PRIMECAP Management (Trades, Portfolio), an independent investment management company founded in 1983, recently disclosed its portfolio updates for the second quarter of 2023, which ended on June 30, 2023. The firm, based in Pasadena, CA, manages US-focused equity portfolios for a select number of institutions and mutual funds. PRIMECAP's investment approach is grounded in four key principles: individual decision-making, commitment to fundamental research, a long-term investment horizon, and a focus on value. The firm utilizes a multi-counselor investment model, allowing each portfolio manager complete autonomy over a distinct portion of each fund.
Portfolio Overview
The firm's portfolio contained 328 stocks with a total value of $119.68 billion. The top holdings were Eli Lilly and Co (LLY, Financial) with 9.23%, Biogen Inc. (BIIB) with 3.81%, and Microsoft Corp (MSFT, Financial) with 3.01%.
Top Three Trades of the Quarter
PRIMECAP Management (Trades, Portfolio)'s top three trades of the quarter involved Eli Lilly and Co (LLY, Financial), Thermo Fisher Scientific Inc (TMO, Financial), and Microsoft Corp (MSFT, Financial).
Eli Lilly and Co (LLY, Financial)
The firm reduced its investment in Eli Lilly and Co (LLY) by 1,821,349 shares, impacting the equity portfolio by 0.55%. During the quarter, the stock traded for an average price of $418.16. As of August 15, 2023, Eli Lilly's stock price was $546.02, with a market cap of $518.33 billion. The stock has returned 75.58% over the past year. GuruFocus gives the company a financial strength rating of 6 out of 10 and a profitability rating of 9 out of 10. In terms of valuation, Eli Lilly has a price-earnings ratio of 77.02, a price-book ratio of 46.83, a PEG ratio of 3.91, a EV-to-Ebitda ratio of 57.65, and a price-sales ratio of 16.71.
Thermo Fisher Scientific Inc (TMO, Financial)
PRIMECAP Management (Trades, Portfolio) also reduced its investment in Thermo Fisher Scientific Inc (TMO) by 486,002 shares, impacting the equity portfolio by 0.24%. During the quarter, the stock traded for an average price of $540.21. As of August 15, 2023, Thermo Fisher's stock price was $534.92, with a market cap of $206.45 billion. The stock has returned -11.38% over the past year. GuruFocus gives the company a financial strength rating of 6 out of 10 and a profitability rating of 9 out of 10. In terms of valuation, Thermo Fisher has a price-earnings ratio of 36.56, a price-book ratio of 4.72, a PEG ratio of 1.72, a EV-to-Ebitda ratio of 22.52, and a price-sales ratio of 4.83.
Microsoft Corp (MSFT, Financial)
Lastly, the firm reduced its investment in Microsoft Corp (MSFT) by 866,371 shares, impacting the equity portfolio by 0.22%. During the quarter, the stock traded for an average price of $313.01. As of August 15, 2023, Microsoft's stock price was $323.6261, with a market cap of $2,404.47 billion. The stock has returned 11.22% over the past year. GuruFocus gives the company a financial strength rating of 8 out of 10 and a profitability rating of 10 out of 10. In terms of valuation, Microsoft has a price-earnings ratio of 33.40, a price-book ratio of 11.66, a PEG ratio of 1.81, a EV-to-Ebitda ratio of 22.39, and a price-sales ratio of 11.43.
In conclusion, PRIMECAP Management (Trades, Portfolio)'s Q2 2023 portfolio update reveals a strategic focus on value and long-term investment, as evidenced by their top trades and holdings. The firm's commitment to individual decision-making and fundamental research continues to guide their investment choices.
