This article is part of a series that provides an ongoing analysis of the changes made to Gardner Russo & Gardner’s 13F stock portfolio on a quarterly basis. It is based on Russo’s regulatory 13F Form filed on 08/14/2020. Please visit our Tracking Gardner Russo & Gardner Portfolio series to get an idea of their investment philosophy and the last update for their moves during Q1 2020.
This quarter, Gardner Russo & Gardner’s 13F stock portfolio value decreased marginally from $9.89B to $9.84B. The top three holdings are at ~43% of the portfolio while the top five are at ~57% of the assets: Mastercard (MA), Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B), Nestle (OTCPK:NSRGY) (OTCPK:NSRGF), Heineken Holding (OTCQX:HKHHF), and Pernod Ricard (OTCPK:PDRDF) (OTCPK:PDRDY). Recent 13F reports have shown around 100 positions with around 20 stakes that are significantly large. The focus of this article is on the larger positions.
Note: Russo’s portfolio on its own should not be viewed as an overall asset allocation plan as his clients look at his firm to allocate a portion of their assets to his focus area (global equities with consumer orientation).
The Swatch Group (OTCPK:SWGAY): SWGAY was a minutely small stake as of Q3 2015. The following quarter saw a ~600% increase at prices between $16.50 and $21. 2016 also saw a ~40% stake increase at prices between $12.75 and $17.90. The stock currently trades at $11.09. This quarter saw the ~2% portfolio stake disposed at prices between $8.90 and $10.70. Russo realized losses.
Alphabet Inc. (GOOG) (GOOGL): GOOG is now a ~6% of the portfolio position. It was built from Q4 2018 when the small position saw a ~60% stake increase at prices between $976 and $1203. Q2 2019 saw a stake doubling at prices between $1036 and $1288 and that was followed with a ~30% stake increase next quarter at prices between $1098 and $1250. Last three quarters have seen another two-thirds increase at prices between ~$1054 and ~$1525. The stock is now at ~$1581.
Berkshire Hathaway (BRK.A) (BRK.B): BRK.B had been consistently maintained as a top position in the portfolio since their first 13F filing in Q1 1999. At the time, the sizing was at 5.78% compared to the current allocation of ~14%. The last major activity was in 2012 when around 400K shares were acquired in the low-$80s price range. The following year also saw an increase at higher prices. The stock is now at ~$218. Last six quarters have seen minor selling.
Mastercard Inc.: MA is currently the largest 13F stake at 16.24% of the portfolio. It was established in 2008 with the bulk of the current stake purchased in 2010 in the low-$20s price range. 2011 to 2013 also saw significant buying at higher prices. The stock is now at ~$335. There was a ~30% selling over the last two years at prices between $155 and $300. Last two quarters have seen another ~15% trimming.
Nestle SA: NSRGY is the third-largest 13F stake at ~13% of the portfolio. It was a ~3% portfolio stake (~460K shares) in Q1 1999. The position size increased to ~4M shares by 2007 but was sold out the following year. The majority of the current ~11.5M shares stake was purchased in 2011 in the mid-$50s price range. The following two years also saw a combined ~45% increase at higher prices. The stock is currently at ~$120. There was a one-third reduction over the last three years.
Heineken Holding NV: HKHHF was a fairly large ~6% portfolio stake (~2.5M shares) in their first 13F filing in Q1 1999. That original position was sold out in 2008. It was built back up to a 10.2M share stake in the 2011-2013 time frame at prices between $37 and $66. The current position is at 8.56M shares and it is a large (top five) stake at 7.11% of the portfolio. The stock is now at $81.40. Last seven quarters have seen a ~20% trimming.
Pernod Ricard: PDRDF is a large (top five) ~7% of the 13F portfolio position. The stake was established in Q1 2011 in the low-$90s price range. The two years through Q1 2017 saw a ~17% combined increase at prices between $101 and $126. The interim period had also seen purchases almost every quarter. The stock is now at ~$169. Last thirteen quarters saw a one-third reduction.
Unilever N.V. (UN) (UL) (OTCPK:UNLNF): UN is a large 6.56% of the portfolio stake first purchased in 2000. The bulk of the current 12.12M shares stake was acquired during the 5-year period from 2010 to 2014 at prices in the high-$20s to the low-$40s. The stock is now at $57.87. There was a ~22% selling over the last nine quarters.
Philip Morris International (PM): PM is a large position at 5.87% of the 13F portfolio. It was acquired as a result of the spinoff of Philip Morris International from Philip Morris (now Altria) in 2008. Last major activity was in 2013 when close to 2M shares were acquired in the high-$80s price range. The stock currently trades at $79.15. Last two years have seen a ~21% trimming.
