What do the top hedge fund and mutual fund gurus like in the consumer durable goods group? This article, the 45th and last one in this series, identifies, through research of the latest available institutional 13-F filings, the gurus who are most invested in the consumer durable goods group, and the specific stocks within that group that they prefer to hold in their portfolios.
Consumer durable goods or hard goods or non-consumables are defined as goods that do not quickly wear out, or more specifically, one that yields utility over time rather than being completely consumed in one use (as in the case of non-durable consumer goods covered separately previously in another article). The list is extremely diverse, including highly durable goods such as refrigerators and other home appliances, house-wares, consumer electronics and lighting products, furniture and home furnishings, leisure and sports goods, toys and games. It should be noted that automobiles are also durable consumer goods for obvious reasons, but due to the size of the industry they are typically analyzed separately, and as such the automobile industry was covered in another article.
Furthermore, please note that this article will be among the last in this series, as the latest March 2011 quarter 13-F Institutional filings are now almost complete. Later this week, I will bring to you the "Top New and Added Picks" of guru funds by industry/sector detailing this time not the top holdings, but more importantly what "New" positions they took and what existing positions they added to in the latest March 2011 quarter. Please check my article page for previous articles in this series.
A guru is defined as someone who is regarded as having great knowledge, wisdom and authority in a certain area. When it comes to hedge funds, there are a number of ways to anoint leading managers as gurus, including long-term performance, low portfolio volatility and an elite reputation in the investment community.
Many of us are familiar with leading investors and hedge fund managers such as Warren Buffet, George Soros, Carl Icahn and Julian Robertson, but the hedge fund community alone includes over 9,000 funds; add in mutual funds, ETFs, and other investment entities and the number is likely to be at least two to three times that number. While there is no official list of gurus, less than one percent or between 100 to 200 fund managers are commonly believed by the larger investment community to have earned the distinction of being called gurus.
The study of the investing habits of gurus can be informative as these are very savvy, well-respected investors with a high personal net worth deploying large sums of capital from their funds regularly. They have a long-term track record of success, and while one can easily just ride their coattails, the savvy investor may want to use these lists as a starting point to conduct their own due diligence.
The total capitalization of the U.S. equity markets is somewhere in the $15 trillion range, and the total market capitalization of leading consumer durable goods companies is $195 billion which is 1.3% of the overall market. The table lists four investment gurus whose funds have invested more than twice that average or at least 2.6% in the consumer durable goods Industry. The following is a list of the top consumer durable goods company picks of guru funds over-concentrated in that sector:
- Activision Blizzard Inc. (ATVI) is a publisher of interactive entertainment software and peripheral products for consoles, hand-held devices and PCs.
- Electronic Arts Inc. (ERTS) is a developer of video game software and content for play on video game consoles, PC’s, handheld platforms, and mobile phones.
- Avid Technology Inc. (AVID) is a developer of software and hardware used for digital media production, management and distribution.
- Sony Corp. (SNE) is a Japanese manufacturer of audio and video equipment, computers, electronics, components, software, game, video and music.
- Eastman Kodak (EK) manufactures digital and film imaging systems for the photographic and graphic communications markets.
- Mattel Inc. (MAT) manufactures toy products sold worldwide under the Mattel, Fisher-Price and American Girl Brands.
- Whirlpool Corp. (WHR) manufactures consumer washers and dryers, refrigerators and freezers, dishwashers, and other household appliances.
- Plantronics Inc. (PLT) manufactures headsets and headphones used in office and contact centers, mobile phones, computers and video games.
Table
Fund and Guru | Type of fund | Assets Under Management | Percent Equity Portfolio invested in Equities of Companies in the consumer durable goods Industry | Major consumer durable goods company positions in Portfolio |
Blum Capital Partners (Richard Blum) | hedge fund - Deep Value | $ 1.7 billion | 7.5% | AVID |
Tiger Global Management LLC (Chase Coleman) | hedge fund - Technology Focused | $ 3.7 billion | 6.3% | ERTS |
PRIMECAP Management Company | mutual fund | $ 71.6 billion | 3.5% | WHR, SNE, ERTS, MAT, PLT, ATVI |
Private Capital Management | hedge fund and mutual fund | $ 1.6 billion | 2.9% | AVID, EK |
San Francisco-based hedge fund Blum Capital Management, headed by guru Richard Blum, was founded in 1975. It is an investment firm making strategic block, minority and control investments in public and private companies.
New York-based hedge fund Tiger Global Management is managed by Chase Coleman, a former analyst and partner at legendary Julian Roberson's Tiger Management. It invests in the public and private equity markets across the world, with a focus on technology stocks and also employing fundamental analysis to make its investment decisions.
Pasadena, CA-based mutual fund Company PRIMECAP Management Company was established in 1983, and manages three funds: PRIMECAP Odyssey Stock fund, PRIMECAP Odyssey Growth fund, and PRIMECAP Odyssey Aggressive Growth fund. Since inception in 2004, the three funds above have delivered a return of 7.16%, 8.40% and 10.36% respectively versus 4.65% for the S&P 500. Their investment approach is based on four key principles: a commitment to fundamental research, a long-term investment horizon, emphasis on individual decision-making, and a focus on value. In addition, they also manage the equity portfolio for a limited number of institutional clients, including the Vanguard Group.
Naples, FL-based Investment Management Company Private Capital Management, was founded in 1986, and offers both a mutual fund and hedge funds. Their investment approach is based on identifying undervalued companies that can attain their intrinsic value over an acceptable investment time horizon.
Credit: Historical fundamentals, including operating metrics and stock ownership information were derived using I-Metrix by Edgar Online, Zacks Investment Research, DailyGraphs, Thomson Reuters and Briefing.com. fund data, including assets under management and firm profiles are sourced mostly from hedgetracker.com. The information and data are believed to be accurate, but no guarantees or representations are made.
Disclaimer: Material presented here is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. Further, these are my opinions and I may be wrong. I may have positions in securities mentioned in this article. You should take this into consideration before acting on any advice given in this article. If this makes you uncomfortable, then do not listen to my thoughts and opinions. The contents of this article do not consider your individual investment objectives so consult with your own financial adviser before making an investment decision. Investing includes certain risks, including loss of principal.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
