PRIMECAP Management (Trades, Portfolio) was founded more than 30 years ago as an independent investment management company. Its objective is to provide solid long-term equity investment results based on commitment to fundamental research, long-term investment horizon, emphasis on individual decision-making and focus on value. With returns of 18.72% last year, 39.73% in 2013 and 15.27% in 2012, PRIMECAP appears to be meeting its goal.
PRIMECAP’s most noteworthy second-quarter transaction was its sale of its 2,284,039-share stake in Pharmacyclics Inc. (PCYC, Financial), a Sunnyvale, Calif.-based biopharmaceutical company, for an average price of $256.7 per share. The deal had a -0.57% impact on PRIMECAP’s portfolio.
Pharmacyclics has a market cap of $20.14 billion and an enterprise value of $19.25 billion. It has a P/E of 291.6, a Price/Book of 22.5 and a Price/Sales of 25.1.
PRIMECAP sold its 245,000-share stake in Pall Corporation (PLL, Financial), a Port Washington, N.Y.-based supplier of filtration, separations and purification products, for an average price of $112.7 per share. The divestiture had a -0.02% impact on PRIMECAP’s portfolio.
Pall Corporation has a market cap of $13.58 billion and an enterprise value of $13.67 billion. It has a P/E of 35.7, a Price/Book of 8.3 and a Price/Sales of 4.9. Meridian Funds (Trades, Portfolio), Mario Gabelli (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio), Westport Asset Management (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio), Murray Stahl (Trades, Portfolio), Mariko Gordon (Trades, Portfolio) and First Eagle Investment (Trades, Portfolio) have shares of Pall Corporation in their portfolios.
PRIMECAP also sold its 19,700-share stake in Shake Shack Inc. (SHAK, Financial).
PRIMECAP sold portions of 91 existing stakes in the second quarter. Its most significant sale was of 2,752,257 shares (more than half its stake) of CME Group Inc. (CME, Financial), a Chicago-based s ecurity & commodity exchanges company, for an average price of $93.31 per share. The transaction had a -0.25% impact on PRIMECAP’s portfolio.
CME Group has a market cap of $32.01 billion and an enterprise value of $33.02 billion. It has a P/E of 26.9, a Price/Book of 1.5 and a Price/Sales of 9.8. PRIMECAP is CME Group’s largest stockholder among the gurus; Paul Tudor Jones (Trades, Portfolio), Tom Gayner (Trades, Portfolio), Louis Moore Bacon (Trades, Portfolio), Murray Stahl (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio), Ron Baron (Trades, Portfolio), Pioneer Investments (Trades, Portfolio), Steven Cohen (Trades, Portfolio), George Soros (Trades, Portfolio), Jim Simons (Trades, Portfolio), John Rogers (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio) and Mario Gabelli (Trades, Portfolio) have shares of CME Group in their portfolios.
PRIMECAP sold more than a quarter of its stake in Honeywell International Inc. (HON, Financial), a New Jersey-based provider of commercial and consumer products, engineering services, and aerospace systems. PRIMECAP sold 1,866,552 shares of Honeywell for an average price of $103.78 per share. The deal had a -0.19% impact on PRIMECAP’s portfolio.
Honeywell has a market cap of $78.14 billion and an enterprise value of $78.17 billion. It has a P/E of 17.9, a Price/Book of 4.2 and a Price/Sales of 2.0. James Barrow (Trades, Portfolio), Brian Rogers (Trades, Portfolio), Bill Frels (Trades, Portfolio), Mario Gabelli (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio), First Eagle Investment (Trades, Portfolio), Pioneer Investments (Trades, Portfolio), Ken Fisher (Trades, Portfolio), Louis Moore Bacon (Trades, Portfolio), Scott Black (Trades, Portfolio), John Burbank (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), Ray Dalio (Trades, Portfolio), Murray Stahl (Trades, Portfolio), Dodge & Cox and Paul Tudor Jones (Trades, Portfolio) have shares of Honeywell in their portfolios.
PRIMECAP sold 1,446,450 shares of DirecTV (DTV, Financial), a California-based direct broadcast satellite service provider and broadcaster, for an average price of $90.32 per share. That transaction had a -0.12% impact on PRIMECAP’s portfolio.
