Former U.S. Vice President Al Gore (Trades, Portfolio), leader of Generation Investment Management, and Parnassus Investments’ Jerome Dodson (Trades, Portfolio) may take slightly different approaches to identifying good value opportunities, but they are both known for their commitment to being socially responsible. As such, they have several holdings in common.
Gore’s London-based firm, which he founded in 2004 with David Blood, is dedicated to long-term investing, integrated sustainability research and client alignment. Its primary focus is on sustainability within markets, investing in companies that strategically manage their economic, social and environmental performances.
With the goal of capital appreciation, Dodson’s San Francisco-based firm invests across the capitalization spectrum in discounted companies that have strong competitive advantages, relevant products or services that will compound growth over the long term and quality management teams. He also takes the business' environmental and societal impacts into account, avoiding companies that produce, transport or sell fossil fuels.
According to GuruFocus’ Aggregated Portfolio, a Premium feature, the two gurus both have positions in Dentsply Sirona Inc. (XRAY, Financial), Cognizant Technology Solutions Inc. (CTSH, Financial), Microsoft Corp. (MSFT, Financial), Cerner Corp. (CERN, Financial) and Nvidia Corp. (NVDA, Financial) as of the second quarter.
Dentsply Sirona
While Gore curbed his Dentsply Sirona stake by 19.26% in the second quarter, Dodson left his position unchanged.
The York, Pennsylvania-based manufacturer of dental equipment and supplies has an $11.67 billion market cap; its shares were trading around $52.13 on Tuesday with a price-earnings ratio of 110.77, a price-book ratio of 2.27 and a price-sales ratio of 2.96.
The Peter Lynch chart shows the stock is trading above its fair value, suggesting it is overpriced.
GuruFocus rated Dentsply Sirona’s financial strength 6 out of 10. Despite having sufficient interest coverage, the Altman Z-Score of 2.94 indicates the company is under some financial pressure since it has recorded a decline in revenue per share for the last five years.
The company’s profitability and growth scored a 5 out of 10 rating. In addition to a declining operating margin, Dentsply Sirona is struggling with poor returns that underperform a majority of competitors. It is supported, however, by a moderate Piotroski F-Score of 6, which implies operations are stable, and a business predictability rank of one out of five stars. According to GuruFocus, companies with this rank typically see their stocks gain an average of 1.1% per annum over a 10-year period.
GuruFocus estimates Gore, who is the company’s largest guru shareholder with a 7.53% stake, has lost 1.75% on his investment since the first quarter of 2016, while Dodson has lost approximately 4.65% since establishing the position in the first quarter.
Other gurus who own the stock include First Eagle Investment (Trades, Portfolio), Steven Cohen (Trades, Portfolio), Pioneer Investments (Trades, Portfolio), Mario Gabelli (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), Jim Simons (Trades, Portfolio)’ Renaissance Technologies and Ruane Cunniff (Trades, Portfolio).
Cognizant Technology Solutions
Dodson boosted his holding of Cognizant by 25.46% in the second quarter. Gore established a 10.45 million-share stake.
The information technology services company, which is headquartered in Teaneck, New Jersey, has a market cap of $33.07 billion; its shares were trading around $59.91 on Tuesday with a price-earnings ratio of 16.58, a price-book ratio of 3.27 and a price-sales ratio of 2.09.
According to the Peter Lynch chart, the stock is overvalued.
Cognizant’s financial strength and profitability and growth were both rated 8 out of 10 by GuruFocus. Supported by a good cash-debt ratio and comfortable interest coverage, the robust Altman Z-Score of 6.95 suggests the company is in good financial standing.
Although the operating margin is in decline, it still outperforms over half of industry peers. In addition, Cognizant has solid returns, consistent earnings and revenue growth, a moderate Piotroski F-Score of 5 and a four-star business predictability rank. GuruFocus says companies with this rank typically see their stocks gain an average of 9.8% per year.
GuruFocus data shows Gore has lost an estimated 9.08% on the investment since establishing it in the second quarter. Dodson has gained approximately 30% on the investment since the first quarter of 2017.
With 3.12% of outstanding shares, Dodge & Cox is the company’s largest guru shareholder. Other top guru investors include Richard Pzena (Trades, Portfolio), Yacktman Asset Management (Trades, Portfolio), the Matthews Pacific Tiger Fund (Trades, Portfolio), Pioneer, the T Rowe Price Equity Income Fund (Trades, Portfolio), Diamond Hill Capital (Trades, Portfolio), Charles Brandes (Trades, Portfolio), Ronald Muhlenkamp (Trades, Portfolio), David Rolfe (Trades, Portfolio), Jeff Auxier (Trades, Portfolio), Greenblatt, John Hussman (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio).
Microsoft
Gore reduced his Microsoft stake by 4.76% in the second quarter, while Dodson established a 262,828-share holding.
