Tracking Jeremy Grantham’s GMO Capital Portfolio – Q1 2023 Update

This text is a part of a sequence that gives an ongoing evaluation of the adjustments made to GMO’s 13F inventory portfolio on a quarterly foundation. It’s based mostly on GMO’s regulatory 13F Type filed on 5/12/2023. Jeremy Grantham’s 13F portfolio worth elevated ~5% from $18.77B to $19.66B this quarter. The portfolio is diversified with current 13F stories displaying properly over 500 completely different positions though most of them are very small. There are 48 securities which might be considerably giant (greater than 0.5% of the portfolio every) and they’re the main focus of this text. The biggest 5 stakes are Microsoft Company, Meta Platforms, UnitedHealth, Apple, and Alphabet. They add as much as ~16% of the portfolio. Please go to our Monitoring Jeremy Grantham’s GMO Portfolio sequence to get an thought of their funding philosophy and our final report for the fund’s strikes throughout This fall 2022.

As of April 30, 2023, GMO’s 7-year asset class actual return forecast is for US Massive Cap asset class to have a damaging 1.8% annualized return on one finish and Rising Worth asset class to have a optimistic 7.6% annualized return on the different excessive. The agency at present has ~$70B underneath administration, a far cry from ~$120B that they’d on the peak. The property are distributed amongst individually managed, institutional, and mutual fund accounts. Their flag ship mutual fund is GMO Benchmark-Free Allocation Fund (MUTF:GBMFX) which was incepted in 2003.

Word 1: It was reported in December 2020 that Jeremy Grantham has a ~4.8M share stake in QuantumScape (QS). The ~$12.5M funding was made 8 years in the past as a part of a sequence of bets on early-stage “inexperienced expertise” firms.

Word 2: Jeremy Grantham has repeatedly stated the US inventory market is in a bubble since June 2020. The newest was a analysis notice in January. The notice has turned mildly damaging: “The pricking of the supreme overconfidence bubble is behind us, and shares are actually cheaper. However due to the sheer size of the record of necessary negatives, I imagine continued financial and monetary issues are possible. I imagine they may simply change into unexpectedly dire. I imagine subsequently {that a} continued market decline of at the least substantial proportions, whereas not the close to certainty it was a 12 months in the past, is more likely than not.”

Stake Will increase:

UnitedHealth Group (UNH): The highest three 2.71% of the portfolio stake in UNH was already a really giant ~18M share place in 2005. The place dimension peaked in 2007 at over 20.5M shares. The 5 years by 2019 had seen a ~75% promoting at costs between $102 and $296. That was adopted with a ~25% discount in Q2 2022 at costs between ~$452 and ~$546. The inventory is now at ~$479. The final three quarters have seen solely minor changes.

Alphabet Inc. (GOOG): GOOG is a 2.64% place. The long-term stake was constructed in the course of the 2007-2014 timeframe at low costs. The place dimension peaked in 2014. Since then, the stake was lowered at costs between ~$25 and ~$150. There was a ~25% stake enhance this quarter at costs between ~$87 and ~$109. The inventory at present trades at ~$124.

Amazon.com (AMZN): The two.50% AMZN stake noticed an enormous ~130% stake enhance final quarter at costs between ~$82 and ~$121. That was adopted by a ~25% enhance this quarter at costs between ~$83 and ~$113. The inventory at present trades at ~$118.

Johnson & Johnson (JNJ): JNJ is a really long-term stake. Of their first 13F submitting in 2005, the place was at ~170K shares. The sizing peaked at round 26M shares in 2009. The stake was offered down by ~40% in 2014 at costs between $88 and $109. 2016 noticed one other ~50% promoting at costs between $97 and $125. Latest exercise follows. H2 2019 noticed a 23% stake enhance at costs between $127 and $146. There was one other one-third enhance in Q3 2022 at costs between ~$161 and ~$180. The inventory at present trades at ~$159 and the stake is at 2.37% of the portfolio. The final two quarters have seen solely minor changes.

