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Tom Gayner's Top 6 Position Boosts in 1st Quarter

- By James Li

Tom Gayner (Trades, Portfolio), co-CEO of Markel Corp. (MKL), disclosed last week his top six position boosts for the first quarter were Apple Inc. (AAPL), Whirlpool Corp. (WHR), Alphabet Inc. (GOOG), The Scotts Miracle Gro Co. (SMG), Goldman Sachs Group Inc. (GS) and Sherwin-Williams Co. (SHW).


Managing a portfolio of 133 stocks, Gayner concentrates his focus and portfolio in promising areas where he has the best understanding and knowledge. The fund manager believes the stock is part of a business and the business is worth the present value of future cash flows.

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As of quarter-end, Gayner's top three sectors in terms of portfolio weight were financial services, consumer cyclical and industrials.

Apple

Gayner added 114,450 shares of Apple, boosting the position 73.23% and his equity portfolio 0.36%. Shares of the Cupertino, California-based tech giant averaged $169.29 during the quarter.

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CNBC anchor Becky Quick reported in a Monday interview that during Berkshire Hathaway Inc.'s (BRK-A)(BRK-B) annual meeting last Saturday, Apple CEO Tim Cook said while the company "welcomes all shareholders," he also mentioned it was a "recognition, honor and privilege" to have Berkshire as a major shareholder. Cook said to Quick he found out Berkshire started investing in Apple "just like [everyone else] did": on Berkshire's 13-F reports. Even though Berkshire has not filed its first-quarter 13-F as the deadline is 45 days after the quarter ends, Berkshire owned 249,589,329 shares of Apple as of December 2018.

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The Dow Jones Industrial Average opened over 300 points lower than Friday's close of 26,504.95 on President Trump's threats to increase the tariff on over $200 billion worth of Chinese goods from 10% to 25%. Likewise, shares of Apple opened at $204.29, down approximately 3.52% from Friday's close.

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Berkshire CEO Warren Buffett (Trades, Portfolio) said during the interview that although the current relationship between the U.S. and China can impact the company's investments, he prefers to focus on the relationship between the two superpowers over the next three to five years and beyond. Further, Buffett said the trade disputes could escalate, albeit there is a low chance of that occurring.

Whirlpool

Gayner added 113,490 shares of Whirlpool, increasing the position 139.66% and his equity portfolio 0.25%. Shares averaged $131.72 during the quarter.

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The Benton Harbor, Michigan-based company manufactures and markets various home appliances, including washers, dryers, refrigerators and cooking appliances. Whirlpool said on April 22 that adjusted earnings for the quarter ending March 31 were $3.11 per share, compared to $2.81 per share in the prior-year quarter.

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GuruFocus ranks Whirlpool's profitability 6 out of 10: Even though net profit margins and returns are underperforming over 82% of global competitors, the company's three-year revenue growth rate of 0.20% outperforms 61.27% of global competitors.

Gurus with large holdings in Whirlpool include PRIMECAP Management (Trades, Portfolio) and Ray Dalio (Trades, Portfolio)'s Bridgewater Associates.

Alphabet

Gayner added 8,750 Class C shares of Google parent Alphabet, increasing the position 7.6% and his equity portfolio 0.17%. Shares averaged $1,120 during the quarter.

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The Mountain View, California-based company said on April 29 that net income for the quarter declined from the prior-year quarter on several factors, including the $1.7 billion European competition law fine and decelerating advertising revenue growth. Despite this, Google's financial strength ranks 9 out of 10 on several strong indicators, which include robust interest coverage and a solid Altman Z-score of 10.15.

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Gurus with large holdings in Alphabet include Chris Davis (Trades, Portfolio) and Dodge & Cox.

Scotts Miracle Gro

Gayner added 120,000 shares of Scotts Miracle Gro, increasing the holding 67.42% and his equity portfolio 0.16%.

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The Marysville, Ohio-based company distributes and sells gardening and lawn care products in the U.S., primarily to retailers like The Home Depot Inc. (HD), Lowe's Companies Inc. (LOW) and Walmart Inc. (WMT). GuruFocus ranks the company's profitability 6 out of 10: Even though revenues have declined over the past three years, Scotts Miracle Gro's three-year compound annual growth rate of sales still outperforms 63.37% of global competitors.

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Gurus with large holdings in Scotts Miracle Gro include First Eagle Investment (Trades, Portfolio) and Ken Fisher (Trades, Portfolio).

Goldman Sachs

Gayner added 42,960 shares of Goldman Sachs, increasing the position 34.12% and his equity portfolio 0.14%.

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The New York-based investment bank said on April 15 that net revenues for the quarter declined 13% year over year on lower revenue in key business segments like investment banking and underwriting. GuruFocus ranks Goldman Sachs' profitability 4 out of 10: Although net profit margins outperform 53% of global competitors, the bank's three-year revenue growth rate and three-year earnings per share growth rate underperform 55% and 77% of global capital market companies.

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Buffett's conglomerate owned 18,353,635 shares of Goldman Sachs as of the fourth quarter.

Sherwin-Williams

Gayner added 20,000 shares of Sherwin-Williams, increasing the position 181.82% and his equity portfolio 0.14%.

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The Cleveland-based company distributes and sells premium paint and paint-related products. GuruFocus ranks the company's profitability 8 out of 10: Even though gross profit margins have declined over the past five years, Sherwin-Williams' return on equity and the Joel Greenblatt (Trades, Portfolio) return on capital are outperforming over 95% of global competitors. The company's five-star predictability rank reflects consistent revenue and earnings growth over the past 10 years.

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Disclosure: No positions.

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This article first appeared on GuruFocus.