Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Wedgewood Partners’ Investor Letter Dishes On QUALCOMM Inc (QCOM), Perrigo Company (PRGO), More

Page 1 of 2

Wedgewood Partners is a St. Louis-based mutual fund which was founded in 1988 with the goal of providing investors a superior approach to managing their investments. The combined focus on large-cap growth stocks together with the ‘invest as business owners’ orientation has helped the fund outperform both the S&P 500 and Russell 1000 over a long-term period. According to the official web-page of Wedgewood Partners, the fund has returned net of fees 7.60% on average per annum during the last 15 years, while the S&P 500 gained an average of 4.87% during the same period. However, during the second quarter of 2015, Wedgewood Partners’ Composite portfolio returned negative 1.45% net of fees, while the S&P 500 was slightly positive, with gains of 0.28%. Of course, we cannot judge such prominent and experienced investors by small time frames like these, therefore, let’s better concentrate on the stock picking wisdom and knowledge that one can find in the latest Wedgewood letter to investors. In this article would like to review the four stocks presented for analysis by the fund, which are QUALCOMM Inc (NASDAQ:QCOM), Varian Medical Systems Inc (NYSE:VAR), Perrigo Company (NYSE:PRGO) and LKQ Corporation (NASDAQ:LKQ).

QUALCOMM, Inc. (NASDAQ:QCOM)Professional investors like Wedgewood Partners spend considerable time and money conducting due diligence on each company they invest in, which makes them the perfect investors to emulate. However, we also know that the returns of hedge funds on the whole have not been good for several years, underperforming the market. We analyzed the historical stock picks of these investors and our research revealed that the small-cap picks of these funds performed far better than their large-cap picks, which is where most of their money is invested and why their performances as a whole have been poor. Why pay fees to invest in both the best and worst ideas of a particular hedge fund when you can simply mimic the best ideas of the best fund managers on your own? A portfolio consisting of the 15 most popular small-cap stock picks among the funds we track has returned more than 139% and beaten the market by 81 percentage points since the end of August 2012, (see the details).

The first in the list is QUALCOMM Inc (NASDAQ:QCOM), a $104 billion market-cap manufacturer of digital communications products. During the second quarter of this year, the stock continued to disappoint its investors, closing with a 7.21% loss. Despite that, the shares of the company still took the leading position in terms of weighting in the portfolio of Wedgewood. According to the letter, QUALCOMM Inc (NASDAQ:QCOM) offers a very attractive risk-reward ratio, as compared to the closest investment alternatives. Earlier this year a key overhang was removed after Qualcomm settled an investigation by China’s National Development and Reform Commission regarding alleged antimonopoly violations. As Qualcomm’s intellectual property is increasingly enforced across China’s emerging smartphone OEMs, Wedgewood estimates that the settlement could represent 5% to 10% upside for earnings over the next few years. According to our database, JANA Partners, led by Barry Rosenstein, finished the first quarter of the year with a newly initiated activist position of 28.54 million shares of QUALCOMM Inc (NASDAQ:QCOM), valued at $1.98 billion, and Rosenstein has already been active in pushing for positive change at the company.

Varian Medical Systems Inc (NYSE:VAR) has been owned by Wedgewood Partners since 2005. Over the last quarter, the value of its equity dropped by 6.79%, making the total year-to-date gains equal to 1.38%. According to Wedgewood’s letter, the company’s non-core business of Imaging Components, which brings in around 20% of revenues, was buffeted by a host of macro pressures, including foreign exchange, as well as weakness in governmental security inspection budgets, which was mostly contained to petroleum-exporting countries. Wedgewood Partners expects these headwinds to abate over the next 12 months and for Varian Medical Systems Inc (NYSE:VAR)’s core competency in Oncology Systems to continue driving results, but the relative valuation of Varian Medical Systems Inc (NYSE:VAR)’s stock, combined with its relatively attractive historical valuation, allows the fund to keep holding the position. David Blood and Al Gore’s Generation Investment Management held some 4.5 million shares equivalent to $423.43 million in monetary terms.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!