The Intrinsic Value model managed by Ryan Leggio looks for above average companies that are priced below average. Leggio looks for companies that earn returns on invested capital for a sustained period of time, thereby creating some intrinsic value. Leggio leaves cash in the model when he doesn’t find enough suitable companies to invest in.
The top holding in the account is Microsoft Corp (NASDAQ: MSFT). Since 2007, MSFT has gradually increased the value of its cash and short term investments. In 2010, they increased to $36.8 billion from $31.4 billion the year before. In the same time period, the company’s total assets have gradually risen as well, going from $61.8 billion in 2007 to $86.1 billion in 2010. Shareholder equity shows consistent growth too. Compared to many competitors, MSFT’s price to earnings ratio is low, indicating that it may be under-bought.
The next largest holding is Dell Inc (NASDAQ: DELL), whose price to earnings ratio is much lower than its peers. The company’s cash and short term investments have been growing steadily since 2008 as have their total assets and shareholder equity, which grew from $4.3 billion in 2009 to $5.6 billion in 2010.
Finally, let’s take a look at the Intrinsic Value model’s third largest holding, Johnson & Johnson (NYSE: JNJ). As of September 15th, 2010, JNJ’s price to earnings ratio beats that of some of its competitors, but not all. JNJ’s cash and short term investments have grown steadily since 2006, at which time they totaled $4.1 billion. As of 2009, their cash and short term investments had reached $19.4 billion. Their shareholder equity took a minor dip in 2008, falling to $42.5 billion when it had been $43.3 billion the year before. But in 2009, their shareholder had once again increased, this time to $50.6 billion.
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