Patrick Gideon’s Grandmaster Capital Loves Warren Buffett’s Picks

As we continue to track 13F filings for the second quarter of 2014, we came across Grandmaster Capital’s. This hedge fund, managed by Patrick Gideon, acknowledged holding 19 long equity positions as of June 30 2014, with a combined market value of almost $250 million. Its equity portfolio is mainly focused on consumer discretionary stocks (45% of its total equity portfolio); however, its financial and tech stock picks are the most interesting –and strongly resemble those of Warren Buffett. Let’s, thus, take a look at Grandmaster’s top 3 holdings in order to elucidate if any of them deserve further research.

Grandmaster’s third largest bet is placed on Wells Fargo & Co (NYSE:WFC) which is one of the biggest banks in the World. The fund disclosed ownership of 431,308 shares of the company; this implies a 4% decrease in its stake. Nonetheless, the value of this position slightly augmented over the second quarter, as the stock returned almost 7% between April and June. The bet is now worth $22.67 million, and account for roughly 9% of the fund’s total equity portfolio.

Largest Financial Services Companies

As many knowledgeable investors know, Wells Fargo & Co (NYSE:WFC) is Warren Buffett’s biggest equity position as of March 31 2014. The investment guru owns more than 463 million shares of the company.

Wells Fargo & Co (NYSE:WFC) reported unexceptional results in early July. Revenues fell by 1% year-over-year, but increased by 2% in relation to the previous quarter. Diluted earnings per share of $1.01 were in line with analysts’ estimates; this implied a 3% growth year-over-year, but a 4% drop in relation to the previously reported quarter.

American Express Company (NYSE:AXP), the $90 billion market cap credit and travel services company, escalated a position in this list, after Grandmaster upped its stake by 11% during the second quarter. The fund now owns 253,025 shares of the company, which have a market value of approximately $24 million.

Same as in the case of Wells Fargo & Co (NYSE:WFC), Warren Buffett’s Berkshire Hathaway is among the largest shareholder of record, with 151.61 million shares of American Express Company (NYSE:AXP). Ken Fisher’s Fisher Asset Management also declared an increase in its position at the credit services provider. Over the second quarter, the fund acquired 419,884 shares, taking its holdings to 11.38 million shares of the company, worth about $1 billion.

Grandmaster’s largest position is in Microsoft Corporation (NASDAQ:MSFT). The fund boosted its exposure to the company by 17% over the quarter, and now owns 603,619 shares, worth roughly $25 million.

Donald Yacktman is also long Microsoft Corporation (NASDAQ:MSFT). His fund held 32.93 million shares of the company by the end of the second quarter.

However, Buffett is not betting on Microsoft Corporation (NASDAQ:MSFT). Although he usually stays away from tech stocks, the famed investor holds stakes in International Business Machines Corp. (NYSE:IBM) and Intel Corporation (NASDAQ:INTC).

“He always says that he likes to invest in companies that he can understand, and he doesn’t understand tech, so he has generally avoided that,” Bloomberg’s Noah Buhayar noted recently. However, this is not the case with Microsoft Corporation (NASDAQ:MSFT), given Buffett’s long-standing friendship with Bill Gates. It was, in fact, because of this relationship, and his understanding of the company, that he chooses not to invest in it, Buffett said on CNBC a few years ago.

“Microsoft is a special case because Microsoft is off bounds to us because of my friendship with Bill and if we spent seven months buying Microsoft stock and during that period they announced a repurchase or an increase of the dividend or an acquisition, people would say you’ve been getting inside information from Bill […] I think Microsoft is attractive but, we will never buy Microsoft,” Buffett said.

Disclosure: Javier Hasse holds no position in any stocks or funds mentioned

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