T. Rowe Price Buys Apple, Pepsi, Western Digital

The fund's largest second quarter buys

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Jul 26, 2016
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John Linehan has been the portfolio manager of T. Rowe Price Equity Income Fund (PRFDX) since November of 2015, taking the reins from Brian Rogers, who managed the Fund since its inception in 1985. The following are the most heavily weighted buys of the second quarter of 2016.

The fund raised its stake in Total SA ADR. (TOT) by 91.74%, with an impact of 0.68% on the portfolio.

The company is an integrated oil and gas company which explores and develops oil and gas properties, liquefied natural gas, petrochemicals and specialty chemicals. It is also engaged in the trading and shipping of crude oil and petroleum products.

During the last quarter, adjusted net income decreased 37% from the same quarter a year before and operating cash flow was $3.7 billion, a decrease limit to 20% due to the resilience of their integrated model.

GuruFocus gives the stock a profitability and growth rating of 7 out of 10 with ROE of 4.12% and ROA of 1.73%, which are outperforming 52% of the companies in the global oil and gas integrated industry. Financial strength has a rating of 5 out of 10, with a cash to debt ratio of 0.45, which is below the industry median of 0.31.

Another notable shareholder among the gurus is Charles Brandes (Trades, Portfolio) with 0.03% of outstanding shares, followed by Sarah Ketterer (Trades, Portfolio) with 0.02%, Tweedy Browne (Trades, Portfolio) with 0.02% and Jeremy Grantham (Trades, Portfolio) with 0.01%.

The firm bought 720,000 shares in Apple Inc (AAPL), with an impact of 0.33% on the portfolio.

The company designs, manufactures and markets mobile communication and media devices, personal computers, portable digital music players and sells a variety of related software, services, accessories, networking solutions and third-party digital content.

Second quarter revenue was $50.6 billion with a quarterly net income of $10.5 billion, or $1.90 per diluted share. These results compare to revenue of $58 billion and net income of $13.6 billion, or $2.33 per diluted share, in the same quarter last year.

GuruFocus gives the stock a profitability and growth rating of 8 out of 10 with ROE of 40.05% and ROA of 17.80%, which are outperforming 97% of the companies in the global consumer electronics industry. The company's financial strength has a rating of 7 out of 10, with a cash to debt ratio at 0.69, which is below the industry median of 1.45.

Ken Fisher (Trades, Portfolio) is the main shareholder of the company among the gurus, with 0.21% of outstanding shares, followed by Spiros Segalas (Trades, Portfolio) with 0.2%, Warren Buffett (Trades, Portfolio) with 0.18%, Pioneer Investments (Trades, Portfolio) with 0.16%, David Einhorn (Trades, Portfolio) with 0.15% and Jeremy Grantham (Trades, Portfolio) with 0.13%.

The fund acquired 750,000 shares in Medtronic PLC. (MDT), with an impact of 0.31% on the portfolio.

The company is engaged in providing medical technology specializing in alleviating pain, restoring health, and extending life. It currently functions in three operating segments that manufacture and sell device-based medical therapies.

Fourth quarter revenue grew 4% and diluted EPS was $0.78, non-GAAP diluted EPS was $1.27, an increase of 7% and 9% respectively.

GuruFocus gives the stock a profitability and growth rating of 7 out of 10 with ROE of 6.77% and ROA of 3.41%, which are outperforming 62% of the companies in the global medical devices industry. Its financial strength has a rating of 6 out of 10, with a cash to debt ratio of 0.40, which is below the industry median of 2.42.

The largest shareholder among the gurus is Barrow, Hanley, Mewhinney & Strauss with 1.97% of outstanding shares, followed by Vanguard Health Care Fund (Trades, Portfolio) with 1.31%, PRIMECAP Management (Trades, Portfolio) with 1.09%, Manning & Napier Advisors, Inc with 0.56% and Dodge & Cox with 0.49%.

The firm increased its stake in Western Digital Corp. (WDC) by 45.10%, with an impact of 0.25% on the portfolio.

