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Holly LaFon
Holly LaFon
Articles (8905)  | Author's Website |

David Rolfe Is Taking Investing Questions From GuruFocus Users

Get an answer to your investing question from a pro

Portfolio manager David Rolfe (Trades, Portfolio) is taking GuruFocus reader questions now.

Rolfe, chief investment officer of $4 billion Wedgewood Partners, is an accomplished investor who spoke at the GuruFocus Value Conference in Omaha.

In his strategy, Rolfe seeks both value and growth. He takes advantage of short-term price volatility to find underpriced securities according to classic value principles, enabling him to achieve superior results over the long term. Mitigation of risk is also paramount throughout the investing process. Rolfe thinks like a business owner and is invested in only 34 stocks.

The result has been market-beating returns over the long term. Since inception in 1992, Wedgewood Partners has delivered an 11.40% return compared to the 9.67% return in the S&P 500. 

One of Rolfe’s most stellar recent investments has been Apple, his second-largest pick as of first quarter-end. He spotted its value potential early and began purchasing in 2005 – years before Warren Buffett (Trades, Portfolio) lighted on the stock – when the price was around $5.

“In sum, we hope to convey that the State of Apple is quite healthy – and growing,” he said in a fourth-quarter shareholder letter. “Recall that the Company’s recent financial peak was fiscal 2015 when the Company generated $81.3 billion in operating cash flow. We expect that level to be breached in the next couple of years.”

Five of Rolfe’s six top picks have posted double-digit gains year to date. His largest positions are: Berkshire Hathaway (NYSE:BRK.B), Apple (NASDAQ:AAPL), Ewards Lifesciences Corp. (NYSE:EW), Visa (NYSE:V), Booking Holdings Inc. (NASDAQ:BKNG). Facebook (NASDAQ:FB), his sixth-largest position, was a new buy in the first quarter.

Rolfe also sold PepsiCo (NASDAQ:PEP), TJX Companies (NYSE:TJX) and Express Scripts Holding (NASDAQ:ESRX) in the first quarter. His largest portfolio weights are: 29% technology, 24% financial services and 17% health care.

See Rolfe’s portfolio here. Learn more about him in one of his prolific quarterly letters here.

We are happy to bring you this chance to learn from a guru of investing!

To ask Rolfe anything about investing, your portfolio or the markets, post your question in the comments section below. Look out for an article with his answers in the coming week.

Many thanks!

About the author:

Holly LaFon
I'm a financial journalist with a master of science in journalism from Medill at Northwestern University.

Visit Holly LaFon's Website


Rating: 5.0/5 (3 votes)

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Comments

jarsen
Jarsen - 2 months ago    Report SPAM

Mr. Rolfe, My e-mail box has been inandated with all kinds of offers to subscriptions that provide information of stocks that have the potential of increasing investments from 20% to 1000 %. One of the more aggressive is an ex wall street fund manager Mr. Paul Mampilly and his group affiliated with a publishing company. This is a rather new approach to marketing investment opportunities. Before it was financial advisers and now subscriptions. What do you make of it?

Isaac Jarsen

stevehoney
Stevehoney - 2 months ago    Report SPAM

I have just sold a property and have 1mil to invest, currently sitting in a cash account. I dont feel comfortable putting it into the market at the current stage of the cycle as I think I would be buying at or close to the peak and expect a capital loss to happen in the next 12 TO 18 months. I am still working so income is not a problem and Australian banks are paying between 1.5%-3.0%. Your thoughts would be appreciated

Aton
Aton - 2 months ago    Report SPAM

1) Do you use Kelly formula or any other formulaic approach to portfolio management? How do you construct portfolio?

2) How do you determine intrinsic value? If you use DCF model, how do you deal with uncertainty? Do you use different discount rates for different businesses?

Thank you!

claz
Claz - 2 months ago    Report SPAM

Hi David, thanks for taking questions.
I was wondering if you had any tips in particular for picking value/growth stocks in the health sector. Especially pointers on: how to cut through the extra media hype in the sector at the moment, how to read the financials of younger companies when they likely have significant losses and a short history, and ways to find out what the specific technologies/drugs etc are that they are pursuing?