Compagnie Financière Richemont (OTCPK:CFRHF) (OTCPK:CFRUY): A large ~6.5M share stake was established in 2011 in the low-$50s price range and was increased to 10.32M shares through incremental purchases in the following years. Q4 2015 saw a ~17% increase at prices between $71 and $87. That was followed with a similar increase next quarter at prices between $62 and $72. The stock is now at $68.25. It is currently a large position at ~5% of the 13F portfolio. There was a ~11% trimming over the five quarters through Q4 2019 and that was followed with a ~20% selling last quarter at prices between $49 and $85. This quarter saw a further ~5% trimming.
JPMorgan Chase (JPM): JPM is 3.46% of the portfolio position. The stake was built last quarter at prices between $79 and $141 and the stock currently trades at ~$104. This quarter saw a ~6% trimming.
Note: a similar-sized position in Wells Fargo (NYSE:WFC) was reduced substantially last quarter.
Martin Marietta Materials (MLM): MLM is 3.28% of the 13F portfolio stake. It had stayed steady at ~2M shares since 2004 but Q4 2016 saw a significant change: ~12% selling at prices between $169 and $234. The stock price increased around five times over that twelve-year period. It currently trades at ~$215. There was a ~15% stake increase in Q3 2017 at prices between $196 and $228. Last nine quarters have seen minor trimming.
Anheuser-Busch InBev SA (BUD) (OTCPK:AHBIF): BUD is ~3% of the 13F portfolio position. The majority of the current position was purchased in 2010 and 2011 at prices between $45 and $64. The following two years also saw significant buying at higher prices. There was a ~25% increase in Q4 2015 as well at prices between $106 and $130. The eleven quarters through Q3 2018 had also seen another ~25% increase at prices between ~$85 and ~$130. The stock is now well below their purchase price ranges at $58.44. For investors attempting to follow Russo, BUD is a good option to consider for further research. Last seven quarters have seen only minor adjustments.
Note: Anheuser-Busch was a small ~1% of the portfolio position during their first 13F filing in Q1 1999. That stake was eliminated in 2008.
Brown Forman (BF.A) (BF.B): BF.B is a 2.94% of the 13F portfolio position that has been in the portfolio since their first 13F filing in Q1 1999. The last significant activity was in 2012 when around 1M shares were purchased in the $26 to $35 price range. There was a ~23% increase in Q1 2018 at prices between $50.50 and $56.50. The stock is now at $80.12. Last nine quarters have seen a one-third selling.
Note: The stock prices and the share counts quoted above are adjusted for the 2-for-1 stock split in August 2016.
Comcast Corp. (CMCSA): CMCSA is another very long-term position that has been in the 13F portfolio since their first filing in Q1 1999. The last major activity was between 2008 and 2011 when the original position was reduced by half (from ~20M shares to ~10M shares) at ~$10. The current position is at ~5.2M shares (~2% of the portfolio) and the stock is at $44.43. There was a ~28% selling over the last two years.
Note: The prices & share counts quoted above are adjusted for the 2-for-1 stock-split in February 2018.
Diageo plc (DEO) (OTCPK:DGEAF): DEO is ~2% of the portfolio’s very long-term stake that was sold down in 2008 but built back up from Q1 2011. Over 6M shares were acquired that quarter in the high-$70s price range. The following two years also saw significant buying. There was a ~40% reduction over the seven quarters through Q2 2019 at prices between $132 and $175. The stock is now at ~$133. Last four quarters have also seen minor selling.
JCDecaux SA (OTCPK:JCDXF) (OTC:JCDXY): JCDXF is now a minutely small position. The original stake was built during the period from 2011 through 2018. 2015 saw a ~240% increase at prices between $34 and $44 while the following year saw another ~40% increase at prices between $25 and $44.50. This quarter saw the position almost sold out at prices between $17 and $24. The stock is currently at $19.24. Russo realized losses.
Visa Inc. (V): The very small 0.95% V stake saw a ~10% increase in Q2 2018 at prices between $118 and $136 and the stock is currently at ~$205. Last year saw a ~15% trimming at prices between ~$132 and ~$190. Last two quarters have seen only minor adjustments.
There are four stakes that are between ~0.1% and ~0.5% of the portfolio: Altria Group (MO), American Express (AXP), Swedish Match AB, and Wells Fargo. The remaining positions are all below 0.1% of the portfolio and so have limited portfolio performance impact.
Note: Some of the securities in this report are OTC stocks with very low liquidity in the US markets. As such, it is best to use limit orders and/or use orders in their native markets.
The spreadsheet below highlights changes to Gardner Russo & Gardner’s 13F stock holdings in Q2 2020:
Disclosure: I am/we are long BRK.B, GOOGL, PM, WFC. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.