The company is a developer, manufacturer and provider of data storage solutions that enable consumers, businesses, governments and other organizations to create, manage, experience and preserve digital content. Its products include HDDs and SSDs.

GuruFocus gives the stock a profitability and growth rating of 7 out of 10 with ROE of 8.82% and ROA of 4.45%, which are outperforming 62% of the companies in the global data storage industry. The company's financial strength has a rating of 7 out of 10, with a cash to debt ratio of 2.74, which is above the industry median of 1.45.

Charles Brandes (Trades, Portfolio) is another notable shareholder of the company among the gurus, with 0.97% of outstanding shares, followed by First Pacific Advisors (Trades, Portfolio) with 0.79%, Joel Greenblatt (Trades, Portfolio) with 0.52%, FPA Capital Fund (Trades, Portfolio) with 0.44% and David Dreman (Trades, Portfolio) with 0.02%.

The fund raised its stake in Flowserve Corp. (FLS) by 136.83%, with an impact of 0.2% on the portfolio.

The company develops and manufactures precision-engineered flow control equipment, such as pumps, valves and seals, for critical service applications that require high reliability.

First quarter sales decreased 6.6%, or 2.1% on a constant currency basis, and total bookings were $922 million, down 7.8% on a constant currency basis.

GuruFocus gives the stock a profitability and growth rating of 7 out of 10 with ROE of 16.16% and ROA of 5.38%, which are outperforming 68% of the companies in the global diversified industrials industry. Its financial strength has a rating of 6 out of 10, with a cash to debt ratio of 0.19, which is above the industry median of 1.10.

The largest shareholder among the gurus is First Eagle Investment (Trades, Portfolio) with 9.2% of outstanding shares followed by Manning & Napier Advisors, Inc with 3.23%, Mario Gabelli (Trades, Portfolio) with 2.09%, Charles de Vaulx (Trades, Portfolio) with 0.57% and Joel Greenblatt (Trades, Portfolio) with 0.38%.

The firm raised its stake in Morgan Stanley (MS) by 13.91%, with an impact of 0.17% on the portfolio.

The company through its subsidiaries and affiliates, provides financial products and services to a diversified group of clients and customers, including corporations, governments, financial institutions and individuals.

Second quarter net revenues were $8.9 billion in 2016 compared with $9.7 billion in 2015 and net income was $0.75 per diluted share compared to $0.85 per diluted share for the same respective quarters.

GuruFocus gives the stock a profitability and growth rating of 5 out of 10 with ROE of 5.55%, which is outperforming and ROA of 0.57%, which is underperforming 62% of the companies in the global capital markets industry.

Richard Pzena (Trades, Portfolio) is the main shareholder of the company among the gurus, with 0.65% of outstanding shares, followed by Diamond Hill Capital (Trades, Portfolio) with 0.61%, HOTCHKIS & WILEY with 0.37%, Spiros Segalas (Trades, Portfolio) with 0.29% and Ken Heebner (Trades, Portfolio) with 0.21%.

The fund raised its stake in PepsiCo Inc. (PEP) by 8.53%, with an impact of 0.09% on the portfolio.

The beverage company manufactures, markets, distributes and sells convenient and enjoyable beverages, foods and snacks to consumers in more than 200 countries and territories.

Second quarter net revenue declined 3.3% and gross margin expanded 115 basis points. The company reported 2% increase for operating profit.

GuruFocus gives the stock a profitability and growth rating of 7 out of 10 with ROE of 39.86% and ROA of 7.31%, which are out performing 63% of the companies in the global beverages - soft drinks industry. Its financial strength has a rating of 6 out of 10, with a cash to debt ratio of 0.38, which is below the industry median of 0.69.

The largest shareholder among the gurus is Donald Yacktman (Trades, Portfolio) with 0.93% of outstanding shares, followed by Ken Fisher (Trades, Portfolio) with 0.37%, Jim Simons (Trades, Portfolio) with 0.26%, Yacktman Focused Fund (Trades, Portfolio) with 0.22% and Pioneer Investments (Trades, Portfolio) with 0.15%.