GMO LLC, the firm prominent economist and investor Jeremy Grantham (Trades, Portfolio) co-founded, disclosed last week that it purchased 81 stocks in the third quarter.
The equities side of GMO’s strategies contains 526 long positions, with the highest allocation going to technology at 34.69% of stocks, followed by health care at 18.3%. Together the stocks have a value of $14.76 billion out of the firm’s $70 billion in assets under management. GMO also oversees multi-asset class, fixed income and alternative investments.
In his most recent letter, Grantham gave a stern warning about the destruction climate change, population growth and increasing environmental toxicity would ultimately wreak on us all.
“Thirty years ago the dire predictions of leading climate scientists were laughed at. Now we watch these predictions coming true and ignore the data or pretend to. So, as the world starts to burn up, we twiddle our thumbs and talk about ‘just another heat wave!’ God help us. For we appear incapable of, or are at least unwilling to, help ourselves, and our great scientific skills increasingly appear insufficient on their own,” Grantham wrote.
He also named some of the reasons and effects:
“We face a form of capitalism that has hardened its focus to short-term profit maximization with little or no apparent interest in social good just as its power to influence government and its own fate has grown so strong that only the biggest most powerful corporations and the very richest individuals have any real say in government. To make matters worse, we have an anti-science administration that overtly takes the side of large corporations against public well-being, even if that means denying climate change and stripping the country of the very regulations designed to protect us. The timing could not be worse. It is likely we in the US will lose – indeed, we are losing already – the stable and reasonable society that we have enjoyed since The Great Depression. Beyond the US, the risks may be even greater, with the worst effects in Africa – threatening the failure of an entire continent.”
As a result, GMO established a climate change portfolio a year earlier.
“Unsurprisingly, the portfolio has lots of clean energy stocks, copper (which is 5 times more heavily used by electric cars than conventional cars), masses of energy efficiency opportunities, and around 20% in agriculture,” he said. “I can say that I have a very high-confidence belief that these industries collectively will have higher top-line revenue growth than the balance of the economy.”
GMO’s top stock buys during the third quarter represented a variety of industries. The largest were: Twenty-First Century Fox Inc. (FOX, Financial), Pinnacle Foods Inc. (PF, Financial), Bemis Co. Inc. (BMS, Financial), BRP Inc. (DOOO, Financial), Avista Corp. (AVA, Financial) and iShares China Large-Cap (FXI, Financial).
New buys
Twenty-First Century Fox Inc. (FOX, Financial)
GMO purchased 2,337,345 shares of the company, giving it 0.73% portfolio weight. The stock’s third-quarter share price averaged $45.
Twenty-First Century Fox Inc. has a market cap of $90.88 billion; its shares were traded around $48.83 with a price-earnings ratio of 18.67 and price-sales ratio of 2.99. The trailing 12-month dividend yield of Twenty-First Century Fox Inc. stocks is 0.74%. The forward dividend yield of Twenty-First Century Fox Inc. stocks is 0.75%.
Pinnacle Foods Inc. (PF, Financial)
GMO purchased 988,600 shares of the company, giving it 0.43% portfolio weight. The stock’s third-quarter share price averaged $66.
Pinnacle Foods Inc. has a market cap of $7.94 billion; its shares were traded around $66.66 Wednesday with a price-earnings ratio of 13.20 and price-sales ratio of 2.53. The trailing 12-month dividend yield of Pinnacle Foods Inc. stocks is 1.95%. The forward dividend yield of Pinnacle Foods Inc. stocks is 1.95%. Pinnacle Foods Inc. had an annual average earnings growth of 2.50% over the past five years.
Bemis Co. Inc. (BMS, Financial)
GMO purchased 570,495 shares of the company, giving it 0.19% portfolio weight. The stock’s third-quarter share price averaged $47.
Bemis Co. Inc. has a market cap of $4.37 billion; its shares were traded around $48.05 with a price-earnings ratio of 39.36 and price-sales ratio of 1.10. The trailing 12-month dividend yield of Bemis Co. Inc. stocks is 2.59%. The forward dividend yield of Bemis Co. Inc. stocks is 2.58%. Bemis Co. Inc. had an annual average earnings growth of 0.20% over the past 10 years.
GMO purchased 532,448 shares of the company, giving it 0.17% portfolio weight. The stock’s third-quarter share price averaged $49.
BRP Inc. has a market cap of $3.53 billion; its shares were traded around $33.62 with a price-earnings ratio of 18.59 and price-sales ratio of 0.94. The trailing 12-month dividend yield of BRP Inc. stocks is 0.81%. The forward dividend yield of BRP Inc. stocks is 0.87%. BRP Inc. had an annual average earnings growth of 18.30% over the past five years.
GMO purchased 396,968 shares of the company, giving it 0.14% portfolio weight. The stock’s third-quarter share price averaged $51.
Avista Corp. has a market cap of $3.44 billion; its shares were traded around $52.36 with a price-earnings ratio of 29.28 and price-sales ratio of 2.41. The trailing 12-month dividend yield of Avista Corp. stocks is 2.81%. The forward dividend yield of Avista Corp. stocks is 2.84%. Avista Corp. had an annual average earnings growth of 3.80% over the past 10 years.
iShares China Large-Cap (FXI, Financial)
GMO purchased 480,800 shares of the company, giving it 0.14% portfolio weight. The stock’s third-quarter share price averaged $42.
iShares China Large-Cap ETF has a market cap of $5.63 billion; its shares were traded around $41.04 with a price-earnings ratio of 8.59. The trailing 12-month dividend yield of iShares China Large-Cap ETF is 2.73%.
See Jeremy Grantham (Trades, Portfolio)’s portfolio here.
