3 actions on which these ESG gurus agree


Summary

  • Both of the guru’s businesses are known for their commitment to being socially responsible.
  • These shares are their common holdings in the second quarter.

Former vice-president Al gore (Trades, Portfolio), leader of Generation Investment Management, and Jerome Dodson (Trades, Portfolio) Parnassus Investments may take slightly different approaches to identifying good value opportunities, but they are both known for their commitment to being socially responsible investors. As such, they have several farms in common.

Gore’s London-based company, which he founded in 2004 with David Blood, is dedicated to long-term investing, integrated sustainability research and customer alignment. Its main objective is sustainability within markets, investing in companies that strategically manage their economic, social and environmental performance.

In an effort to appreciate capital, San Francisco-based Dodson’s invests across the full spectrum of capitalization in low-cost companies that have strong competitive advantages, relevant products or services that will enhance long-term growth. and quality management teams. It also takes into account the environmental and societal impacts of the company by avoiding companies that produce, transport or sell fossil fuels.

According to the aggregate portfolio of GuruFocus, a Premium feature, the two gurus both have positions in Synopsys Inc. (SNPS, Financial), Illumina Inc. (ILMN, Financial) and Guidewire Software Inc. (GWRE, Financial) at the end of the day. of the second trimester.

Synopsis

While Gore established a new 1.2 million share stake in Synopsys (SNPS, Financial) during the quarter, Dodson’s company left its position unchanged at 155,573 shares.

The Mountain View, Calif., Based company, which focuses on technology for chip design, verification, IP integration, software security and quality testing, has a market capitalization of $ 51.2 billion ; its shares were trading around $ 336.24 on Thursday with a price-to-earnings ratio of 69.95, a price-to-book ratio of 9.94 and a price-to-sell ratio of 12.94.

The GF value line suggests that the stock is significantly overvalued based on its historical ratios, past performance and future earnings projections.

Synopsys’ financial strength and profitability were both rated 8 out of 10 by GuruFocus. In addition to a comfortable level of interest coverage, the company has a high Altman Z-Score of 10.74 which indicates it is in good standing. Return on invested capital also dwarfs the weighted average cost of capital, which means that value creation occurs as the business grows.

The company is also supported by an expanding operating margin, strong returns on equity, assets and capital that outperform more than half of its competitors and a moderate Piotroski F-Score of 6, which suggests that business conditions are typical of a stable business. Consistent earnings and revenue growth also contributed to Synopsys’ predictability rating of five out of five stars. According to GuruFocus, companies with this rank are reporting an average of 12.1% per year over a 10-year period.

GuruFocus estimates that Gore, who is the company’s largest guru shareholder with a 0.82% stake, has earned 32.47% on the investment so far, while Dodson’s company has generated a return of 102.93% since the position was established in Q2 2020.

Other gurus who own the stock include Pioneer Investments, Catherine Wood (professions, portfolio), Jeremy grantham (professions, portfolio), Ken fisher (businesses, portfolio), Dodge & Cox, Joel greenblatt (professions, portfolio), Lee ainslie (professions, portfolio), Paul Tudor Jones (trades, portfolio) and Baillie Gifford (trades, portfolio).

Illumina

Parnassus Investments left its stake in Illumina (ILMN, Financial) unchanged in the second quarter with 88,399 shares. Gore reduced its position of 1.09 million shares by 18.68%.

The San Diego-based medical diagnostics and research company, which focuses on the analysis of genetic variation and biological function, has a market capitalization of $ 73.49 billion; its shares were trading around $ 469.03 on Thursday with a price-to-earnings ratio of 89.96, a price-to-book ratio of 13.32 and a price-to-sell ratio of 17.46.

According to the GF Value Line, the stock is currently slightly overvalued.

GuruFocus rated Illumina’s financial strength at 6 out of 10. In addition to adequate interest coverage, the company is backed by a strong Altman Z-Score of 10.89, although assets are growing at a pace faster as incomes rise. The WACC is also eclipsed by the ROIC, indicating that value creation is underway.

The company’s profitability was rated 9 out of 10. Even though the operating margin is declining, returns surpass more than half of its industry peers. Illumina also has a high Piotroski F-Score of 7, which suggests that trading conditions are sound and that steady profit and revenue growth has contributed to a predictability ranking of 3.5 stars. GuruFocus claims that companies with this rank are reporting an average of 9.3% per year.

GuruFocus data shows that Gore has gained around 37.85% on investment since its inception in Q4 2019. Dodson’s company has gained around 45.15% on investment since Q3 2019.

With 14.51% of the shares in circulation, Baillie Gifford (Trades, Portfolio) is the company’s largest shareholder guru. Frank sands (trades, portfolio), the Vanguard Healthcare Fund (professions, portfolio), PRIMECAP management (professions, portfolio), Ron baron (Trades, Portfolio), Pioneer Investments, the Parnassus Endeavor Fund (trades, portfolio) and Ray dalio (Trades, Portfolio) also have important positions in Illumina.

Guide wire software

Gore increased its position in Guidewire Software (GWRE, Financial) by 49.27% ​​in the second quarter, while Dodson’s company established a stake of 150,889 shares.

The San Mateo, Calif., Based software company, which provides a platform for property and casualty insurance companies, has a market cap of $ 9.78 billion; its shares were trading around $ 117.62 on Thursday with a price-to-pound ratio of 6.3 and a price-to-sell ratio of 12.97.

Based on the GF value line, the stock currently appears to be slightly overvalued.

Guidewire’s financial strength has been rated 5 out of 10 by GuruFocus. The company has a high Altman Z-Score of 9.38, indicating that it is in good standing even as assets are accumulating at a faster rate as revenues are growing.

The company’s profitability is rated 6 out of 10, even though its margins and returns are negative and underperform more than half of its competitors. Guidewire also has a low Piotroski F-Score of 3, indicating operations are in poor shape, as well as a one-star predictability rating. GuruFocus data shows that companies in this rank are reporting an average of 1.1% per year.

GuruFocus estimates that Gore has earned 4.74% on its investment since its inception in the first quarter. Dodson gained about 12.37%.

Among the gurus invested in Guidewire, Baron holds the largest stake with 6.87% of the shares outstanding. Other major guru shareholders include Pioneer Investments, Wallace weitz (trades, portfolio), Dalio and Ainslie.

Portfolio composition

Gore’s $ 24.12 billion equity portfolio of 40 stocks as of June 30 is heavily invested in the tech and healthcare sectors.

Likewise, the Parnassus Fund’s $ 1.13 billion equity portfolio of 45 stocks is heavily invested in the tech sector, followed by smaller positions in the healthcare and consumer discretionary sectors. .

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