The Redmond, Washington-based software company has a $1.03 trillion market cap; its shares were trading around $136.41 on Tuesday with a price-earnings ratio of 26.86, a price-book ratio of 10.21 and a price-sales ratio of 8.38.
Based on the Peter Lynch chart, the stock appears to be overvalued.
Driven by comfortable interest coverage and a high Altman Z-Score of 4.90, GuruFocus rated Microsoft’s financial strength 7 out of 10.
The company’s profitability and growth fared even better with a 9 out of 10 rating. In addition to an expanding operating margin, Microsoft is supported by returns that outperform a majority of competitors, stable earnings and revenue growth and a high Piotroski F-Score of 8, which indicates business conditions are strong. It also has a four-star business predictability rank.
GuruFocus estimates Gore has gained 90% on his investment since the second quarter of 2014. Dodson has gained approximately 5.62%.
Of the gurus invested in Microsoft, PRIMECAP Management (Trades, Portfolio) has the largest stake with 0.46% of outstanding shares. Other top guru shareholders include Dodge & Cox, Ken Fisher (Trades, Portfolio), Pioneer, Chase Coleman (Trades, Portfolio), Spiros Segalas (Trades, Portfolio), Andreas Halvorsen (Trades, Portfolio), Steve Mandel (Trades, Portfolio), Hotchkis & Wiley, Philippe Laffont (Trades, Portfolio) and Stanley Druckenmiller (Trades, Portfolio).
Cerner
During the second quarter, Gore trimmed his Cerner stake by 0.25%, while Dodson did not make any changes to his position.
The health care IT company, which is headquartered in Kansas City, Missouri, has a market cap of $21.82 billion; its shares were trading around $69.06 on Tuesday with a price-earnings ratio of 37.86, a price-book ratio of 4.71 and a price-sales ratio of 4.08.
The Peter Lynch chart suggests the stock is overvalued.
Cerner’s financial strength was rated 7 out of 10 by GuruFocus. Despite having a poor cash-debt ratio of 0.92, the Altman Z-Score of 7.59 indicates the company is in good financial health.
The company’s profitability and growth scored an 8 out of 10 rating. Although the operating margin is in decline, it still outperforms over half of its industry peers. Cerner is also supported by a moderate Piotroski F-Score of 4. Despite recording consistent earnings and revenue growth, the five-star business predictability rank is on watch. According to GuruFocus, companies with this rank typically see their stocks gain an average of 12.1% per year.
GuruFocus data shows Gore has gained approximately 14.92% on his investment since fourth-quarter 2015. Dodson has gained an estimated 19.81% since fourth-quarter 2018.
With 3.75% of outstanding shares, the Vanguard Health Care Fund (Trades, Portfolio) is the company’s largest guru shareholder. Pioneer, Auxier, Lee Ainslie (Trades, Portfolio), Jones, Hussman, PRIMECAP, Greenblatt and Mairs and Power (Trades, Portfolio) also own the stock.
Nvidia
While Dodson boosted his Nvidia position by 15.31% in the second quarter, Gore trimmed his holding by 7.96%.
The Santa Clara, California-based manufacturer of semiconductor chips has a $100.76 billion market cap; its shares were trading around $165.45 on Tuesday with a price-earnings ratio of 37.35, a price-book ratio of 9.86 and a price-sales ratio of 10.07.
According to the Peter Lynch chart, the stock is overvalued.
GuruFocus rated Nvidia’s financial strength 8 out of 10, driven by comfortable interest coverage and a high Altman Z-Score of 16.94.
The company’s profitability and growth scored a 9 out of 10 rating on the back of an expanding operating margin, strong returns that outperform the majority of competitors and a median Piotroski F-Score of 6. Nvidia’s three-star business predictability rank is on watch as a result of a decline in revenue per share over the last 12 months as well as poor earnings quality. GuruFocus says companies with this rank typically see their stocks gain an average of 8.2% per year.
GuruFocus estimates Gore has lost 11.46% on his investment since the fourth quarter of 2018, while Dodson has lost 7.46% over that same period.
The Parnassus Endeavor Fund (Trades, Portfolio) is the company’s largest guru shareholder with 0.18% of outstanding shares. Other gurus who have positions in the stock are Halvorsen, Fisher, Simons’ firm, Cohen, Mairs and Power (Trades, Portfolio), Laffont, Ron Baron (Trades, Portfolio), Jones, Ainslie and Greenblatt.
Portfolio composition
Gore’s $14.51 billion equity portfolio, which is composed of 34 stocks, is heavily invested in the technology sector.
Similarly, Dodson’s $942 million equity portfolio, which is also composed of 34 holdings, is largely invested in the technology sector, followed by smaller positions in the financial services and health care sectors.
Disclosure: No positions.
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