While all investment gurus seek long-term capital appreciation, not all gurus think identically. Some gurus invest in companies with a fundamental, value-oriented approach while other gurus, like Bill Ackman (Trades, Portfolio) and Carl Icahn (Trades, Portfolio), actively invest in distressed companies and generate value through company reforms. However, regardless of their investing approach, gurus usually invest in companies that offer high value potential to their fund and shareholders.
In Part 1, we analyzed the Aggregated Portfolio of Gurus, which lists the 50 companies with the highest combined weighting among the gurus selected through the “Personalized List” feature.
Table 1 shows the six companies with the highest combined ownership among gurus, including Warren Buffett (Trades, Portfolio), Stanley Druckenmiller (Trades, Portfolio) and George Soros (Trades, Portfolio), three of the world's most famous value investors. As these gurus pour high capital in these stocks, the six companies in Table 1 likely have strong value potential in the short term.
| Company | # of Guru Owners | # of Guru Buys Last Quarter | # of Guru Sells Last Quarter | Combined Weightings (%) |
| Microsoft Corp. (MSFT, Financial) | 15 | 5 | 10 | 67.68 |
| Amazon.com Inc. (AMZN, Financial) | 13 | 3 | 10 | 53.9 |
| Facebook Inc. (FB, Financial) | 13 | 5 | 7 | 44.78 |
| The Priceline Group Inc. (PCLN) | 12 | 7 | 6 | 42.86 |
| Procter & Gamble Co. (PG, Financial) | 11 | 3 | 8 | 38.78 |
| Apple Inc. (AAPL, Financial) | 17 | 9 | 6 | 36.87 |
Table 1: Aggregated Portfolio of 34 Gurus: Top Six Companies
This article will further analyze the gurus’ portfolios by concentrating on the gurus’ top 10 holdings. Usually, if a guru invests a high portion of his capital in a single company stock, he or she likely prefers that company over other companies. Companies that make multiple gurus’ top 10 lists generally have stronger value potential than companies with little or no guru ownership.
A statistical approach to determine strong companies
For this statistical study, we first downloaded the portfolios of 34 gurus through the Excel Add-in, then extracted the top 10 holdings for each of the gurus. To determine which companies have strong value potential, we assigned a score for the companies making the list of gurus’ top 10 holdings based on the scale described in Table 2. For example, we give 15 points to each company that represents the top holdings in the gurus’ portfolios.
| Rank | Score |
| 1 | 15 |
| 2 | 12 |
| 3 | 10 |
| 4 | 8 |
| 5 | 7 |
| 6 | 6 |
| 7 | 5 |
| 8 | 4 |
| 9 | 3 |
| 10 | 2 |
Table 2
Once we assign the “guru scores” for each company trading on the Standard & Poor’s 500 index, we take the sum of all guru scores for each company. Higher guru scores suggest stronger value potential. Amazon, Microsoft and Facebook have the top three guru scores based on the study results with scores of 95, 83 and 75. Oracle Corp. (ORCL, Financial) and Johnson & Johnson (JNJ, Financial) round out the top six with scores of 52 and 51.
The best investment sectors based on guru ownership
In Part 1, we identified the best sectors in which to invest based on the Aggregated Portfolio of Gurus: consumer cyclical and technology. Statistical analysis on the top 10 holdings of gurus gives us a different perspective on the best sectors, as illustrated in Figure 1.
Figure 1
The blue bars in Figure 1 report the total guru score for each sector, which is the sum of all company guru scores within that sector. The red line reports the sectors’ average guru score, which is the total guru score divided by the number of stocks in that sector. Based on Figure 1, health care and technology companies have the highest guru scores, suggesting strong value potential in the two sectors. Additionally, the average guru score for technology companies exceeds the average guru score for health care companies by about 0.8 points.
Technology companies have higher value potential than other companies
In Table 1 above, we listed the six companies with the highest combined weighting among 34 gurus. Three of them, including Microsoft, are technology companies, suggesting that gurus prefer technology companies to companies in other sectors.
Microsoft has a combined weighting of 67.68%, but this value is likely to increase when fourth-quarter portfolios come out. The Washington-based application software company completed its merger with LinkedIn Corp. (LNKD, Financial) Dec. 8 as mentioned in a current report filing with the Securities and Exchange Commission. Microsoft’s stock price climbed $1 from Dec. 8 to Dec. 9, and the company currently trades at $63 per share, about $2 higher than its Dec. 8 opening price.
Although David Tepper (Trades, Portfolio) purchased about 1.5 million shares of Facebook, the company only represents the Appaloosa Management founder’s sixth-highest holding. Facebook still has high guru ownership nonetheless: Five gurus have the social media company as one of their top three holdings as summarized in Table 3.
| Guru | Ownership in Facebook | Holding Rank |
| Louis Moore Bacon (Trades, Portfolio) | 3.53% | 1 |
| Steven Cohen (Trades, Portfolio) | 2.20% | 2 |
| Spiros Segalas (Trades, Portfolio) | 4.48% | 2 |
| Andreas Halvorsen (Trades, Portfolio) | 10.40% | 2 |
| John Griffin (Trades, Portfolio) | 5.17% | 3 |
Table 3: Facebook among top three guru holdings
Facebook has the third-highest total guru score, after Amazon and Microsoft. Based on our statistical analysis, Facebook has higher value potential than other technology companies like Oracle and Cisco Systems Inc. (CSCO, Financial).
The Top 10 Holdings View page
To view the top 10 holdings of gurus, click on the “Top 10 Holdings View” page from the “Gurus” tab. This page, as illustrated in Figure 2, lists the portfolio value in millions of dollars, the number of stocks, the top 10 holdings and the percent of total portfolio for these 10 holdings for 25 gurus. You can sort the gurus by guru name, total portfolio value or number of stocks by clicking the “up / down” arrows next to the column headings. Additionally, you can change the number of entries per page by selecting the desired number of entries from the “Show n entries” drop-down menu.
Figure 2
For more information about a guru or a company stock, click the guru’s name or the stock’s name from the records. The “Top Picked Stocks” table at the bottom lists the top five companies based on the entries listed on the page.
See also
Several model portfolios, including the Most Broadly Held Portfolio and the Buffett-Munger Portfolio, outperformed the S&P 500 exchange-traded fund in most years since 2006. Such portfolios work well in a significantly overvalued stock market. Premium members have access to the Aggregated Portfolio, all value screeners including the All-in-One Guru Screener, and portfolio data on over 150 gurus. Please refer to the membership levels page to view all the membership benefits. If you are not a member, we invite you to a free seven-day trial.
Disclosure: The author has no position in the stocks mentioned in this article.
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