DirecTV has a market cap of $47.18 billion and an enterprise value of $62.67 billion. It has a P/E of 16.2 and a Price/Sales of 1.4. Warren Buffett (Trades, Portfolio), John Paulson (Trades, Portfolio), Eric Mindich (Trades, Portfolio), Mario Gabelli (Trades, Portfolio), David Abrams (Trades, Portfolio), George Soros (Trades, Portfolio), Jim Simons (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), John Hussman (Trades, Portfolio), Ruane Cunniff (Trades, Portfolio), Jeff Auxier (Trades, Portfolio), Louis Moore Bacon (Trades, Portfolio), RS Investment Management (Trades, Portfolio), Lee Ainslie (Trades, Portfolio) and Ken Fisher (Trades, Portfolio) have shares of DirecTV in their portfolios.
New buys
PRIMECAP bought six new stakes in the second quarter – Pfenex Inc. (PFNX, Financial), Avis Budget Group Inc. (CAR, Financial), Axovant Sciences Ltd. (AXON, Financial), The Rubicon Project Inc. (RUBI, Financial), Hilton Worldwide Holdings Inc. (HLT, Financial) and Francescas Holdings Corp. (FRAN).
PRIMECAP’s purchase of a 2,371,388-share stake in Pfenex, a San Diego-based developer and producer of biologics, was its most significant new buy. PRIMECAP paid an average price of $16.75 per share. The deal had a 0.05% impact on PRIMECAP’s portfolio.
Pfenex has a market cap of $480.32 million and an enterprise value of $366.73 million. It has a Price/Book of 5.6 and a Price/Sales of 21.5. Jim Simons (Trades, Portfolio) has shares of Pfenex in his portfolio.
PRIMECAP added to more than 100 existing stakes in the second quarter, two of which are among PRIMECAP’s 10 most valuable stakes.
PRIMECAP added 610,736 shares to its second-most valuable stake, Eli Lilly and Co. (LLY), an Indianapolis-based pharmaceutical company, for an average price of $76.14 per share. The transaction had a 0.05% impact on PRIMECAP’s portfolio.
Eli Lilly has a market cap of $91.98 billion and an enterprise value of $95.48 billion. It has a P/E of 42.9, a Price/Book of 6.3 and a Price/Sales of 4.5. PRIMECAP is Eli Lilly’s leading shareholder among the gurus; Vanguard Health Care Fund (Trades, Portfolio), Manning & Napier Advisors, Inc., HOTCHKIS & WILEY, Sarah Ketterer (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio), Pioneer Investments (Trades, Portfolio), Ken Fisher (Trades, Portfolio), Bill Frels (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio), John Hussman (Trades, Portfolio), Mario Gabelli (Trades, Portfolio), Dodge & Cox, Murray Stahl (Trades, Portfolio), Kyle Bass (Trades, Portfolio), RS Investment Management (Trades, Portfolio) and David Dreman (Trades, Portfolio) have shares of Eli Lilly in their portfolios.
PRIMECAP added 202,983 shares to its ninth-most valuable stake, Southwest Airlines Co. (LUV), the Dallas, Texas-based airline, for an average price of $39.19 per share. The deal had a 0.01% impact on PRIMECAP’s portfolio.
Southwest Airlines has a market cap of $24.46 billion and an enterprise value of $23.94 billion. It has a P/E of 16.0, a Price/Book of 3.4 and a Price/Sales of 1.3. PRIMECAP is easily Southwest Airlines’ top shareholder among the gurus; Jim Simons (Trades, Portfolio), James Barrow (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), George Soros (Trades, Portfolio), Steven Cohen (Trades, Portfolio), John Hussman (Trades, Portfolio), RS Investment Management (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio), David Dreman (Trades, Portfolio) and Lee Ainslie (Trades, Portfolio) have shares in Southwest Airlines in their portfolios.
Among the other stakes to which PRIMECAP added are Ross Stores Inc. (ROST), Alibaba Group Holding Ltd. (BABA), JPMorgan Chase & Co. (JPM) and NetApp Inc. (NTAP).
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