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James Li
James Li
Articles (895)  | Author's Website |

Top 6 Holdings of Jeremy Grantham’s GMO

Firm’s largest holdings include Microsoft and Berkshire position Apple

According to current portfolio statistics and the Top 10 Holdings of Gurus page, two of our major Premium features, the top six holdings of Jeremy Grantham (Trades, Portfolio)’s Grantham, Mayo and Van Otterloo as of the June quarter were Microsoft Corp. (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), Oracle Corp. (NYSE:ORCL), UnitedHealth Group Inc. (NYSE:UNH), Medtronic PLC (NYSE:MDT) and Merck & Co. (NYSE:MRK).

Grantham, board chairman of GMO, co-founded the Boston-based firm in 1977. According to the firm’s website, GMO seeks capital appreciation through a long-term, valuation-based investment approach.

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GMO board member Ben Inker said in the firm’s second-quarter letter that larger companies have seen “marked improvement” in profitability over the past 30 years, while smaller companies “have seen very little change.” Inker commented that higher market power and a “playing field” tilted in favor of the larger companies contributed to the higher profitability for large companies.

As of quarter-end, GMO’s $14.21 billion equity portfolio contained 699 stocks, of which 124 represent new holdings. The top three sectors in terms of portfolio weight are technology, health care and financial services, with weights of 30.97%, 17.74% and 15.34%.

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Microsoft

GMO owns 4,465,537 shares of Microsoft, dedicating 4.21% of the equity portfolio to the stake. Shares averaged $126.89 during the quarter.

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Founded by Bill Gates (Trades, Portfolio), Microsoft has a market cap of approximately $1.065 trillion, the largest U.S. public company according to an All-in-One Screener search of all U.S. companies with a market cap of at least $200 billion. The Redmond, Washington-based company provides various software, hardware and services, including Microsoft Office 365 and Windows 10.

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GuruFocus ranks Microsoft’s profitability 9 out of 10 on several positive investing signs, which include a strong Piotroski F-score of 8 and a four-star business predictability rank, suggesting solid revenue and earnings growth over the past 10 years. Additionally, Microsoft’s operating margin has increased approximately 1.40% per year on average over the past five years and is outperforming 91.37% of global competitors.

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Chase Coleman (Trades, Portfolio)’s Tiger Global Management also has Microsoft as its top holding.

Apple

GMO owns 2,466,473 shares of Apple, dedicating 3.44% of the equity portfolio to the position. Shares averaged $194.79 during the quarter.

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The Cupertino, California-based tech giant has a market cap of $959.106 billion, second only to Microsoft according to the Screener search. GuruFocus ranks Apple’s profitability 9 out of 10 on several positive indicators, which include a strong Piotroski F-score of 7 and operating margins that outperform over 93% of global competitors even though margins have contracted approximately 1.9% per year on average over the past five years.

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The company, which is well known for products like iPhones, Mac computers and the Apple Watch, has a three-star business predictability rank on the heels of consistent revenue and earnings growth over the past 10 years.

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Warren Buffett (Trades, Portfolio)’s Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B) owns 249,589,329 shares of Apple, dedicating 23.74% of the equity portfolio to the stake. Apple has been the conglomerate’s top holding for at least the past four quarters.

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Oracle

GMO owns 8,286,195 shares of Oracle, dedicating 3.32% of the equity portfolio to the holding. Shares averaged $54.10 during the quarter.

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The Redwood City, California-based company sells a wide range of information technology solutions, including databases, middleware, applications and hardware. GuruFocus ranks Oracle’s profitability 8 out of 10: Even though the company’s three-year revenue growth rate of 2.20% underperforms 73.54% of global competitors, the Java parent’s profit margins are outperforming over 91% of global application software companies.

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UnitedHealth

GMO owns 1,331,825 shares of UnitedHealth, dedicating 2.29% of the equity portfolio to the stake. Shares averaged $240.34 during the quarter.

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The Minnetonka, Minnesota-based company offers health care plans for individuals, groups and government-sponsored programs. GuruFocus ranks UnitedHealth’s profitability 8 out of 10: Even though the company has a poor Piotroski F-score of 4, its business predictability ranks a perfect five stars on strong and consistent revenue and earnings growth over the past 10 years.

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Medtronic

GMO owns 3,311,281 shares of Medtronic, dedicating 2.27% of the equity portfolio to the position. Shares averaged $91.22 during the quarter.

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The Irish company develops and manufactures therapeutic medical devices for chronic diseases. GuruFocus ranks Medtronic’s profitability 9 out of 10 on the heels of a strong Piotroski F-score of 7 and a five-star business predictability rank: Even though the three-year revenue growth rate of 2% underperforms 83.33% of global competitors, the company has shown strong and consistent revenue and earnings growth over the past 10 years.

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Merck

GMO owns 3,720,146 shares of Merck, dedicating 2.20% of the equity portfolio to the position. Shares averaged $80.15 during the quarter.

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The Kenilworth, New Jersey-based company manufactures pharmaceutical products to treat conditions like cardiovascular disease, asthma, cancer and infections. GuruFocus ranks Merck’s profitability 7 out of 10: The company has a strong Piotroski F-score of 7 and expanding profit margins, albeit a three-year revenue growth rate that underperforms 81.19% of global competitors.

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Disclosure: No positions.

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About the author:

James Li
I am an editorial researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

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