Jerome Dodson And The Parnassus Funds: Why Are They So Successful? It's Simple

Mar. 24, 2017 9:56 AM ETAMAT, LRCX, AMZN, BFH, AXP, SCHW, GILD, PRGO, CIEN, MU12 Comments
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  • The Parnassus funds follow simple investment principles. Invest in companies:
  • With exceptional long-term profitability.
  • During periods of temporary adversity, or when the market is negative on the prospects of an entire sector.
  • That are socially responsible, in particular that are good places to work, that treat their employees well.

Interview of Jerry Dodson, Founder and CEO of The Parnassus Funds

Master Investor Jerome Dodson, CEO and founder of The Parnassus Funds, has built one of the most impressive performance records in the investment business, generating superior returns over the last one, three, five, ten and twenty-five years. According to Barron's, the Parnassus Endeavor Fund is one of only four domestic stock funds to accomplish superior returns with such consistency. The fund has a five-year annual return of 17.8% versus 14.1% for the S&P 500.

The Parnassus funds have accomplished these returns following simple investment principles: Invest in companies with exceptional long-term profitability during periods of temporary adversity, or when the market is negative about the prospects of an entire sector, and focus on companies that are socially responsible, in particular that are good places to work, that treat their employees well. In part, this approach evolved out of studies of the investment performance of Fortune's list of the best 100 companies in the country to work for - they outperformed the market by one to two percent, on average, consistently, over long periods. In our interview, I explored the investment principles behind the Endeavor Fund, as well as the individual holdings in the fund - what positions Jerry feels best about, and which concern him.

Rod MacIver: What do you look for in potential investments?

Jerry Dodson: There are two crucial considerations. One, we look for companies that are out of favor, that are selling at low prices compared to their five-year historic average price to earnings, price to sales, price to cash flow, price to book value. The second thing we look for are companies that are good corporate citizens and that have good environmental policies. We look at charitable contributions. Most importantly, we look at how a company treats its employees. We try to invest in undervalued companies

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Risk Research provides two research services for private equity firms, institutional investors and family offices. Both are based on a combination of proprietary software and traditional Graham and Dodd analysis. 1. Investigative due diligence into factors that determine risk and reward for corporate acquirers, private equity firms and family offices. ( The Dividend Investor Risk Report. Our passive investment portfolio focused on quality dividend payers. We identify companies likely to increase their dividend based on free cash flow trends and dividend history. (

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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