Lam Analysis (LRCX): The two.13% LRCX stake was in-built Q3 2020 at costs between ~$294 and ~$385 and the inventory is now at ~$599. The final a number of quarters have seen minor shopping for.

Accenture plc (ACN): ACN grew to become a big a part of the portfolio in the course of the 2013-2014 timeframe when round 3.8M shares have been bought at costs between $69 and $85. The subsequent 5 years noticed a mixed ~50% discount by minor promoting most quarters. The 2 quarters by Q3 2021 noticed one other ~24% discount at costs between ~$295 and ~$415. The inventory at present trades at ~$288 and the stake is at ~2% of the portfolio. There was a ~9% trimming within the final two quarters whereas this quarter noticed a ~14% enhance.

TJX Firms (TJX): TJX is a 1.88% of the portfolio place that has been within the portfolio for properly over fifteen years. The place has wavered. The final main exercise was a ~25% stake enhance in H1 2020 at costs between ~$37 and ~$63. The inventory is now at ~$79. The final three quarters noticed solely minor changes.

Elevance Well being (ELV): ELV place was first bought in 2014. The majority of the present 1.68% portfolio stake was established in 2017 at costs between $144 and $232. There was a roughly one-third promoting in H1 2022 at costs between ~$428 and ~$530. The inventory at present trades at ~$455. The final three quarters noticed solely minor changes.

Wells Fargo (WFC): The 1.59% WFC place was bought in Q3 2017 at costs between $49.50 and $56. Q1 2020 noticed a ~25% stake enhance at costs between ~$25 and ~$49. That was adopted with a ~30% stake enhance in This fall 2020 at costs between ~$21 and ~$30. There was a ~18% promoting over the following two quarters at costs between ~$30 and ~$48. Final quarter noticed one other ~27% discount at costs between ~$40 and ~$48. The inventory is now at $40.21. There was a ~12% enhance this quarter.

Intuitive Surgical (ISRG): ISRG is a 0.78% of the portfolio place bought in Q2 2022 at costs between ~$191 and ~$306. The inventory at present trades at ~$312. The final three quarters have seen solely minor changes.

Adobe Methods (ADBE), Ameresco (AMRC), Abbott Labs (ABT), BP plc (BP), Canadian Photo voltaic (CSIQ), Constellation Manufacturers (STZ), Darling Components (DAR), Eli Lilly (LLY), Inexperienced Plains (GPRE), Livent Corp. (LTHM), Otis Worldwide (OTIS), Petroleo Brasileiro (PBR), Quest Diagnostics (DGX), and Sunrun Inc. (RUN): These small (lower than ~1.5% of the portfolio every) stakes have been elevated this quarter.

Word: GMO has important possession stakes within the following companies: Ameresco (AMRC) and Canadian Photo voltaic (CSIQ).

Stake Decreases:

Microsoft Company (MSFT): MSFT is at present the highest place within the portfolio at 4.84%. It’s a very long-term stake. The 2007-2008 interval noticed the stake constructed from ~5.6M shares to over 59M shares at costs between $19 and $35. The place dimension peaked in 2011 at ~68M shares. The subsequent 4 years noticed the stake offered down by ~80% at costs between $28 and $56. Latest exercise follows: the three years by Q3 2020 noticed a ~70% promoting at costs between ~$88 and ~$232. There was a ~9% trimming in This fall 2021 whereas in Q2 2022 there was an identical enhance. The inventory at present trades at ~$319. The previous couple of quarters noticed solely minor changes.

Meta Platforms (META): META is a ~3% of the portfolio place bought in Q1 2018 at costs between ~$160 and ~$190. The stake had seen incremental shopping for since. The final three quarters noticed a ~125% stake enhance at costs between ~$90 and ~$235. The inventory is now at ~$247. There was a minor ~5% trimming this quarter.

