An Auspicious Time to Sell

Guru Jerome Dodson pocketed estimated gains of up to 157% after selling these stocks in the 2nd quarter

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Yamil Berard
Jul 17, 2018
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Jerome Dodson (Trades, Portfolio)’s Parnassus Fund unloaded a pair of stocks in the second quarter, pocketing a bounty of estimated gains that brought the billionaire investor even more wealth.

The San Francisco-based guru closed his position in Progressive Corp. (

PGR, Financial) after storing shares for several years. He made an estimated 88% on the stock of the well-known insurer.

Dodson profited even more handsomely from an investment in Nutrient (

NTR, Financial), the company that was formed after the consolidation of some of Canada’s largest fertilizer companies. The estimated gain on the investment exceeded 150%.

Parnassus reported assets valued at $975 million in a portfolio of 33 stocks.

Progressive Corp.

Dodson's exit had a 5% impact on the portfolio. In total, 850,000 shares of the company were sold for an average price of $61.20 a share. Dodson bought shares for the first time in the fourth quarter of 2015. At the time of his purchase, shares were priced at an average of just under $32 a share. The investment produced an estimated 88% gain.

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Progressive’s stock value has had a good run over the last several years. The company jumped in value by 29% in the last 12 months while the stock has risen by 87% in the last three years. Year to date, it is up 6%. It closed at $58.42, down 0.03%, on Monday. On Tuesday, it was up 1.68%. The company’s 52-week range is $43 to $64.77 a share.

The GuruFocus median price-sales chart showed the stock is trading above market value, signaling an auspicious time to sell.

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The Peter Lynch chart also suggests it is significantly overvalued at $58 a share. It is trading at 18 times price-earnings, which is lower than 68% of its peers in the Global Insurance Property & Casualty Industry.

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The company posted earnings of $3.22 over the trailing 12 months on revenues of $27.9 billion. It is ranked 4 out of 10 in financial strength, profitability and growth by GuruFocus. It has a market cap of $34 billion.

A consistent growth in revenue per share indicates it produces steady performance for shareholders. It also has an attractive dividend yield, which is close to a one-year high. The yield is 1.93% with a payout ratio of 0.35, which is higher than 68% of its peers in the industry.

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Nutrien Ltd.

The company was the result of a consolidation between Canadian companies PotashCorp and Agrium. The merger, which took place this year, created the world’s largest fertilizer company by capacity.

Having initiated the position in the fourth quarter of 2015, Dodson sold approximately 1.7 million shares. The sale had an impact on the fund of 2.34%.

The investment produced an estimated return of 157%. Shares were purchased initially for just under $20 a share and sold for an average price of just under $49 a share.

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The stock closed down on Monday at $52.74 a share, compared to its 52-week high of $56 a share. The low is $40 a share.

The median price-sales chart by GuruFocus shows it is trading just above its historical market value, which would indicate a selling opportunity.

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It is trading at 100 times earnings, which makes it increasingly unattractive for value investors. It is ranked lower than 88% of its competitors in the Global Agricultural Inputs industry.

It has a market cap of $33 billion.

The consolidation gave a boost to revenues, while net income also increased to $327 million. Revenues stood at $4.5 billion.

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But GuruFocus identified at least five severe warnings signs with Nutrien, including declining gross and operating margins and revenue per share.

GuruFocus also suggested its dividend payout ratio maybe too high at 3.61, which may be unsustainable.

Dentsply Sirona Inc.

In the second quarter, Dodson also closed a position in the stock of Dentsply Sirona (

XRAY, Financial), one of the world's largest manufacturers and distributors of dental supplies and equipment. Over half of its products are sold through dental distributors, and approximately 65% of Dentsply's sales are outside the U.S.

Dodson bought 455,000 shares of the company in the third quarter of last year, though shares have dropped in price since the purchase. The guru closed on the position with an estimated loss of 21%. He bought shares at just under $60 a share. He sold for $47 a share. The exit had a 2.26% impact on the portfolio.

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Shares traded on Tuesday for $45.70, up 2.19%. Shares have lost 30% over the last year. The GuruFocus median price-sales chart suggested the stock price was above historical values.

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The company is trading at 17.39 times price-earnings, which is higher than 77% of 40 companies in the Global Medical Instruments and Supplies Industry. It has a price-book ratio of 1.55 and a price-sales ratio of 2.60. The price-book ratio is higher than 67% of competitors, while the price-sales ratio is 51% higher than competitors.

In the last 12 months, the company has produced an earnings loss of $6.68 per share on $4 billion in revenue.

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GuruFocus ranks it 6 out of 10 in financial strength and 5 out of 10 in profitability and growth.

Portfolio characteristics

Dodson founded Parnassus Investments in 1984. He is the lead manager of the Parnassus Fund and the Parnassus Asia Fund, and is the sole portfolio manager of the Parnassus Endeavor Fund. He’s known for picking stocks of companies with wide moats, which are relevant and depend on quality management teams. He also prefers stocks that are trading at a significant discount to their intrinsic value.

Dodson, like most value investors, adopts the contrarian approach to investments in companies that have fallen out of favor on Wall Street.

He is also known for his pioneer work in socially responsible investing, which has gained traction with the investment community in recent years.

Last year, the fund returned 16% to the S&P 500's 21.71%. In the year prior, it beat the index, returning 13.45% to its 11.99%.

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