The Most Broadly Owned Portfolio, which contains the top 25 company stocks based on number of guru holders, outperformed the Standard & Poor’s 500 benchmark in at least five of the past seven years.
As of May 1, the model portfolio had a cumulative gain of 156.87% since its inception on Dec. 30, 2005. The high portfolio performance is driven by the gains from six companies: Apple Inc. (AAPL, Financial), Bank of America Corp. (BAC, Financial), Comcast Corp. (CMCSA, Financial), Cisco Systems Inc. (CSCO, Financial), Alphabet Inc. (GOOGL, Financial) and Phillip Morris International Inc. (PM, Financial).
Apple
The model portfolio added 84 shares of Apple Jan. 2, 2012, at approximately $57.86 per share. The Cupertino, California tech giant gained 153.34% during the 64-month period from January 2012 to April 2017, an annualized gain of about 19.04%.
Fourteen gurus, including Warren Buffett (Trades, Portfolio), own shares of the tech company as of May 1. The Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial) CEO owns 57,359,652 shares, approximately 1.09% of total shares outstanding. Ken Fisher (Trades, Portfolio), who has the second-largest stake in Apple, invested in 140,368 shares for an average price of $131.71 per share during the first quarter.
Bank of America
On Jan. 2 the Most Broadly Owned Portfolio invested in 482 shares in Bank of America at approximately $22.1 per share. The global bank gained 6.83% during the four-month period, resulting in an annualized gain of 22.26%.
Bank of America has a combined weighting of 71.16% from 18 gurus. While they trimmed 17.50% of their stakes during fourth-quarter 2016, Dodge & Cox still owns 188,215,841 shares of the global bank.
Comcast
The Most Broadly Owned Portfolio invested in 308 shares of Comcast at about $34.53 per share in January. Comcast, one of the largest U.S. cable operators, has a profitability rank of 9 and a GuruFocus business predictability rank of 4.5 stars, both suggesting strong growth potential. During the past four months, the stock gained 13.51%, yielding an annualized gain of about 47.03%.
According to CEO Brian Roberts, Comcast reported “outstanding growth” in its cable and NBCUniversal business segments, the latter delivering 14.7% revenue growth and 24.4% adjusted EBITDA growth. These growth metrics contributed to strong profit margins and returns, which outperform over 80% of competitors.
Eleven gurus owned shares in Comcast as of May 1. Four of them, including John Hussman (Trades, Portfolio), increased their positions in Comcast as the company offers strong growth potential in 2017. Hussman purchased 75,000 shares at an average price of $37.11 during the first quarter.
Cisco Systems
In January, the model portfolio invested in 352 shares of Cisco Systems at around $30.22 per share. The Internet Protocol networking company gained 12.41% from January to May, yielding an annualized gain of approximately 42.74%.
Cisco has a profitability rank of 8 and a predictability rank of 4 stars, suggesting good growth potential for 2017. As the company offers a high forward rate of return, Donald Yacktman (Trades, Portfolio) and his related Yacktman Fund (Trades, Portfolio) have over 24 million and 12 million shares of Cisco. Thirteen gurus had positions in the company as of May 1.
Alphabet
On New Year’s Day 2015, the model portfolio purchased 16 Class A shares of Alphabet at about $530.66 per share. The online media giant’s stock price rose over $400 per share from January 2015 to May 2017, resulting in an annualized gain of 27.33%.
Alphabet has a financial strength rank of 8 and an Altman Z-score of 16.23, suggesting a robust business with a near 0% probability of financial distress. The company reported a year-over-year revenue growth of 22% during the quarter ending March 31 according to CEO Ruth Porat. The total revenue growth was driven by higher revenues in Google’s advertising and network business, which increased an estimated $3 billion and $400 million from first-quarter 2016 values.
As the company has good growth potential, 12 gurus have positions in Alphabet. PRIMECAP Management (Trades, Portfolio) and Andreas Halvorsen (Trades, Portfolio) have the top two stakes in the company with 2,434,183 and 1,807,781 respective shares.
Phillip Morris International
The Most Broadly Owned Portfolio added 116 shares of Phillip Morris International, one of the largest tobacco companies in the world. From January to May, the stock rose about $10 per share from the purchase price of $91.49, yielding an annualized gain of 77.81%. This gain represents the largest annualized gain among the six companies as illustrated in Figure 1.
Figure 1
Phillip Morris International has a profitability rank of 6, with operating margins outperforming 85% of global tobacco companies. Based on its first-quarter earnings results, the company expects full-year 2017 earnings to outperform 2016 earnings by approximately 40 cents to 50 cents per share.
John Linehan, portfolio manager of the T Rowe Price Equity Income Fund (Trades, Portfolio), added 280,000 shares of Phillip Morris International during the first quarter. The stock averaged $103.17 during the quarter and Linehan gained approximately 17% on the stock based on GuruFocus estimates.
See also
Premium members can replicate the Most Broadly Owned Portfolio using the Aggregated Portfolio of Gurus feature. You can select your personalized list of gurus and analyze the combined portfolio of these gurus. Figures 2 and 3 illustrate these steps.
Figure 2: Sample Personalized List of Gurus
Figure 3: Sample Aggregated Portfolio
To determine the companies in which to invest, rank the stocks in the portfolio by number of guru owners DESC (descending). We suggest that you invest in the top 25 companies from the list. The following article gives further instructions on investing using guru strategies.
Disclosure: I do not have positions in the stocks mentioned in this article.
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