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Top 5 Holdings of Jerome Dodson's Parnassus Fund

According to top 10 holdings statistics, a Premium feature of GuruFocus, the top five holdings of Jerome Dodson (Trades, Portfolio)'s Parnassus Fund as of the third quarter were Mondelez International Inc. (NASDAQ:MDLZ), Alphabet Inc. (NASDAQ:GOOGL), Motorola Solutions Inc. (NYSE:MSI), Thomson Reuters Corp. (NYSE:TRI) and Microsoft Corp. (NASDAQ:MSFT).

Dodson, founder and chairman of Parnassus Investments, provides guidance on the long-term strategic direction of the San Francisco-based firm and serves as chairman of the board. Prior to founding Parnassus, Dodson served as president and CEO of Continental Savings of America from 1976 to 1982, where he started the "Solar T-Bill" program to finance solar energy installations and developed innovative programs to finance low and moderate-income housing.


Dodson has since given the portfolio management roles for the Parnassus Fund to his partners Robert Klaber and Ian Sexsmith. Despite this, the chairman still leads the management of the Parnassus Endeavor Fund (Trades, Portfolio).

The Parnassus Fund invests across the capitalization spectrum, focusing on companies with wide moats, relevancy over the long term, quality management teams and high margin of safety based on intrinsic value. The fund, which avoids companies engaged in the exploration and production of fossil fuels, reported a gain of 1.68% for the quarter, slightly underperforming the Standard & Poor's 500 Index's return of 1.70%. Managers said the "most meaningful contributor" to positive return is the fund's underweight positioning of the energy sector.


As of quarter-end, the fund's $926 million equity portfolio contains 37 stocks, of which four represent new holdings. The fund's top three sectors in terms of weight were technology, financial services and health care.


The fund owns 842,990 shares of Mondelez, giving the holding 5.03% weight in the equity portfolio. Shares averaged $54.74 during the quarter.


The Deerfield, Illinois-based company manufactures well-known snacks like Oreos and Chips Ahoy. GuruFocus ranks Mondelez's profitability 7 out of 10: Even though revenues have declined approximately 1.2% per year on average over the past three years, a rate that underperforms 69.56% of global competitors, Mondelez's profit margins are outperforming over 86% of global companies that produce consumer packaged goods.


Gurus with large holdings in Mondelez include Hotchkis & Wiley, Pioneer Investments (Trades, Portfolio) and Jim Simons (Trades, Portfolio)' Renaissance Technologies.


The fund owns 32,038 Class A shares of Alphabet, giving the position 4.22% weight in the equity portfolio. While shares averaged $1,183.58 during the third quarter, shares of Alphabet traded on Tuesday around 2% below Monday's close of $1,288.98 on the heels of reporting earnings that missed analyst estimates.


The fund said in its quarterly letter that the Mountain View, California-based online media giant contributed gains of 0.45% as the company reported better-than-expected revenue growth during the second quarter, driven by YouTube, mobile search and cloud business. GuruFocus ranks Alphabet's profitability 10 out of 10 on several positive investing signs, which include a 3.5-star business predictability rank and operating margins that outperform 87.76% of global competitors despite contracting approximately 2.3% per year on average over the past five years.



The fund owns 228,992 shares of Motorola, down 20.51% from the prior quarter. Shares, which occupy 4.21% of the equity portfolio, averaged $171.80 during the quarter.


The Chicago-based company manufactures global communications equipment, including two-way portable radios, batteries, base stations and consoles. GuruFocus ranks Motorola's profitability 8 out of 10 on several positive investing signs, which include a strong Piotroski F-score of 7 and profit margins that outperform approximately 92% of global competitors.


Thompson Reuters

The fund owns 557,337 shares of Thompson Reuters, down 13.51% from the prior quarter. Shares, which occupy 4.02% of the equity portfolio, averaged $67.40 during the quarter.


The Toronto-based company operates three business segments: financial and risk, legal and tax and accounting. GuruFocus ranks Thompson Reuters' profitability 6 out of 10: Although the company has expanding profit margins, its three-year average revenue decline rate of 20.10% underperforms 80.23% of global competitors.



The fund owns 262,828 shares of Microsoft, giving the position 3.94% weight in the equity portfolio. Shares averaged $137.52 during the quarter.


The Redmond, Washington-based company provides software, hardware and services across three segments: productivity and business process, intelligent cloud and more personal computing. Chief Financial Officer Amy Hood said last week that for the quarter ending Sept. 30, its first quarter in fiscal 2020, Microsoft's commercial cloud revenues increased 36% year over year to $11.1 billion.


GuruFocus ranks Microsoft's profitability 10 out of 10 on several positive investing signs, which include a business predictability rank of four stars, a strong Piotroski F-score of 8 and operating margins that have increased approximately 1.40% per year on average over the past five years and are outperforming 96.48% of global competitors.


Register for our 2020 Value Conference

We are pleased to have Dodson as one of our speakers at our 2020 Value Conference in Omaha, Nebraska. Other speakers at our conference include Matthew McLennan from First Eagle Investment (Trades, Portfolio), Win Murray from Bill Nygren (Trades, Portfolio)'s Oakmark Funds and Rhupal Bhansali from John Rogers (Trades, Portfolio)' Ariel Investments. The presentations will take place on May 1, 2020, the day before Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B) co-managers Warren Buffett (Trades, Portfolio) and Charlie Munger (Trades, Portfolio) host their annual shareholder meeting. Register now and save $300 off the regular price!

Disclosure: No positions.

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This article first appeared on GuruFocus.