Jeff Auxier (Trades, Portfolio) released his portfolio for the second quarter earlier this week.
The guru’s Oregon-based firm, Auxier Asset Management, seeks to invest in “compelling, undervalued” companies that have, among other attributes, strong or improving fundamentals, consistent operating results, a significant competitive advantage, understandable products and a demonstrated ability to earn a high return on capital.
In his quarterly commentary, Auxier discussed the market’s recent performance.
“While the rally in the markets is good news, most of this growth has come off the back of a very small number of companies from the technology and communications sectors,” he wrote. “Investors have been flooding into a select few names that are driving most of the growth in the S&P 500. According to the Financial Times, Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla and Meta accounted for 29.5% of the S&P 500’s total market cap in June. The explosion of growth in these seven names has brought the index to its most concentrated level since the 1970s. This kind of concentration can lead to overvaluation compared to the rest of the market.”
Keeping these considerations in mind, 13F filings show Auxier established eight new positions during the three-month period ended June 30, sold out of three stocks and added to or trimmed a slew of other existing investments. His most notable trades included a new investment in Domino’s Pizza Inc. (DPZ, Financial), increased bets on Keurig Dr Pepper Inc. (KDP, Financial) and British American Tobacco PLC (BTI, Financial) and reductions in the UnitedHealth Group Inc. (UNH, Financial) and Mastercard Inc. (MA, Financial) holdings.
Investors should be aware 13F filings do not give a complete picture of a firm’s holdings as the reports only include its positions in U.S. stocks and American depository receipts, but they can still provide valuable information. Further, the reports only reflect trades and holdings as of the most-recent portfolio filing date, which may or may not be held by the reporting firm today or even when this article was published.
Domino’s Pizza
The guru invested in 1,600 shares of Domino’s Pizza (DPZ, Financial), allocating 0.09% of the equity portfolio to the holding. The stock traded for an average price of $315.80 per share during the quarter.
The Ann Arbor, Michigan-based company, which operates a chain of pizza restaurants, has a $13.42 billion market cap; its shares were trading around $382.30 on Friday with a price-earnings ratio of 28.90 and a price-sales ratio of 3.01.
The GF Value Line suggests the stock is modestly undervalued currently based on its historical ratios, past financial performance and analysts’ future earnings projections.
At 95 out of 100, the GF Score indicates the company has high outperformance potential on the back of high ratings for growth, profitability, value and momentum and a more moderate financial strength rank.
Of the gurus invested in Dominos, Jim Simons (Trades, Portfolio)’ Renaissance Technologies has the largest position with 2.48% of its outstanding shares. Lee Ainslie (Trades, Portfolio) and Ken Fisher (Trades, Portfolio) also have notable holdings.
Keurig Dr Pepper
Auxier expanded his Keurig Dr Pepper (KDP, Financial) position by 207.28%, picking up 26,685 shares. The transaction had an impact of 0.14% on the equity portfolio. Shares traded for an average price of $32.86 each during the quarter.
He now holds 39,559 shares in total, which represent 0.21% of the equity portfolio. GuruFocus estimates he has gained 77.88% on the long-held investment.
The beverage company headquartered in Frisco, Texas, which is known for soft drinks like Dr Pepper and its K-Cup coffee products, has a market cap of $47.18 billion; its shares traded around $33.77 on Friday with a price-earnings ratio of 29.62, a price-book ratio of 1.87 and a price-sales ratio of 3.29.
According to the GF Value Line, the stock is modestly undervalued currently.
The GF Score of 76 implies the company is likely to have average performance going forward. While it received high ratings for profitability and value, the growth, financial strength and momentum ranks are more moderate.
With a 0.56% stake, Simons’ firm is the company’s largest guru shareholder. Other top guru investors of Keurig Dr Pepper include Joel Greenblatt (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio) and Jefferies Group (Trades, Portfolio).
British American Tobacco
The investor boosted the British American Tobacco (BTI, Financial) holding by 11.11%, buying 16,150 shares. The transaction impacted the equity portfolio by 0.09%. During the quarter, the stock traded for an average per-share price of $34.20.
