Bernard Horn (Trades, Portfolio), president and portfolio manager of Polaris Capital Management, and David Rolfe (Trades, Portfolio), head of Wedgewood Partners, will both be speaking at the GuruFocus Value Conference in May.
The event, which will be held at the Hilton Omaha hotel, will start on Thursday, May 4, 2023 at 6 p.m. with the keynote speaker and a catered dinner. Then, the other speakers will present between 8 a.m. and 6 p.m. on Friday.
Seats are limited, so reserve your spot today! Prices increase on April 1: https://www.gurufocus.com/conference/register.php
The conference is not all they have in common, however. They both have positions in some of the same stocks despite having slightly different investing strategies.
Horn’s Boston-based global and international value equity firm oversees approximately $14 billion in assets under management. Its pure global value philosophy combines investment technology with traditional fundamental research. With the goal of generating strong risk-adjusted returns and capital appreciation, the firm invests in discounted but high-quality stocks in developed as well as emerging markets.
In contrast, Rolfe’s St. Louis-based firm approaches potential investments with the mindset of a business owner, striving to generate significant long-term wealth by analyzing a handful of undervalued companies that have a dominant product or service, consistent earnings, revenue and dividend growth, are highly profitable and have strong management teams.
According to GuruFocus’ Aggregated Portfolio, a Premium feature based on 13F filings, the two gurus both have positions in UnitedHealth Group Inc. (UNH, Financial) and Microsoft Corp. (MSFT, Financial) as of the end of the fourth quarter.
Investors should be aware 13F filings do not give a complete picture of a firm’s holdings as the reports only include its positions in U.S. stocks and American depository receipts, but they can still provide valuable information. Further, the reports only reflect trades and holdings as of the most-recent portfolio filing date, which may or may not be held by the reporting firm today or even when this article was published.
UnitedHealth Group
During the quarter, Rolfe curbed his UnitedHealth (UNH, Financial) position by 0.40%, while Horn left his holding unchanged. The two gurus have a combined equity portfolio weight of 7.54% in the stock.
The Minnetonka, Minnesota-based company, which offers managed health care and insurance services, has a $448.90 billion market cap; its shares were trading around $481.22 on Monday with a price-earnings ratio of 22.71, a price-book ratio of 5.78 and a price-sales ratio of 1.41.
The GF Value Line suggests the stock is fairly valued currently based on its historical ratios, past financial performance and analysts’ future earnings projections.
At 93 out of 100, the GF Score indicates the company has high outperformance potential. While it received solid ratings for profitability, growth and financial strength, the GF Value and momentum ranks were more moderate.
In addition to adequate interest coverage, UnitedHealth has a high Altman Z-Score of 3.76, indicating it is in good standing even though assets are building up at a faster rate than revenue is growing and it is issuing new debt. The return on invested capital also eclipses the weighted average cost of capital, meaning value is being created as the company grows. It also has a high Piotroski F-Score of 7 out of 9, which indicates operations are healthy, and a predictability rank of five out of five stars. According to GuruFocus research, companies with this rank return an average of 12.1% annually over a 10-year period.
GuruFocus estimates Horn has returned 354.68% on the long-held he investment, while Rolfe has gained 13.35%.
Of the gurus invested in UnitedHealth, the Vanguard Health Care Fund (Trades, Portfolio) has the largest stake with 0.64% of its outstanding shares. Dodge & Cox, Andreas Halvorsen (Trades, Portfolio), Ruane Cunniff (Trades, Portfolio), Barrow, Hanley, Mewinney & Strauss, the late Spiros Segalas’ Harbor Capital Appreciation Fund (Trades, Portfolio) and Jeremy Grantham (Trades, Portfolio) also have significant holdings.
Microsoft
Rolfe reduced his position in Microsoft (MSFT, Financial) by 3.19% to 133,584 shares during the three months ended Dec. 31, while Horn left his holding unchanged with 19,400 shares. They have a combined equity portfolio weight of 7.12% in the stock.
The software company headquartered in Redmond, Washington, which is known for its Windows operating system and Office suite of products, has a market cap of $1.93 trillion; its shares traded around $259.08 on Monday with a price-earnings ratio of 28.79, a price-book ratio of 10.54 and a price-sales ratio of 9.55.
According to the GF Value Line, the stock is modestly undervalued currently.
The GF Score of 97 implies the company has high outperformance potential, driven by strong ratings for four of the criteria and a more moderate momentum rank.
On top of sufficient interest coverage, Microsoft has a robust Altman Z-Score of 8.14. The ROIC also exceeds the WACC, so value creation is occurring. The Piotroski F-Score of 5 indicates conditions are typical of a stable company. It also has a 3.5-star predictability rank. GuruFocus found companies with this rank return, on average, 9.3% annually.
Over its lifetime, GuruFocus data shows Rolfe has gained around 30.21% on his investment, while Horn has recorded a return of 291.67%.
With a 0.53% stake, Bill Gates (Trades, Portfolio)’ foundation trust is Microsoft’s largest guru shareholder. Other top guru investors include Ken Fisher (Trades, Portfolio), PRIMECAP Management (Trades, Portfolio), Dodge & Cox, Baillie Gifford (Trades, Portfolio), Segalas’ fund, Chase Coleman (Trades, Portfolio) and Al Gore (Trades, Portfolio)’s Generation Investment.
Portfolio composition
Horn’s $377 million equity portfolio, which is composed of 94 stocks, is largely invested in the financial services sector.
Rolfe’s $544 million equity portfolio, which is composed of 41 stocks, is heavily invested in the technology and financial services sectors.
