The second quarter of 2023 saw U.S. markets trade higher, driven by moderating inflation and signs the economy remains resilient despite higher interest rates. There was some concern regarding the U.S. debt ceiling, which was resolved by Congress in early June.
As such, the S&P 500 rallied about 8% during the three months ended June 30, while the Dow Jones Industrial Average rose 2.40% and the Nasdaq Composite Index gained nearly 13%.
According to GuruFocus Hot Picks, a Premium feature that allows investors to screen for the stocks that had the highest number of buys or sells based on the most recent regulatory filings, the five stocks gurus were selling the most during the quarter, as determined by net sells, were Microsoft Corp. (MSFT, Financial), Amazon.com Inc. (AMZN, Financial), Meta Platforms Inc. (META, Financial), Alphabet Inc. (GOOGL, Financial) and Johnson & Johnson (JNJ, Financial).
Investors should be aware the data is based on 13F filings for investing firms and portfolio updates for mutual funds, which do not provide a complete picture of a guru’s holdings. The 13Fs include only U.S. common stocks, while the mutual fund updates typically include both U.S. and foreign common stocks. Neither includes other assets or investments such as bonds, credit, etc. All numbers are as of the quarter’s end only; it is possible the gurus may have already made changes to the positions after the quarter ended. However, even this limited data can provide valuable information.
Microsoft
Held by 59 gurus with a combined equity portfolio weight of 282.77%, 32 sells and 20 buys were recorded for Microsoft (MSFT, Financial) in the second quarter. This resulted in 12 net sells.
Gurus buying the stock included Daniel Loeb (Trades, Portfolio) and David Tepper (Trades, Portfolio), while those selling included Wallace Weitz (Trades, Portfolio) and Catherine Wood (Trades, Portfolio). Overall, gurus have been fairly bearish on the stock in recent quarters.
The Redmond, Washington-based software company has a $2.44 trillion market cap; its shares were trading around $327.80 on Wednesday with a price-earnings ratio of 33.83, a price-book ratio of 11.81 and a price-sales ratio of 11.52.
The GF Value Line suggests the stock is fairly valued 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 profitability, growth and financial strength as well as more moderate value and momentum ranks.
Amazon
Recording 25 sells and 19 buys for the quarter, 50 gurus are invested in Amazon (AMZN, Financial). The combined weight in their equity portfolios is 144.75%. The net sells totaled six.
Among the gurus buying the stock were Philippe Laffont (Trades, Portfolio) and Loeb, while Steve Mandel (Trades, Portfolio) and Chase Coleman (Trades, Portfolio) cut back their holdings. Gurus have overall been pretty bullish on the stock in recent quarters.
The e-commerce giant, which is headquartered in Seattle, has a market cap of $1.40 trillion; its shares traded around $135.21 on Wednesday with a price-earnings ratio of 106.46, a price-book ratio of 8.27 and a price-sales ratio of 2.57.
According to the GF Value Line, the stock is modestly undervalued currently.
The GF Score of 94 implies the company has high outperformance potential, driven by high ratings for profitability, growth, value and momentum. The financial strength rank is more moderate.
Meta Platforms
With 31 sells and 15 buys for the quarter, generating 16 net sells, Meta Platforms (META, Financial) is held by 47 gurus. They have a combined equity portfolio weight of 139.13% in the stock.
Andreas Halvorsen (Trades, Portfolio) and Jeremy Grantham (Trades, Portfolio) are among those selling the stock, while Jim Simons (Trades, Portfolio)’ Renaissance Technologies and Coleman are adding to their holdings. The overall trend among gurus has been more bearish in recent quarters.
The Menlo Park, California-based social media company formerly known as Facebook has a $743.75 billion market cap; its shares were trading around $763.87 on Wednesday with a price-earnings ratio of 34.60, a price-book ratio of 5.68 and a price-sales ratio of 6.57.
Based on the GF Value Line, the stock appears to be modestly undervalued currently.
Supported by high ranks for profitability, growth, financial strength and value as well as a low momentum rating, the GF Score is 90. This indicates the company has good outperformance potential.
Alphabet
Alphabet (GOOGL, Financial), which recorded 33 sells and 14 buys, or 19 net sells, is held by 50 gurus with a combined equity portfolio weight of 134.07%.
Gurus curbing their investments included Chris Davis (Trades, Portfolio) and Coleman, while Laffont and Simons’ firm were buying the stock. The overall trend over the past several quarters has been slightly more bullish before the large selloff in the second quarter.
The communications services company headquartered in Mountain View, California, which owns the Google search engine, YouTube and a number of other businesses, has a market cap of $1.72 trillion; its Class A shares were trading around $136.01 on Wednesday with a price-earnings ratio of 28.82, a price-book ratio of 6.43 and a price-sales ratio of 6.19.
The GF Value Line suggests the stock is fairly valued currently.
With high ratings for four of the criteria and a more moderate value rank, the GF Score of 98 means the company has high outperformance potential.
Johnson & Johnson
Johnson & Johnson (JNJ, Financial), which is held by 31 gurus, recorded 17 sells and 11 buys for the three-month period, or six net sells. Their combined equity portfolio weight is 46.14%.
Ray Dalio (Trades, Portfolio)’s Bridgewater Associates and Simons’ firm were among those selling, while Louis Moore Bacon (Trades, Portfolio) and Lee Ainslie (Trades, Portfolio) were buying. The overall sentiment among gurus has switched between bearish and bullish in recent quarters.
The New Brunswick, New Jersey-based pharmaceutical company, which also makes medical devices and consumer goods, has a $395.59 billion market cap; its shares were trading around $164.28 on Wednesday with a price-earnings ratio of 33.26, a price-book ratio of 5.68 and a price-sales ratio of 4.44.
According to the GF Value Line, the stock is modestly undervalued currently.
The GF Score of 91 implies the company has high outperformance potential, receiving strong ratings for profitability, growth, financial strength and momentum as well as middling marks for value.
