Parnassus Fund manager Jerome Dodson (Trades, Portfolio) disclosed on Tuesday that he invested in CVS Health Corp. (CVS, Financial) during the first quarter. Dodson also expanded his position in Nielson Holdings PLC (NLSN, Financial) and divested his positions in International Business Machines Corp. (IBM, Financial) and Wells Fargo & Co. (WFC, Financial).
CVS
Dodson invested in 346,000 shares of CVS for an average price of $71.75 per share. With this transaction, the guru increased his portfolio 2.13%.
CVS Chairman David Dorman and CEO Larry Merlo disclosed several management highlights in their April 12 shareholder letter, including the pending acquisition of Aetna Inc. (AET, Financial). Merlo said on March 13 the “combined company will be well-positioned to reshape the consumer health care experience” through high-quality and more affordable care. Even though the company’s operating margin is near a 10-year low of 5.15%, CVS’s profitability ranks 8 out of 10, driven by consistent revenue growth and a strong Piotroski F-score of 7. GuruFocus ranks CVS’s business predictability a perfect five stars.
Nielson Holdings
Dodson added 522,000 shares of Nielson Holdings for an average price of $34.58 per share. With this transaction, the guru increased his portfolio 1.64%.
Nielson provides management services through two business segments: Buy and Watch. The company has poor financial strength based on its Altman Z-score and interest coverage. According to the All-in-one Screener, Nielson’s long-term debt increased 30.19% over the past three years. The company’s debt-to-EBITDA ratio of 4.58 underperforms 77% of global competitors.
Even though the company has poor financial strength, Nielson’s operating margin and dividend yield both outperform over 83% of global business services companies. The former is near a 10-year high of 19.86% while the latter is close to a 10-year high of 4.22%.
Guru divests two positions
Dodson sold his 235,000 IBM shares for an average price of $158.26 per share and his 500,000 Wells Fargo shares for an average price of $59.40 per share. With these transactions, the guru knocked 6.30% off his portfolio in the aggregate.
As discussed in a previous article, Wells Fargo reported earnings results that may be affected by a $1 billion civil liability due to ongoing legal matters involving auto collateral protection insurance policies.
Disclosure: No positions.
