T Rowe Price Equity Income Fund's Top 4 1st-Quarter Trades

GuruFocus.com
·4 min read

- By James Li

The T Rowe Price Equity Income Fund (Trades, Portfolio), part of Baltimore-based T. Rowe Price Group Inc. (NASDAQ:TROW), disclosed this week that its top four trades during the first quarter included a reduction in its DuPont de Nemours Inc. (NYSE:DD) holding, new buys in International Flavors & Fragrances Inc. (NYSE:IFF) and Bank of New York Mellon Corp. (NYSE:BK) and a position boost to its Sempra Energy (NYSE:SRE) holding.


Managed by John Linehan, the fund seeks long-term capital appreciation by investing primarily in large-cap stocks that trade below fair value and pay good dividends.

T Rowe Price Equity Income Fund's Top 4 1st-Quarter Trades
T Rowe Price Equity Income Fund's Top 4 1st-Quarter Trades

As of March 31, the fund's $18.05 billion equity portfolio contains 113 stocks, with eight new positions and a turnover ratio of 6%. The top four sectors in terms of weight are financial services, industrials, health care and technology, representing 22.72%, 12.54%, 12.25% and 9.57% of the equity portfolio.

T Rowe Price Equity Income Fund's Top 4 1st-Quarter Trades
T Rowe Price Equity Income Fund's Top 4 1st-Quarter Trades

DuPont de Nemours

The fund sold 3 million shares of DuPont de Nemours (NYSE:DD), chopping 51.11% of the position and 1.31% of the equity portfolio. Shares averaged $76.28 during the first quarter; the stock is significantly overvalued based on Friday's price-to-GF Value ratio of 1.37.

T Rowe Price Equity Income Fund's Top 4 1st-Quarter Trades
T Rowe Price Equity Income Fund's Top 4 1st-Quarter Trades

GuruFocus ranks the Wilmington, Delaware-based chemical company's financial strength 4 out of 10 on several warning signs, which include a low Altman Z-score of 0.84 and interest coverage and debt ratios underperforming over 70% of global competitors.

T Rowe Price Equity Income Fund's Top 4 1st-Quarter Trades
T Rowe Price Equity Income Fund's Top 4 1st-Quarter Trades

Other gurus with holdings in DuPont de Nemours include Lee Ainslie (Trades, Portfolio)'s Maverick Capital and Mason Hawkins (Trades, Portfolio)' Southeastern Asset Management.

T Rowe Price Equity Income Fund's Top 4 1st-Quarter Trades
T Rowe Price Equity Income Fund's Top 4 1st-Quarter Trades

International Flavors & Fragrances

The fund purchased 1.36 million shares of International Flavors & Fragrances (NYSE:IFF), giving the position 1.05% equity portfolio weight. Shares averaged $129.42 during the first quarter; the stock is modestly undervalued based on Friday's price-to-GF Value ratio of 0.83.

T Rowe Price Equity Income Fund's Top 4 1st-Quarter Trades
T Rowe Price Equity Income Fund's Top 4 1st-Quarter Trades

The New York-based chemical company produces ingredients for a wide range of food, beverage and personal care industries. GuruFocus ranks the company's profitability 7 out of 10 on several positive investing signs, which include profit margins and a Joel Greenblatt (Trades, Portfolio) return on capital outperforming over 66% of global competitors.

T Rowe Price Equity Income Fund's Top 4 1st-Quarter Trades
T Rowe Price Equity Income Fund's Top 4 1st-Quarter Trades

Pioneer Investments (Trades, Portfolio) and First Pacific Advisors (Trades, Portfolio) also have holdings in International Flavors & Fragrances.

T Rowe Price Equity Income Fund's Top 4 1st-Quarter Trades
T Rowe Price Equity Income Fund's Top 4 1st-Quarter Trades

Bank of New York Mellon

The fund purchased 1.95 million shares of Bank of New York Mellon (NYSE:BK), giving the position 0.51% weight in the equity portfolio. Shares averaged $43.95 during the first quarter; the stock is fairly valued based on Friday's price-to-GF Value ratio of 0.91.

T Rowe Price Equity Income Fund's Top 4 1st-Quarter Trades
T Rowe Price Equity Income Fund's Top 4 1st-Quarter Trades

GuruFocus ranks the New York-based asset management company's financial strength 4 out of 10 on the back of debt ratios underperforming more than 52% of global competitors. Despite this, Bank of New York Mellon's profitability ranks 6 out of 10, driven by returns on equity and three-year revenue growth rates outperforming over 66% of global asset management companies.

T Rowe Price Equity Income Fund's Top 4 1st-Quarter Trades
T Rowe Price Equity Income Fund's Top 4 1st-Quarter Trades

Warren Buffett (Trades, Portfolio)'s Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B) has one of the largest holdings in Bank of New York Mellon, with over 70 million shares as of the December 2020 quarter filing.

T Rowe Price Equity Income Fund's Top 4 1st-Quarter Trades
T Rowe Price Equity Income Fund's Top 4 1st-Quarter Trades

Sempra Energy

The fund purchased 985,000 shares of Sempra Energy (NYSE:SRE), boosting the position 93.36% and the equity portfolio 0.72%. Shares averaged $124.40 during the first quarter; the stock is fairly valued based on Friday's price-to-GF Value ratio of 1.02.

T Rowe Price Equity Income Fund's Top 4 1st-Quarter Trades
T Rowe Price Equity Income Fund's Top 4 1st-Quarter Trades

GuruFocus ranks the San Diego-based utility company's profitability 7 out of 10: Profit margins and returns are outperforming more than 78% of global competitors despite three-year revenue and earnings growth rates underperforming over 51% of global utility companies.

T Rowe Price Equity Income Fund's Top 4 1st-Quarter Trades
T Rowe Price Equity Income Fund's Top 4 1st-Quarter Trades

Disclosure: Author is long International Flavors & Fragrances and T. Rowe Price Group.

Read more here:

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