Investing with the Gurus – Gurus Thinking Alike?

I always wondered if Gurus ever compared notes, and if so, what lessons would they learn from each other. Just on a whim, I thought I’d pit two Gurus against each other, and see what their portfolios might reveal. This may be an exercise on a whim, but it is a powerful learning opportunity too. It may shed some light on what similar (identical) names more than one Guru might like, and what could ordinary investors like you and I learn from that behavior.

So, I took a look at Guru Daniel Loeb’s (Third Point, LLC) and Guru Joel Greenblatt’s (Gotham Asset Management, LLC) Q4-2017 and Q1-2018 portfolios. Let’s see what interesting facts we might learn from this exercise.

The Dream Portfolio

We’re looking to see what we can glean from Loeb’s and Greenblatt’s Q4-2017 and Q1-2018 portfolios. For the purpose of this learning exercise, we’ve chosen to take just 4 common holdings (sorted alphabetically) from the two combined portfolios, just to see how the two gurus think (alike!).

Loeb, Greenblatt, portfolios, Guru Investing
Source: sec.gov/edgar

To put things in perspective, here’s what the entire portfolios actually represent:

  • Loeb-Q4 2017: 44 total positions, for a total portfolio value of $13,855,071,000
  • Loeb-Q1 2018: 40 total positions, for a total portfolio value of $13,318,675,000
  • Greenblatt-Q4 2017: 919 positions for a total value of $6,886,214,000
  • Greenblatt-Q1 2018: 929 holdings valued at $7,148,924,000

As you can see, the four common positions we’ve highlighted are a drop in the bucket in terms of the full portfolios of both Gurus. However, our objective isn’t to do a line-by-line analysis. We started out by asking one simple question: What are some identical holdings in Guru portfolios? But that’s not the entire scope of our Lessons Learned. Here’s what we’re trying to glean from this exercise:

a) Are there similar (identical) stocks that both Gurus like?
b) If so, how much (value/quantity) of them does each Guru hold in their respective portfolios?
c) How well (or poorly) has each of those positions done?
d) What would ordinary investors like you and I have hoped to gain had we built a portfolio of similar (identical) stocks?

To answer those questions, lets do some more number crunching.

Our Dream Portfolio Takeaways

The table above already answers our first question. An analysis of the last two 13F filings from EDGAR confirm that these two Gurus are both currently (as of Q1 2018) fans of:

  • ADOBE SYS INC (NASDAQ: ADBE)
  • ALPHABET INC (NASDAQ: GOOG); and
  • ANTHEM INC (NYSE: ANTM)

Although both Gurus still hold these three positions, Greenblatt has been reducing his stakes in ADBE, and ANTM, while raising it in GOOG. Loeb, on the other hand, appears to have his increased his holdings of ANTM and, unlike Greenblatt, has reduced his GOOG position slightly. For Loeb, ADBE is a new holding in Q1-2018.

When it comes to the 4th position:

  • AETNA INC (NYSE: AET)

It appears that both Gurus are of the same mind. Loeb exited his holdings prior to Q1-2018, while Greenblatt seems to have lightened up on his AET holdings in Q1-2018.

So, how did each of these holdings fare over a 200-day range?

Investing_with_the_Gurus, Adobe,Aetna, Alphabet, Anthem,
Source: sec.gov/edgar

Well, both ADBE and GOOG have been clear winners, with the former visibly leading the pack with a 37% plus gain. AET on the other hand has been flat, with ANTM contributing a not so shabby gain. Still, if ordinary investors had these 4 picks in a hypothetical portfolio, they would have got an enviable average 13.45% pop over the 200-day analysis period.

Investing_with_the_Gurus, Adobe, NASDAQ:ADBEInvesting_with_the_Gurus,Aetna, NYSE:AETInvesting_with_the_Gurus, Anthem, NYSE:ANTMInvesting_with_the_Gurus, Alphabet, NASDAQ:GOOG

 

 

 

 

SOURCE: Yahoo Finance (Intra-day Jun 12th, 2018)

To account for the various position shifts (increases, decreases, entries and exits), let’s take a look at how a Dream Portfolio with these 4 positions would fare over a much shorter (6 month) duration. Based on intra-day closing prices on Jun 12, 2018, your Dream Portfolio would have returned you an approximately 14.18% – which isn’t a bad deal!

My takeaway from this exercise: If ONE Guru loves a stock, perhaps you should follow it. If TWO Gurus hold a stock – should you buy it? You decide. The numbers don’t lie!

Author does not have investment in stock discussed in this article. Sign-up for our bi-weekly newsletter so you don’t miss any hot investment opportunities. Also don’t forget to get our recently published Best Blockchain Stock To Invest In Right Now report absolutely free. Find other top stocks to invest in, go here.

Free books, reports and subscriptions...