RTX Stock – Jeremy Grantham’s Top 5 Trades
Jeremy Grantham (Trades, Portfolio), board chairman of Boston-based firm GMO, disclosed this week that his firm’s top-five trades during the first quarter included a new position in Global Payments Inc. (GPN, Financial), a boost to its stakes in Baidu Inc. (BIDU, Financial) and Cigna Corp. (CI, Financial) and the trimming of its holdings in Raytheon Technologies Corp. (RTX, Financial) and iShares Core MSCI Emerging Markets ETF (IEUR, Financial).
According to the firm’s website, GMO applies a long-term, valuation-based investment philosophy, seeking opportunities at market extremes. GMO believes that standing apart from other investors and pursuing a contrarian investing approach can create high shareholder value in the long term.
As of March 31, the firm’s $18.30 billion equity portfolio contains 829 stocks, with 198 new positions and a turnover ratio of 16%. The firm’s top three sectors in terms of weight are technology, health care and financial services, representing 29.14%, 18.83% and 15.11% of the equity portfolio.
GMO purchased 682,199 shares of Global Payments (GPN, Financial), giving the position 0.75% weight in the equity portfolio. Shares averaged $199.17 during the first quarter; the stock is modestly overvalued based on Thursday’s price-to-GF Value ratio of 1.11.
GuruFocus ranks the Atlanta-based payment processing service company’s profitability 7 out of 10: Although the company has a three-star business predictability rank and profit margins outperforming over 77% of global competitors, returns and three-year revenue and earnings growth rates underperform more than half of global business service companies.
Gurus with large holdings in Global Payments include
Steve Mandel (Trades, Portfolio)’s Lone Pine Capital and
Philippe Laffont (Trades, Portfolio)’s Coatue Asset Management.
The firm added 725,010 shares of Baidu (BIDU, Financial), expanding the position 274.63% and the equity portfolio 0.87%. Shares averaged $261.90 during the first quarter; the stock is fairly valued based on Thursday’s price-to-GF Value ratio of 1.09.
GuruFocus ranks the Beijing-based online search giant’s profitability 8 out of 10 on several positive investing signs, which include a high Piotroski F-score of 7 and net profit margins outperforming over 80% of global competitors.
Gurus with large holdings in Baidu include
PRIMECAP Management (Trades, Portfolio),
Jim Simons (Trades, Portfolio)’ Renaissance Technologies and
Catherine Wood (Trades, Portfolio)’s ARK Investment.
The firm purchased 536,363 shares of Cigna (CI, Financial), boosting the position 664.93% and the equity portfolio 0.70%. Shares averaged $222.64 during the first quarter; the stock is fairly valued based on Thursday’s price-to-GF Value ratio of 1.02.
GuruFocus ranks the Bloomfield, Connecticut-based insurance company’s profitability 7 out of 10: Three-year revenue and earnings growth rates outperform over 86% of global competitors despite net margins and returns outperforming just over 55% of global insurance companies.
The firm sold 2,419,906 shares of Raytheon (RTX, Financial), slashing 88.68% of the position and 1.06% of the equity portfolio. Shares averaged $72.98 during the first quarter; the stock is significantly overvalued based on Thursday’s price-to-GF Value ratio of 1.39.
GuruFocus ranks the Waltham, Massachusetts-based aerospace and defense company’s financial strength 4 out of 10 on several warning signs, which include a weak Altman Z-score of 1.69, an interest coverage ratio less than 3 and a debt-to-equity ratio that underperforms 55% of global competitors.
IShares Core MSCI Emerging Markets ETF
The fund sold 2,410,248 shares of iShares Core MSCI Emerging Markets ETF (IEMG), discarding 86.62% of the stake and 0.92% of the equity portfolio. Shares averaged $65.79 during the first quarter.
According to the iShares website, the Core MSCI Emerging Markets ETF seeks to track the performance of an index composed of large-, mid- and small-cap stocks from emerging markets.
Disclosure: No positions.
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