The Most Bought Guru Stocks of Q3
Now that all investors GuruFocus tracks have reported their
third quarter portfolios, data on their buying and selling trends
is available. Though the investors are independent thinkers, many
seek similar characteristics in a stock, and thus some will agree
on the attractiveness of certain securities during a given quarter.
This quarter, the stocks with the highest consensus guru buying
were: Microsoft (
), Oracle (
), Apple (
) and Exxon (
Microsoft ( MSFT )
The most bought stock of the third quarter was Microsoft, with 28 gurus establishing or adding to an existing stake in the company. The company has a 90.5% weighting in their combined portfolios.
Eight gurus initiated new Microsoft positions: Kyle Bass, George Soros, Murray Stahl, John Keeley, Paul Tudor Jones, Glenn Greenberg and Louis Moore Bacon. George Soros took the largest new position, buying 0.15% of the company's shares outstanding, or 12,580,700 shares.
Microsoft is currently in the process of shifting its focus on software to a focus on devices and services, company CEO Steve Ballmer said at the Nov. 19 annual shareholder meeting. Ballmer also announced in August that he would leave Microsoft after a year. Microsoft shares have climbed 41% overall year to date, with a 3.7% drop over the third quarter.
For the third quarter, the company reported $18.53 billion in revenue, up from $16.01 billion for the previous year quarter. This was led by revenue from its Devices and Consumer segment, up 4%, and its Commercial segment, up 10%. Net income also increased to $5.24 billion, or $0.62 per diluted share, compared to $4.47 billion, or $0.53 per diluted share.
The company ended the quarter with $4.02 billion in cash on its balance sheet, down from $5.04 billion, ROE of 25.6%, down from 26%, and ROA of 14.8%, flat from the previous year.
Microsoft's revenue and earnings history:
Microsoft on Wednesday trades around $37.71, close to a 10-year high. It has a P/E of 14.1, P/B of 3.9 and P/S of 3.95, near a three-year high
Oracle ( ORCL )
The second most-bought stock, Oracle, saw 25 gurus buy or add to their holding of the company. It has a combined weighting of 69.3% in gurus' portfolios.
Gurus establishing new positions in the company were: John Buckingham, NWQ Managers and Jim Simons. NWQ Managers bought the largest position, buying 0.06% of shares outstanding, or 2,608,551 shares total.
Oracle is a company working to simplify IT by moving it out of the enterprise by integrating hardware and software in the cloud and data center. Its shares are up 6% year to date, rebounding after a drop of around 7.8% in the first half of the year.
Highlights of Oracle's first fiscal quarter financial results include a GAAP revenue increase to $8.37 billion from $8.18 billion in the prior-year quarter. GAAP net income rose 8% to $2.2 billion, and earnings per share rose 14% to $0.47 for the same periods. Its free cash flow reached a record $6 billion, of which it used $3 billion to repurchase shares in the quarter.
Oracle ROE reached 20%, up from 18.8%, and ROA grew to 10% from 10.8%. The company has $19.66 billion on its balance sheet, compared to $15.67 billion the previous year.
Oracle's revenue and earnings history:
Oracle shares are trading close to a 10-year high, at $34.83, with a P/E ratio of 15.3, P/B of 3.7 and P/S of 4.45.
Apple ( AAPL )
Apple shares were purchased by 23 gurus during the third quarter, giving it a combined 34.4% weight in gurus' portfolios.
Four of the positions were new, those by: Carl Icahn, Paul Tudor Jones, Chris Davis and Meridian Funds. The largest new position was bought by Carl Icahn, who acquired 0.43% of shares outstanding, or 3,875,063 shares.
Computer, iPhone, iPad and iPod maker Apple saw its shares rise less than 3% year to date, with a 20% rally in the third quarter.
In its fiscal 2013 fourth quarter, Apple produced revenue of $37.5 billion, up from $36 billion in the prior-year quarter, and net income of $7.5 billion, or $8.26 per diluted share, down from $8.67 per diluted share in the prior-year quarter. Its gross margin was 37%, from 40%.
Apple in the third quarter sold a September-quarter record 33.8 million iPhones, compared to 36.9 million in the prior-year quarter. It also generated $9.9 billion in cash flow from operations and spent $7.8 billion in cash on dividends and share repurchases.
The company reported ROE of 24.4% and ROA of 37%, down from 28% and 40%, respectively, in the prior-year quarter. It balance sheet reflected about $61 billion in cash, risen from about $48 billion a year earlier.
Apple's revenue and earnings history:
Apple has a P/E of 13.8, P/B of 3.9 and P/S of 2.9.
Exxon ( XOM )
Twenty-one gurus in the third quarter bought Exxon. Its combined portfolio weight among all gurus is 32.5%.
Gurus with a new position in Exxon were: John Burbank, Warren Buffett, Jim Simons and T Boone Pickens. Notably, Buffett made the largest purchase, amassing 0.91% of the massive company's outstanding shares, or an amount of 40,089,371.
Exxon is the world's largest publicly traded global oil and gas company, and the largest refiner and marketer of petroleum products, with a chemicals business among the world's largest. Exxon shares appreciated more than 8% year to date, after an almost 5% dip across the third quarter.
Exxon's revenue in the third quarter declined to $112.4 billion, from $115.14 billion in the prior-year quarter. Earnings also fell by 18% to $7.87 billion, and earnings per share dropped 14% to $1.79, in the same periods. Cash flow from operations and assets sales was $13.6 billion, and it returned $5.8 billion to shareholders through dividends and share repurchases.
The company's ROE was 18.8% and ROA was 9.2%, down from 22.8% and 12%, respectively, in the prior-year quarter. Exxon carries about $38.5 billion in cash on its balance sheet.
Exxon's revenue and earnings history:
Around $95.01 per share on Wednesday, Exxon's share price is near a 10-year high. It has a P/E of 12.2 and P/B of 2.45, close to a two-year high. Its P/S is 1.0.
To see more of the most purchased stocks of the third quarter, use the S&P 500 screener here. Not a Premium Member of GuruFocus? Try it for free for 7 days here! About GuruFocus: GuruFocus.com tracks the stocks picks and portfolio holdings of the world's best investors. This value investing site offers stock screeners and valuation tools. And publishes daily articles tracking the latest moves of the world's best investors. GuruFocus also provides promising stock ideas in 3 monthly newsletters sent to Premium Members .