Top 5 4th-Quarter Trades of Chris Davis' Firm
- By James Li
Davis Select Advisors recently released its fourth-quarter 2020 portfolio update. Among the changes made during the quarter, the firm disclosed a new position in Viatris Inc. (NASDAQ:VTRS), a position boost in Cigna Corp. (NYSE:CI) and reductions in its holdings in Facebook Inc. (NASDAQ:FB), Quest Diagnostics Inc. (NYSE:DGX) and Alphabet Inc. (NASDAQ:GOOGL)(NASDAQ:GOOG).
Fund Chairman Chris Davis (Trades, Portfolio) manages the firm's Large Cap Value Portfolio and joins the research team for the firm's other portfolios. The Tucson, Arizona-based firm seeks long-term capital appreciation through investments in durable, well-managed businesses that can be purchased at value prices.
As of December 2020, the firm's $20.78-billion equity portfolio contains 109 stocks with a turnover ratio of 2%. The top four sectors in terms of portfolio weight are financial services, communication services, technology and consumer cyclical, with weights of 39.09%, 14.99%, 12.96% and 10.63%, respectively.
Viatris
The firm purchased 11,727,007 shares of Viatris (NASDAQ:VTRS), giving the position 1.06% of the equity portfolio space. Shares averaged $16.33 during the fourth quarter. The stock may be a possible value trap based on Thursday's price-to-GF-Value ratio of 0.58.
According to the company's website, the Canonsburg, Pennsylvania-based drug manufacturer was formed through the merger of Mylan and Pfizer Inc. (NYSE:PFE) subsidiary Upjohn. GuruFocus ranks the company's financial strength 4 out of 10. Although the company has a high Piotroski F-score of 7, interest coverage and debt ratios are underperforming over 80% of global competitors.
Other gurus with holdings in Viatris include the Vanguard Health Care Fund (Trades, Portfolio) and John Paulson (Trades, Portfolio)'s Paulson & Co.
Cigna
The firm added 435,956 shares of Cigna (NYSE:CI), increasing the position by 135.29% and impacting the equity portfolio 0.44%. Shares averaged $196.59 during the fourth quarter.
GuruFocus ranks the Bloomfield, Connecticut-based insurance company's profitability 6 out of 10: The company has a high Piotroski F-score of 7 and three-year revenue and earnings growth rates that outperform over 70% of global competitors even though net margins and returns are underperforming over 60% of global insurance companies.
The firm sold 418,626 shares of Facebook (NASDAQ:FB), trimming the position by 11.3% and impacting the equity portfolio 0.61%. Shares averaged $274.26 during the fourth quarter.
GuruFocus ranks the Menlo Park, California-based social media giant's profitability 10 out of 10 on several positive investing signs, which include a five-star business predictability rank and profit margins that outperform over 90% of global competitors.
Quest Diagnostics
The firm sold 818,355 shares of Quest Diagnostics (NYSE:DGX), curbing the position 21.84% and impacting the equity portfolio 0.52%. Shares averaged $122.05 during the fourth quarter.
GuruFocus ranks the Secaucus, New Jersey-based medical diagnostics company's profitability 8 out of 10 on several positive investing signs, which include a 3.5-star business predictability rank and an operating margin that has increased approximately 5.40% per year on average over the past five years and is outperforming over 80% of global competitors.
Alphabet
The firm sold 62,212 Class C shares of Alphabet (NASDAQ:GOOG), trimming the position by 8.31% and impacting the equity portfolio 0.51%.
GuruFocus ranks the Mountain View, California-based interactive media giant's financial strength 8 out of 10 on several positive investing signs, which include a strong Altman Z-score of 10.4 despite debt ratios outperforming just over 53% of global competitors.
Disclosure: Long Pfizer.
Read more here:
Ruane Cunniff's Top 4 Trades in the 4th Quarter
Jana Partners' Top 4 Trades of the 4th Quarter
Top 4 Broadest-Owned Tech Stocks as of the 4th Quarter
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This article first appeared on GuruFocus.
