According to GuruFocus’ top 10 holdings data, Ronald Muhlenkamp (Trades, Portfolio)’s top five holdings as of the September quarter are Apple Inc. AAPL, Microsoft Corp. MSFT, Alliance Data Systems Corp. ADS, UnitedHealth Group Inc. UNH and Express Scripts Holding Co. ESRX.
Managing a portfolio of 33 stocks, Muhlenkamp seeks companies with strong balance sheets and high returns on equity. The guru’s top three sectors in terms of portfolio weight are health care, technology and materials.
Apple
Muhlenkamp agrees with Berkshire Hathaway Inc. BRK.ABRK.B CEO Warren Buffett (Trades, Portfolio) on Apple in the sense that both Muhlenkamp and Buffett have the Cupertino, California-based tech giant as their largest holding. While Buffett dedicated 25.79% of his equity portfolio to Apple, Muhlenkamp dedicated a modest 8.71% of his.
Apple started its descent from its 52-week high of $233.47 around Nov. 1, when the company announced weak holiday-quarter guidance and plans to terminate reporting iPhone and iPad unit sales. The company traded at a six-month low of $172.29 on Nov. 23.
GuruFocus ranks Apple’s profitability 8 out of 10: operating margins still outperform over 97% of global competitors despite languishing near a 10-year low of 26.69%. Additionally, the company’s returns on equity outperform 98% of global competitors, and its business predictability ranks three stars out of five on consistent revenue growth over the past 10 years.
Other gurus with large positions in Apple include Ken Fisher (Trades, Portfolio) and Pioneer Investments (Trades, Portfolio).
Microsoft
Muhlenkamp’s second-largest holding, Microsoft, represents 7.93% of the equity portfolio.
Founded by Bill Gates (Trades, Portfolio), Microsoft provides a wide range of products and services through its three business segments: Productivity and Business Processes, Intelligent Cloud and More Personal Computing. GuruFocus ranks the Redmond, Washington-based company’s profitability 8 out of 10 on several positive indicators, which include operating margins that outperform 95% of global competitors and returns on equity that rank higher than four-fifths of global application software companies.
Other gurus with large holdings in Microsoft include PRIMECAP Management (Trades, Portfolio), Dodge & Cox and Pioneer Investments (Trades, Portfolio).
Alliance Data Systems
Muhlenkamp’s third-largest holding, Alliance Data Systems, represents 7.08% of the equity portfolio.
The Plano, Texas-based company provides marketing, loyalty and credit solutions in the U.S., Canada and other countries. GuruFocus ranks Alliance Data’s profitability 10 out of 10 on several strong indicators, which include an excellent Piotroski F-score of 8 and returns on equity that are outperforming 97% of global competitors. Additionally, the company’s business predictability ranks five stars on strong and consistent revenue and earnings growth over the past 10 years.
Alliance Data made both the undervalued predictable screener and the Buffett-Munger screener as the company meets Buffett’s four-criterion investing approach. Other gurus with large holdings in Alliance Data include Jeff Ubben (Trades, Portfolio) and Glenn Greenberg (Trades, Portfolio).
UnitedHealth Group
Muhlenkamp’s fourth-largest holding, UnitedHealth Group, represents 6.63% of the equity portfolio.
GuruFocus ranks the New York-based health care company’s profitability 8 out of 10 on several positive indicators, which include returns on equity near a 10-year high of 26.29% and outperforming 77% of global competitors. UnitedHealth’s business predictability ranks five stars out of five on strong and consistent revenue and earnings growth over the past 10 years.
Express Scripts Holding
Muhlenkamp’s fifth-largest holding, Express Scripts, represents 5.23% of the equity portfolio.
Express Scripts CEO Tim Wentworth said on Oct. 31 the company achieved strong momentum during the quarter, including “strong client retention and increased interest in prospects.” The St. Louis-based company said it expects to complete its merger with Cigna Corp. (CI) by the end of the year.
See also
Muhlenkamp’s other top holdings include Celanese Corp. CE, Gilead Sciences Inc. GILD and Rush Enterprises Inc. RUSHA.
Disclosure: No positions.
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