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Sydnee Gatewood
Sydnee Gatewood
Articles (913) 

Sarah Ketterer’s Favorite Tech Stocks

3 are among her top 10 holdings

September 13, 2019 | About:

Causeway Capital Management, the Los Angeles-based firm founded by Sarah Ketterer (Trades, Portfolio) and Harry Hartford in 2001, seeks to achieve superior risk-adjusted returns by investing in mispriced equities in both developed and emerging markets.

The guru and her team look for potential opportunities among mid- and large-cap companies using quantitative and value-oriented methods. Each stock also receives a risk score based on the amount of volatility it adds to the portfolio. The investment team then enters positions in the stocks with the highest expected risk-adjusted returns that also have a lower price-earnings ratio and higher dividend yield than the market.

As of the second quarter, the tech sector had the largest representation in Ketterer’s $9.14 billion equity portfolio with 20.37% weight.

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According to GuruFocus portfolio data, Ketterer’s five largest tech holdings as of the end of the second quarter were Baidu Corp. (NASDAQ:BIDU), Sabre Corp. (NASDAQ:SABR), Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE:TSM), Oracle Corp. (NYSE:ORCL) and Microsoft Corp. (NASDAQ:MSFT).

Baidu

In the second quarter, Ketterer trimmed her stake in Baidu by 0.65% to 5.3 million shares. The position accounts for 6.82% of the equity portfolio and is her third-largest holding overall. GuruFocus estimates she has lost 38% on the investment since the second quarter of 2016.

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The Chinese search engine has a $38.86 billion market cap; its shares were trading around $111.50 on Friday with a price-earnings ratio of 16.4, a price-book ratio of 1.65 and a price-sales ratio of 2.51.

The Peter Lynch chart shows the stock is trading above its fair value, suggesting it is overpriced.

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Of the gurus invested in Baidu, Dodge & Cox has the largest position with 2.37% of outstanding shares. Other top guru shareholders include David Herro (Trades, Portfolio), First Pacific Advisors (Trades, Portfolio), Tweedy Browne (Trades, Portfolio), Steven Romick (Trades, Portfolio), Ken Fisher (Trades, Portfolio), John Rogers (Trades, Portfolio), Mason Hawkins (Trades, Portfolio), Pioneer Investments (Trades, Portfolio), Richard Pzena (Trades, Portfolio), Frank Sands (Trades, Portfolio) and Charles de Vaulx (Trades, Portfolio).

Sabre

The investor boosted her Sabre stake by 2.60% during the second quarter to 12.2 million shares. The holding accounts for 2.96% of the equity portfolio and is the eighth-largest position. GuruFocus data shows Ketterer has gained approximately 6.58% on the investment since establishing it in the second quarter of 2017.

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The Southlake, Texas-based travel technology company, which provides air and hotel booking services, has a market cap of $6.42 billion; its shares were trading around $23.58 on Friday with a price-earnings ratio of 27.28, a price-book ratio of 7.09 and a price-sales ratio of 1.68.

According to the Peter Lynch chart, the stock is overvalued.

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With 4.45% of outstanding shares, Ketterer is Sabre’s largest guru shareholder. Pioneer and Jeremy Grantham (Trades, Portfolio) also own the stock.

Taiwan Semiconductor Manufacturing

The guru beefed up her Taiwan Semiconductor stake by 8% during the second quarter, bringing the total holding to 6.5 million shares. The position accounts for 2.81% of the equity portfolio and is her 10th-largest holding overall. According to GuruFocus, Ketterer has gained an estimated 45% on the investment since the third quarter of 2012.

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The Taiwanese company, which manufactures semiconductor chips, has a $219.12 billion market cap; its shares were trading around $44.07 on Friday with a price-earnings ratio of 21.1, a price-book ratio of 4.47 and a price-sales ratio of 6.89.

Based on the Peter Lynch chart, the stock appears to be overvalued.

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Fisher has the largest stake in Taiwan Semiconductor with 0.67% of outstanding shares. Jim Simons (Trades, Portfolio)’ Renaissance Technologies, First Eagle Investment (Trades, Portfolio), Spiros Segalas (Trades, Portfolio), Sands, Howard Marks (Trades, Portfolio), Grantham, Ron Baron (Trades, Portfolio), Pzena, Pioneer, Al Gore (Trades, Portfolio), Steven Cohen (Trades, Portfolio), Lee Ainslie (Trades, Portfolio) and Prem Watsa (Trades, Portfolio), among others, are also shareholders.

Oracle

Ketterer curbed her Oracle stake by 30.1% in the second quarter. Now holding 3.8 million shares, the position has 2.41% weight in the equity portfolio. GuruFocus estimates she has gained 30.41% on the investment since the third quarter of 2012.

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The Redwood City, California-based software company has a market cap of $178.83 billion; its shares were trading around $53.84 on Friday with a price-earnings ratio of 17.46, a price-book ratio of 9.6 and a price-sales ratio of 4.86.

The Peter Lynch chart suggests the stock is overvalued.

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Of the gurus invested in Oracle, First Eagle has the largest holding with 0.96% of outstanding shares. Other top guru shareholders include Barrow, Hanley, Mewhinney & Strauss, Fisher, Hotchkis & Wiley, PRIMECAP Management (Trades, Portfolio), Yacktman Asset Management (Trades, Portfolio), Grantham, Pzena, Pioneer, Simons’ firm, Chris Davis (Trades, Portfolio) and NWQ Managers (Trades, Portfolio).

Microsoft

The investor reduced her Microsoft position by 13.40% in the second quarter. The 1.4 million-share stake represents 2.11% of the equity portfolio. GuruFocus data shows she has gained an estimated 143.7% on the investment since establishing it in the third quarter of 2012.

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The software company, which is headquartered in Redmond, Washington, has a $1.05 trillion market cap; its shares were trading around $137.86 on Friday with a price-earnings ratio of 27.08, a price-book ratio of 10.29 and a price-sales ratio of 8.45.

According to the Peter Lynch chart, the stock is overvalued.

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With 3.47% of outstanding shares, PRIMECAP is the company’s largest guru shareholder. Other top guru investors include Dodge & Cox, Fisher, Pioneer, Chase Coleman (Trades, Portfolio), Segalas, Barrow, Hanley, Mewhinney & Strauss, Andreas Halvorsen (Trades, Portfolio), Steve Mandel (Trades, Portfolio), Hotchkis & Wiley, Philippe Laffont (Trades, Portfolio), Stanley Druckenmiller (Trades, Portfolio), First Eagle, Grantham and Gore.

Disclosure: No positions.

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About the author:

Sydnee Gatewood
I am the editorial director at GuruFocus. I have a BA in journalism and a MA in mass communications from Texas Tech University. I have lived in Texas most of my life, but also have roots in New Mexico and Colorado. Follow me on Twitter! @gurusydneerg

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