Ryle
Ryle - 2 months ago    Report SPAM
Hey there Mr. Rolfe, you may have heard the news about David Einhorn (Trades, Portfolio) or Jerry Grantham questioning whether value investing is still a "viable strategy" given the overvaluation present in today's markets and the fact that growth stocks have finally been outperforming value stocks. My question is, do you think the value investing approach has "died," is currently out of favor, or has just gotten a hell of a lot harder?

P.S. I tried uploading this question a few minutes ago but the damn site didn't work. Anyway, hope to get an answer from you Sir!

gvalue
Gvalue - 2 months ago    Report SPAM

Hello Mr. Rolfe,

Can you tell us why AAPL wasn't purchased before 2012?

Thanks!

James Li
James Li premium member - 2 months ago

Hi Mr. Rolfe,

Thank you for taking questions. I have a question about the retail sector:

What are your thoughts about the retail sector? I was a little surprised you closed your position in TJX Companies Inc (TJX). Has anything changed about your views in retail?

jomado3
Jomado3 - 2 months ago    Report SPAM

Hi David,

Thanks for taking the time to answer questions. I have a few questions for you.

1. When looking for potential investments what types of metrics are most important to you during the initial screening phase?

2. If you were currently sitting on 50% cash in your portfolio, would you be looking to invest it all in the near term, dollar cost average it into the market over the course of the next couple years, or sit on it in the near term and hope for equities to get cheaper?

3. How does your investing approach change in a rising interest rate environment? Or will it not change at all?

wbgerdts
Wbgerdts premium member - 2 months ago

question regarding Buffett buying back stock at 1.2x book value. In the 4th quarter of 2017, due to the new tax laws, Berkshire's book value was marked up by many billions of dollars. As such - a buy back at 1.2x the "new higher BV" would seem like less of a deal. Your thoughts please.

Bill Gerdts 408-938-2870

Rupert Hargreaves
Rupert Hargreaves - 2 months ago    Report SPAM

Hi David,

What has been your biggest investing mistake and what did you take away from the experience? Has your process changed since?

Thanks

Yamil Berard
Yamil Berard - 2 months ago    Report SPAM

Hi Mr. Rolfe, Thank you for taking our questions. What are your thoughts about all the mergers these days? As larger conglomerates are formed out of these vertical re-alignments, what does it mean for those companies that are left behind? How will these unions change the way normal people live and operate? Do you see any trends?

Grahamites
Grahamites premium member - 2 months ago

Dear Dave,

Thanks for taking our questions.

1. Among all the value investors, you are quite unique in my view because Wedgewood's heavy exposure in two areas in which Buffett has long avoided - technology and healthcare. Can you share how did you overcome the hurdles that many value investors have when it comes to tech and healthcare stocks - such as circle of competency and rapid pace of change? Do you have a different holding period for tech and healthcare stocks than consumer and financial stocks?

2. With Celgene, has the recent setbacks (especially the ozanimod RTF) and the seemingly overpriced acquisition changed your view of management team and Celgene's long term prospects? What filters do you you use when looking into biotech stocks (can you use Celgene versus Biogen and maybe Regeneron as a comparison)?

3. From a fundamental growth perspective, Berkshire seems to have the lowest growth rate among your top holdings yet it's the largest holdings. What factors do you consider when deciding how much would you allocate to your largest holding?

Thank you again.

nnuyenmd
Nnuyenmd premium member - 2 months ago

Why did you close out your position in esrx in light of the ci takeover bid?

kapiloff
Kapiloff - 2 months ago    Report SPAM

Mr. Rolfe,

When you're investigating a company's financials, how to you investigate finding "treasures in the attic?"

georgedona
Georgedona premium member - 2 months ago

Dear Mr Rolfe,

Could you share with your audience what is the key criteria that you use when buying stocks of good businesses?

Thank you for your time.

George

vgm
Vgm - 2 weeks ago    Report SPAM

Hi David,

Thanks for taking our questions.

My two questions are:

1. How has your view on Facebook changed, if at all, on account of the recent regulatory issues around the company?

2. Who is your favorite investor of all time and why?

Please leave your comment:


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