Auxier now holds a total of 161,510 shares, accounting for 0.89% of the equity portfolio. GuruFocus data shows he has lost 14.78% on the long-lived investment.
The British tobacco company has a $71.94 billion market cap; its shares were trading around $32.17 on Friday with a price-earnings ratio of 6.71, a price-book ratio of 0.78 and a price-sales ratio of 2.
Based on the GF Value Line, the stock appears to be modestly undervalued currently.
The GF Score of 72 means the company is likely to have average performance going forward, driven by high profitability and value ratings, middling marks for growth and financial strength and a low momentum rank.
Jeremy Grantham (Trades, Portfolio) is British American Tobacco’s largest guru shareholder with a 0.07% stake. The stock is also being held by Simons’ firm, First Eagle Investment (Trades, Portfolio), Sarah Ketterer (Trades, Portfolio), Jones, Charles Brandes (Trades, Portfolio), Fisher and Steven Cohen (Trades, Portfolio).
UnitedHealth
With an impact of -0.20% on the equity portfolio, Auxier curbed the UnitedHealth (UNH, Financial) position by 2.94%, selling 2,405 shares. The stock traded for an average price of $488.72 per share during the quarter.
The investor now holds 79,444 shares total, occupying 6.34% of the equity portfolio as the second-largest holding. GuruFocus says he has gained 645.38% on the investment over its lifetime.
The Minnetonka, Minnesota-based company, which provides health care plans and services, has a market cap of $461.71 billion; its shares were trading around $498.44 on Friday with a price-earnings ratio of 22.30, a price-book ratio of 5.64 and a price-sales ratio of 1.34.
The GF Value Line suggests the stock is modestly undervalued currently.
Supported by high ratings for profitability, growth and financial strength, the GF Score of 95 means the company has high outperformance potential. The value and momentum ranks are more moderate, however.
Gurus with significant positions in the stock include the Vanguard Health Care Fund (Trades, Portfolio), Dodge & Cox, Andreas Halvorsen (Trades, Portfolio), Fisher, Grantham and Ruane Cunniff (Trades, Portfolio).
Mastercard
Impacting the equity portfolio by -0.13%, Auxier trimmed the Mastercard (MA, Financial) investment by 4.95%, selling 2,090 shares. During the quarter, shares traded for an average price of $375.05 each.
He now holds 40,090 shares, which make up 2.62% of the equity portfolio as his sixth-largest holding. GuruFocus says he has gained 1,002.17% on the investment.
The financial services company headquartered in Purchase, New York, which focuses on payment processing, has a $369.51 billion market cap; its shares were trading around $392.17 on Friday with a price-earnings ratio of 36.75, a price-book ratio of 67.15 and a price-sales ratio of 15.94.
According to the GF Value Line, the stock is modestly undervalued currently.
With solid ratings for profitability, growth, value and momentum as well as a more moderate financial strength rank, the GF Score is 97. As such, the company has high outperformance potential.
Holding a 0.62% stake, Chuck Akre (Trades, Portfolio)’s firm is the largest guru shareholder of Mastercard. Warren Buffett (Trades, Portfolio), Fisher, Baillie Gifford (Trades, Portfolio), Tom Russo (Trades, Portfolio), the Harbor Capital Appreciation Fund (Trades, Portfolio), Al Gore (Trades, Portfolio)’s Generation Investment, Steve Mandel (Trades, Portfolio) and Halvorsen also have large positions in the stock.
Additional trades and portfolio performance
During the quarter, Auxier also established new positions in General Dynamics Corp. (GD, Financial) and Ferguson PLC (FERG, Financial), added to the holdings of AbbVie Inc. (ABBV, Financial) and Forrester Research Inc. (FORR, Financial) and cut back on America Movil SAB de CV (AMX, Financial).
Over half of the guru’s $603 million equity portfolio, which is composed of 167 stocks, is invested in the health care, consumer defensive and financial services sectors.
The Auxier Focus Fund returned -4.52% in 2022, outperforming the S&P 500’s -18.11% return.