Apple Inc. (AAPL): AAPL is a high 5 2.64% long-term stake. It was a big stake in 2005 however was offered down subsequent 12 months. The place was rebuilt in 2007 however was once more offered down subsequent 12 months. Comparable buying and selling sample continued over the following a number of years. The 4 years by 2019 noticed a ~75% discount at costs between ~$23 and ~$82. Q3 2020 noticed one other ~30% promoting at costs between ~$91 and ~$134. That was adopted with a ~20% discount throughout Q3 2022 at costs between ~$137 and ~$175. The inventory is now at ~$175. The final two quarters noticed minor trimming.

Oracle Company (ORCL): The ~2% ORCL place is a really long-term stake. The place was already at round 14M shares in 2007. The subsequent two years noticed the stake constructed to a a lot bigger 62M share place at costs between $15.50 and $24.50. Subsequent few years noticed promoting at greater costs and by 2017 the stake was again at 14M shares. The 5 quarters by Q2 2019 noticed one other ~45% promoting at costs between $44 and $57. Q1 2020 additionally noticed a ~18% discount at costs between ~$40 and ~$56. The three quarters by Q2 2022 noticed one other ~30% promoting at costs between ~$64 and ~$104. The inventory is at present at ~$102. The final two quarters have seen minor trimming.

Texas Devices (TXN): TXN is a ~2% of the portfolio place. The vast majority of the stake was bought in Q3 & This fall 2016 at costs between $63 and $75. There was a ~20% stake enhance in Q1 2022 at costs between ~$163 and ~$191. The inventory at present trades at ~$170. There was minor trimming within the final 4 quarters.

Coca-Cola (KO): KO is a 1.76% of the portfolio stake. The place was already a big 7M share stake in 2005. That authentic stake was constructed to 23.7M shares in the course of the 2007-2008 timeframe at value between $20 and $32. The sizing peaked at nearly 39M shares in 2012. The subsequent 5 years noticed the place offered down by ~90% to a ~3.7M share stake at costs between $37 and $47. Latest exercise follows. Q1 2020 noticed a ~75% stake enhance at costs between $37.50 and $60. That was adopted with a ~37% enhance in Q3 2020 at costs between ~$44 and ~$51. Q2 2022 noticed an identical discount at costs between ~$59 and ~$66. The inventory is now at $62.80. There was minor trimming within the final three quarters.

Merck & Co. (MRK): MRK is a really long-term stake. In 2014, it was offered right down to a really small place at costs between $50 and $62. The stake was rebuilt in H1 2018 at costs between $53 and $63. Q1 2020 noticed a ~20% promoting at costs between ~$66 and ~$92. The seven quarters by Q1 2022 had seen a ~30% stake enhance at costs between ~$69 and ~$88. There was a ~20% discount subsequent quarter at costs between ~$84 and ~$95. The inventory at present trades at ~$114, and the stake is at 1.65% of the portfolio. The final three quarters noticed solely minor changes.

U.S. Bancorp (USB): USB stake was bought in 2017 at costs between $50 and $56. Q1 2020 noticed a ~50% stake enhance at costs between ~$29 and ~$55. There was a ~30% promoting this quarter at costs between ~$33 and ~$50. The inventory is now at $30.49, and the stake is at 1.25% of the portfolio.

AGCO Corp. (AGCO), American Categorical (AXP), BorgWarner (BWA), Cigna (CI), Exxon Mobil (XOM), Kosmos Vitality (KOS), KLA Corp. (KLAC), Medtronic Inc. (MDT), Mosaic Inc. (MOS), Salesforce (CRM), SolarEdge Applied sciences (SEDG), STMicroelectronics (STM), Taiwan Semi (TSM), Teck Assets (TECK), UBS Group AG (UBS), and Visa Inc. (V): These very small (lower than ~1.5% of the portfolio every) positions have been lowered this quarter.

Word: GMO has important possession stakes within the following companies: GrafTech (EAF), Clear Vitality Fuels (CLNE), Aemetis (AMTX), and Adecoagro (AGRO).

Under is a spreadsheet that exhibits the adjustments to Jeremy Grantham’s GMO Capital 13F portfolio holdings as of Q1 2023: