Jerome Dodson’s Parnassus Fund Buys 1 Stock, Sells 3 Others in 3rd Quarter

– By James Li Jerome Dodson (Trades, Portfolio), founder and president of Parnassus Investments, disclosed this week that the Parnassus Fund established a position in Hilton Worldwide Holdings Inc. (NYSE:HLT) during the third quarter. Despite this, the fund’s top three trades featured sells in Trimble Inc. (NASDAQ:TRMB), Dentsply Sirona Inc. […]

– By James Li

Jerome Dodson (Trades, Portfolio), founder and president of Parnassus Investments, disclosed this week that the Parnassus Fund established a position in Hilton Worldwide Holdings Inc. (NYSE:HLT) during the third quarter. Despite this, the fund’s top three trades featured sells in Trimble Inc. (NASDAQ:TRMB), Dentsply Sirona Inc. (NASDAQ:XRAY) and Waste Connections Inc. (NYSE:WCN).

The San Francisco-based fund seeks capital appreciation through investments in companies that are trading below intrinsic value and have wide economic moats, relevancy over the long term and quality management teams. Parnassus avoids investing in companies engaged in the extraction, exploration, production and manufacturing of fossil fuels.

Jerome Dodson's Parnassus Fund Buys 1 Stock, Sells 3 Others in 3rd Quarter
Jerome Dodson’s Parnassus Fund Buys 1 Stock, Sells 3 Others in 3rd Quarter

As of the quarter-end, the fund’s $924 million equity portfolio contains 43 stocks with a turnover ratio of 6%. The top three sectors in terms of weight are technology, health care and industrials, representing 37.44%, 17.46% and 15.35% of the portfolio.

Jerome Dodson's Parnassus Fund Buys 1 Stock, Sells 3 Others in 3rd Quarter
Jerome Dodson’s Parnassus Fund Buys 1 Stock, Sells 3 Others in 3rd Quarter

Fund takes position in Ackman holding Hilton

The Parnassus Fund purchased 108,531 shares of Hilton, giving the position 1% weight in the equity portfolio. Although shares averaged $83.54 during the third quarter, shares of Hilton are significantly overvalued based on its current price-to-GF Value ratio of approximately 1.6.

Jerome Dodson's Parnassus Fund Buys 1 Stock, Sells 3 Others in 3rd Quarter
Jerome Dodson’s Parnassus Fund Buys 1 Stock, Sells 3 Others in 3rd Quarter

GuruFocus ranks the McLean, Virginia-based hotel operator’s profitability 7 out of 10 on the back of operating margins outperforming 76.08% of global competitors, coupled with a three-year revenue growth rate that is near a 10-year high of 17.7%.

Jerome Dodson's Parnassus Fund Buys 1 Stock, Sells 3 Others in 3rd Quarter
Jerome Dodson’s Parnassus Fund Buys 1 Stock, Sells 3 Others in 3rd Quarter

Despite high profitability, Hilton has a low financial strength rank of 3, weighed down by interest coverage and debt-to-Ebitda ratios underperforming over 70% of global travel and leisure companies.

Jerome Dodson's Parnassus Fund Buys 1 Stock, Sells 3 Others in 3rd Quarter
Jerome Dodson’s Parnassus Fund Buys 1 Stock, Sells 3 Others in 3rd Quarter

Other gurus with holdings in Hilton include Bill Ackman (Trades, Portfolio)’s Pershing Square, Andreas Halvorsen (Trades, Portfolio)’s Viking Global and Bill Nygren (Trades, Portfolio)’s Oakmark Funds.

Jerome Dodson's Parnassus Fund Buys 1 Stock, Sells 3 Others in 3rd Quarter
Jerome Dodson’s Parnassus Fund Buys 1 Stock, Sells 3 Others in 3rd Quarter

Trimble

The fund sold 443,594 shares of Trimble, trimming the equity portfolio 2.09%. While shares averaged $47.73 during the third quarter, shares are modestly overvalued based on its current price-to-GF Value ratio of 1.29.

Jerome Dodson's Parnassus Fund Buys 1 Stock, Sells 3 Others in 3rd Quarter
Jerome Dodson’s Parnassus Fund Buys 1 Stock, Sells 3 Others in 3rd Quarter
Jerome Dodson's Parnassus Fund Buys 1 Stock, Sells 3 Others in 3rd Quarter
Jerome Dodson’s Parnassus Fund Buys 1 Stock, Sells 3 Others in 3rd Quarter

The Sunnyvale, California-based company provides location-based solutions that are used in global positioning system tablets. GuruFocus ranks the company’s profitability 8 out of 10 on several positive investing signs, which include a high Piotroski F-score of 7, a 3.5-star business predictability rank and an operating margin that has increased approximately 5.40% per year on average over the past five years and is outperforming over 83% of global competitors.

Jerome Dodson's Parnassus Fund Buys 1 Stock, Sells 3 Others in 3rd Quarter
Jerome Dodson’s Parnassus Fund Buys 1 Stock, Sells 3 Others in 3rd Quarter

Dentsply Sirona

The fund sold 425,437 shares of Dentsply Sirona, trimming the equity portfolio 2.04%. Shares averaged $44.23 during the quarter; the shares are fairly valued based on its current price-to-GF Value ratio of 1.06.

Jerome Dodson's Parnassus Fund Buys 1 Stock, Sells 3 Others in 3rd Quarter
Jerome Dodson’s Parnassus Fund Buys 1 Stock, Sells 3 Others in 3rd Quarter

GuruFocus ranks the Charlotte-based dental supply manufacturer’s financial strength 6 out of 10: Although the company’s trailing-12-month return on invested capital of over 28% outperforms its weighted average cost of capital, Dentsply Sirona’s interest coverage and debt ratios underperform over 68% of global competitors.

Jerome Dodson's Parnassus Fund Buys 1 Stock, Sells 3 Others in 3rd Quarter
Jerome Dodson’s Parnassus Fund Buys 1 Stock, Sells 3 Others in 3rd Quarter

Waste Connections

The fund sold 145,577 shares of Waste Connections, reducing the position 50.32% and the equity portfolio 1.48%. Shares averaged $99.86 during the third quarter; the stock is fairly valued based on its current price-to-GF Value ratio of 0.98.

Jerome Dodson's Parnassus Fund Buys 1 Stock, Sells 3 Others in 3rd Quarter
Jerome Dodson’s Parnassus Fund Buys 1 Stock, Sells 3 Others in 3rd Quarter

GuruFocus ranks the Canadian waste management company’s profitability 7 out of 10 on the back of operating margins outperforming over 73% of global competitors.

Jerome Dodson's Parnassus Fund Buys 1 Stock, Sells 3 Others in 3rd Quarter
Jerome Dodson’s Parnassus Fund Buys 1 Stock, Sells 3 Others in 3rd Quarter

Disclosure: No positions.

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This article first appeared on GuruFocus.

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