The Parnassus Mid Cap Growth Fund disclosed in a portfolio update filing its first-quarter equity portfolio, revealing that its top five trades included new positions in Ball Corp. (BALL, Financial), Sherwin-Williams Co. (SHW, Financial) and Lululemon Athletica Inc. (LULU, Financial). The fund also exited its positions in Block Inc. (SQ, Financial) and Thomson Reuters Corp. (TRI, Financial).
Parnassus founder Jerome Dodson (Trades, Portfolio) stopped managing money for the firm in 2020, though he remains chairman. The fund seeks to invest in companies with long-term competitive advantages, quality management teams and good environmental, social and governance practices. The fund avoids investing in highly leveraged companies and companies associated with the production of fossil fuels and other related industries.
As of March, the fund’s $716- illion equity portfolio contains 36 stocks with a quarterly turnover of 11%. The top four sectors in terms of weight are technology, health care, consumer cyclical and industrials, which account for 42.90%, 18.95%, 14.76% and 11.75% of the equity portfolio.
Investors should be aware that portfolio updates for mutual funds do not necessarily provide a complete picture of a guru’s holdings. The data is sourced from the quarterly updates on the website of the fund(s) in question. This usually consists of long equity positions in U.S. and foreign stocks. All numbers are as of the quarter’s end only; it is possible the guru may have already made changes to the positions after the quarter ended. However, even this limited data can provide valuable information.
Ball
The fund invested in 361,763 shares of Ball (BALL, Financial), giving the position 2.79% equity portfolio weight. Shares averaged $55.61 during the first quarter; the stock is significantly undervalued based on its price-to-GF Value ratio of 0.48 as of Wednesday.
The Westminster, Colorado-based jar and can manufacturer has a GF Score of 79 out of 100 based on a profitability rank of 8 out of 10, a growth rank of 7 out of 10, a momentum rank of 5 out of 10 and a rank of 4 out of 10 for GF Value and financial strength.
The company’s growth ranks 7 out of 10 on the back of a three-year revenue growth rate that outperforms approximately 77% of global competitors despite the three-year earnings growth rate outperforming just over half of global packaging and container companies.
Other gurus with holdings in Ball include Steven Cohen (Trades, Portfolio)’s Point72 Asset Management and Paul Tudor Jones (Trades, Portfolio)’ Tudor Investment.
Sherwin-Williams
The fund invested in 72,133 shares of Sherwin-Williams (SHW, Financial), giving the position 2.27% equity portfolio weight. Shares averaged $228.85 during the first quarter; the stock is modestly undervalued based on its price-to-GF Value ratio of 0.78 as of Wednesday.
The Cleveland-based architectural paint company has a GF Score of 96 out of 100 based on a rank of 10 out of 10 for profitability and growth, a GF Value rank of 9 out of 10, a momentum rank of 8 out of 10 and a financial strength rank of 4 out of 10.
Sherwin-Williams' high profitability rank is driven by several positive investing signs, which include a five-star business predictability rank and an operating margin that has increased by approximately 4.9% per year on average over the past five years.
Lululemon Athletica
The fund purchased 39,157 shares of Lululemon Athletica (LULU, Financial), giving the position 1.99% equity portfolio weight.
Shares of Lululemon averaged $313.51 during the first quarter; the stock is significantly undervalued based on its price-to-GF Value ratio of 0.63 as of Wednesday.
The Vancouver-based athletic apparel company has a GF Score of 96 out of 100 based on a rank of 10 out of 10 for growth and GF Value, a profitability rank of 9 out of 10 and a rank of 7 out of 10 for financial strength and momentum.
Lululemon’s high profitability rank is driven by several positive investing signs, which include a 3.5-star business predictability rank and an operating margin that has increased by approximately 1.7% per year on average over the past five years and outperforms approximately 94% of global competitors.
Block
The fund sold all 319,369 shares of Block (SQ, Financial), trimming 3.06% of its equity portfolio. Shares averaged $74.85 during the first quarter.
GuruFocus’ GF Value Line labeled the San Francisco-based payment service company a possible value trap based on its low price-to-GF Value ratio of 0.27 as of Wednesday and low profitability rank of 4 out of 10.
Block’s low profitability rank is driven by several warning signs, which include gross margins declining by approximately 6.10% per year on average over the past five years and returns on equity underperforming approximately 60% of global competitors.
Thompson Reuters
The fund sold all 133,264 shares of Thompson Reuters (TRI, Financial), trimming 2.32% of its equity portfolio.
Shares of Thompson Reuters averaged $121.01 during the first quarter; the stock is modestly overvalued based on its price-to-GF Value ratio of 1.25 as of Wednesday.
The Toronto-based tax and legal service company has a GF Score of 77 out of 100 based on a rank of 8 out of 10 for profitability and growth, a GF Value rank of 1 out of 10 and a rank of 6 out of 10 for momentum and financial strength.
Thompson Reuters’ high profitability rank is driven by several positive investing signs, which include 10 years of positive net income over the past decade and an operating margin that has increased by approximately 9.3% per year on average over the past five years and outperforms more than 92% of global competitors.
