Jerome Dodson Buys 2 Stocks, Sells 2 in 1st Quarter
- By Sydnee Gatewood
Jerome Dodson (Trades, Portfolio)'s Parnassus Fund established two new positions and sold out of two others in the first quarter of the year. He bought Cognizant Technology Solutions Corp. (CTSH) and Novartis AG (NVS). He sold Qualcomm Inc. (QCOM) and Applied Materials Inc. (AMAT).
Warning! GuruFocus has detected 4 Warning Signs with CTSH. Click here to check it out.
The intrinsic value of CTSH
Dodson founded his firm, Parnassus Investments, in 1984. He serves as president and is the lead portfolio manager for several funds, including the Parnassus Fund, the Asia Fund and the Endeavor Fund. The firm invests across the capitalization spectrum in companies with wide moats, compounding growth, quality management teams and that are trading at a significant discount to their intrinsic value.
The investor purchased 400,000 shares of Cognizant Technology for an average price of $57.49 per share, giving it 2.7% portfolio space.
Headquartered in New Jersey, the company provides information technology, consulting and business process services. It has a market cap of $35.5 billion; its shares were trading around $58.62 Monday with a price-earnings (P/E) ratio of 22.9, a price-book (P/B) ratio of 3.3 and a price-sales (P/S) ratio of 2.6.
The Peter Lynch chart below shows the stock is trading above its fair value.
GuruFocus ranked Cognizant's financial strength 8 of 10 and its profitability and growth 9 of 10. While the company does not currently pay a dividend, it has grown its revenue at a rate of 15.1% per year, its EBITDA at a rate of 14% per year and its EPS at a rate of 8.1% per year over the past three years.
Pioneer Investments (Trades, Portfolio) is the company's largest guru shareholder with 0.83% of outstanding shares. In all, 19 gurus hold the stock.
Dodson bought 285,000 shares of Novartis for an average price of $74.37 per share, expanding the portfolio 2.4%.
Novartis is a multinational pharmaceutical company based in Switzerland. It has a market cap of $173.4 billion; its shares were trading around $73.05 on Monday with a P/E ratio of 26.8, a P/B ratio of 23 and a P/S ratio of 3.6.
According to the Peter Lynch chart below, the stock is trading above its fair value.
GuruFocus ranked Novartis' financial strength 6 of 10 and its profitability and growth 5 of 10. The trailing dividend yield and forward dividend yield are both 3.75%. Over the past five years, the company has grown its dividend at a rate of 5.2% per year.
Among the gurus invested in Novartis, Dodge & Cox holds the largest position with 1.9% of outstanding shares. In total, 17 gurus hold the stock.
After initially establishing a stake of 325,000 shares in Qualcomm during the fourth quarter of 2015, Dodson sold his remaining 250,000 shares for an average price of $58.02 per share. The trade had an impact of -2.01% on the portfolio.
Dodson sold his remaining 500,000 shares of Applied Materials for an average price of $35.91 per share, contracting the portfolio -1.9%. His initial stake of 1.8 million shares was purchased in fourth-quarter 2015.
Dodson's current portfolio contains 37 stocks valued at $893 million. Technology stocks and financial services stocks are his largest holdings with a combined weight of 50% in the portfolio.
Disclosure: I do not own any stocks mentioned in the article.
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This article first appeared on GuruFocus.
Warning! GuruFocus has detected 4 Warning Signs with CTSH. Click here to check it out.
The intrinsic value of CTSH
