By: Manisha Sethi Aug. 09, 2018

Primecap Management Company disclosed its SEC 13F filings for Q1 2018 on May 14 and reported a portfolio value of $133.27 billion, with its top 10 holdings accounting for 28.35%. Primecap Management Company’s top holdings include Adobe Systems, Inc. (ADBE), Eli Lilly & Co. (LLY), Biogen Inc. (BIIB), Southwest Airlines Co. (LUV), and Microsoft Corp. (MSFT), among which Adobe Systems is its highest investment worth $4.68 billion. The SEC-registered investment advisor invests across diverse sectors, with technology occupying the largest chunk (38.87%). Primecap Management Company was founded in September 1983 in Pasadena, California, as an independent investment management company. The firm provides its services to investment companies, pooled investment vehicles, firms offering pension and profit sharing plans, charitable organizations, and organizations with sovereign wealth funds. In addition, it manages separate client-focused equity portfolios,  launches and manages equity mutual funds, and invests in the public equity markets. Further, it employs fundamental analyses along with a bottom-up stock-picking approach to create its portfolios and a combination of in-house and external research to make its investments.

According to Raltin, around 54.17% or 52 new stock buys of Primecap Management Company outperform S&P 500, whereas 45.83% or 44 new stock buys (between Q1 2014 and Q1 2018) underperform S&P 500. More specifically, 43 out of 96 new buys outperform the index by more than 10%. Raltin’s detailed methodology used to calculate performance relative to S&P 500 can be found here. The table below shows the total number of new stock purchases and the various S&P performance categories.

S&P outperformance categoryNumber of new stock purchasesTotal new purchases (%)
>20%3233.33
10 to 20%1111.46
0 to 10%99.38
-10 to 0%88.33
-20 to -10%1111.46
<-20%2526.04
Total stocks96

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In Q1 2018, the firm purchased 8 new stocks across various sectors. The next table lists new purchases by the firm as well as their holding value and the number of shares purchased.

StocksNo. of sharesHolding value ($1,000)
Siemens Healthineers AG (SHL)7,000,000287,574
DHX Media CL A (DHXM)10,051,00029,557
Moody’s Corp. (MCO)181,00029,195
Facebook, Inc. (FB)113,70018,168
Spirit Aerosystems Holdings, Inc. (SPR)164,20013,744
Booz Allen Hamilton Holding Corp. (BAH)347,77313,466
ICF International, Inc. (ICFI)114,4196,688
Burlington Stores, Inc. (BURL)19,8002,636

The following table presents Primecap Management Company’s portfolio value from Q1 2017 to Q1 2016. In addition, it shows the top holdings that outperform S&P 500 in each quarter. The data suggest that, among the various new purchases, Hilton Grand Vacations Inc. (HGV), AdvanSix Inc. (ASIX), iRobot Corp. (IRBT), Western Digital Corp. (WDC), and HubSpot, Inc. (HUBS) outperform S&P 500 by more than 20%.

PeriodTotal portfolio value ($Mn)Top holdings (ticker, % of IRR difference from S&P 500)
Q1 2017110,174.09Hilton Grand Vacations Inc. (HGV, 38.61), Rockwell Collins, Inc. (COL, 27.26), Bank of America Corp. (BAC, 15.55)
Q4 2016101,624.71AdvanSix Inc. (ASIX, 70.91), Splunk Inc. (SPLK, 42.73), Skechers U.S.A., Inc. (SKX, 34.69)
Q3 2016100,196.95iRobot Corp. (IRBT, 59.29), Dell Technologies Inc. (DVMT, 45.54), CNA Financial Corp. (CNA, 29.99)
Q2 201693,916.55Western Digital Corp. (WDC, 72.04), Charter Communications, Inc. (CHTR, 31.9), Alkermes plc (ALKS, 18.7)
Q1 201696,414.71HubSpot, Inc. (HUBS, 24.11), (NTRS, 18.15),