Last year notched a series of new records in the U.S. stock market and its major indexes. The S&P 500 gained 26.9% for full-year 2021, excluding dividends, and while many of the high-flying “pandemic stocks” from 2020 sputtered out and fell, the overall market trend was undeniably positive.
So how did the stock picks of top fund managers do in 2021? If you’re looking for the returns of specific gurus, you can always check out their portfolio pages on GuruFocus or take a look at the Scoreboard. However, we will be taking a look at which of the top guru consensus picks had the best returns in 2021, according to the Broadest Owned model portfolio.
This model portfolio, which tracks the stocks with the highest number of guru owners, has consistently outperformed the S&P 500 over the years since its inception, as shown in the chart below:
Among the 25 stocks that made up the Broadest Owned portfolio in 2021, the ones with the highest returns for the year were Alphabet Inc. (GOOG, Financial)(GOOGL, Financial), Wells Fargo & Co. (WFC, Financial), Charles Schwab Corp. (SCHW, Financial), Microsoft Corp. (MSFT, Financial) and Goldman Sachs Group Inc. (GS, Financial).
Alphabet
Alphabet (GOOG, Financial)(GOOGL, Financial) had the highest returns in the Broadest Owned portfolio, up 65.1% for non-voting shares (GOOG) and 65.2% for voting shares (GOOGL). Based in Mountain View, California, Alphabet is the holding company for Google and its many subsidiaries.
On Jan. 11, shares of Alphabet traded around $2,800.35 per share for a market cap of $1.86 trillion and a price-earnings ratio of 27. This valuation is slightly above the company’s historical median, and the GF Value Line also rates the stock as modestly overvalued.
The company has a financial strength rating of 8 out of 10 and a profitability rating of 10 out of 10. Warning signs include declining margins, while good signs include consistent revenue growth.
The top guru shareholders are Dodge & Cox with 0.32% of non-voting shares outstanding, Ken Fisher (Trades, Portfolio) with 0.28% of voting shares outstanding and Primecap Management with 0.12% of the non-voting shares and 0.19% of the voting shares. Overall, the stock’s non-voting shares appear in the portfolios of 46 gurus, while its voting shares appear in the portfolios of 49 gurus (there’s a lot of overlap here with gurus owning both classes of shares).
Wells Fargo
Second place went to Wells Fargo (WFC, Financial) with a 58.9% increase for the year. The San Francisco-based bank major is known for the fake accounts scandal back in 2016 that resulted in a cap on its assets and years of undervaluation.
On Jan. 11, shares of Wells Fargo traded around $56.06 per share for a market cap of $223.52 billion and a price-earnings ratio of 13.21. This valuation is slightly above the company’s historical median, and the GF Value line also rates the stock as modestly overvalued.
The company has a financial strength rating of 3 out of 10 and a profitability rating of 5 out of 10. Warning signs include declining revenue per share, while positive signs include a low Beneish M-Score, meaning the company is not likely to be manipulating its earnings.
The most notable guru shareholders of the stock are Dodge & Cox with 3.50% of shares outstanding, Primecap Management with 1.25% and Chris Davis (Trades, Portfolio) with 0.99%. All told, there are 37 gurus that have a position in Wells Fargo.
Charles Schwab
Charles Schwab (SCHW, Financial) was just behind Wells Fargo with a return of 58.5% for 2021. This financial services company offers a wide range of products, from mutual funds and bonds to stocks, options and futures. It has its headquarters in San Francisco.
On Jan. 11, shares of Charles Schwab traded around $93.91 per share for a market cap of $177.55 billion and a price-earnings ratio of 35.70. This valuation is more than double the company’s historical median, and the GF Value Line rates the stock as significantly overvalued.
The company has a financial strength rating of 3 out of 10 and a profitability rating of 6 out of 10. The warning signs include a high Beneish M-Score, meaning the company could be an earnings manipulator, while positive signs include a high Piotroski F-Score of 7 out of 9.
The top guru shareholder of Charles Schwab is Dodge & Cox with 3.93% of shares outstanding, followed by Primecap Management with 1.54% and Al Gore (Trades, Portfolio) with 0.68%. The stock appears in the portfolios of 24 gurus.
Microsoft
Microsoft (MSFT, Financial) earned fourth place with a 51.2% return for the year. With its headquarters in Redmond, Washington, Microsoft is a multinational technology giant that offers computer software, consumer electronics, personal computers and related services.
On Jan. 11, shares of Microsoft traded around $314.98 per share for a market cap of $2.36 trillion and a price-earnings ratio of 35.23. This valuation is slightly above the company’s historical median, and the GF Value Line thus rates the stock as modestly overvalued.
The company has a financial strength rating of 6 out of 10 and a profitability rating of 9 out of 10. One warning sign is that assets are growing faster than revenue, and a good sign is that its operating margin is expanding.
Ken Fisher (Trades, Portfolio) is the top guru shareholder of the stock with 0.34% of shares outstanding. Next is Primecap Management with 0.24%, followed by Chase Coleman (Trades, Portfolio) with 0.17%. There are a total of 61 gurus that have shares of Microsoft in their portfolios.
Goldman Sachs Group
In fifth place was Goldman Sachs Group (GS, Financial), up 45.0% in 2021. The largest investment bank in the U.S., Godman Sachs is based in New York City. Its financial services include investment management, securities, asset management, prime brokerage and securities underwriting.
On Jan. 11, shares of Goldman Sachs traded around $403.05 per share for a market cap of $134.45 billion and a price-earnings ratio of 6.65. This valuation is far below the historical median, and the GF Value Line rates the stock as fairly valued.
The company has a financial strength rating of 3 out of 10 and a profitability rating of 6 out of 10. High insider selling is a warning sign for investors, but consistent revenue per share growth serves as a positive sign.
Among guru shareholders, Dodge & Cox has the largest holding with 2.17% of shares outstanding, followed by Ken Fisher (Trades, Portfolio) with 0.84% and Hotchkis & Wiley with 0.37%. In total, Goldman Sachs has 30 guru shareholders.
