a price-earnings ratio of 936, a price-book ratio of 3.40 and a price-sales ratio of 6.25.
According to the GF Value Line, the stock is significantly undervalued currently.
The GF Score of 92 suggests the company has high outperformance potential. While it received solid ranks for four of the criteria, the financial strength rating was more moderate.
Fisher is Salesforce’s largest guru shareholder holding a 1.39% stake. Other gurus invested in the stock include Cohen, Baillie Gifford (Trades, Portfolio), Al Gore (Trades, Portfolio)’s Generation Investment, Bill Nygren (Trades, Portfolio), First Eagle Investment (Trades, Portfolio) and Jeremy Grantham (Trades, Portfolio).
Additional trades and portfolio performance
During the quarter, the fund also entered a new position in L’Oreal SA (XPAR:OR, Financial), increased its holdings of T-Mobile US Inc. (TMUS, Financial) and Netflix Inc. (NFLX, Financial), cut back its investment in Eli Lilly and Co. (LLY, Financial) and exited Target Corp. (TGT, Financial).
The fund’s $21.87 billion equity portfolio, which is composed of 56 stocks, is heavily invested in the technology and consumer cyclical sectors.
The Harbor Capital Appreciation Fund (Trades, Portfolio) posted a return of -37.94% in 2022, underperforming the S&P 500's -18.11% return.
