Jeremy Grantham Portfolio Analysis: A Look at The Guru’s Top Holdings

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Jacob Wolinsky
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Jeremy Grantham, founder of GMO became famous for his ability to read the market and predict market bubbles. This trait earned him the nickname “Bubble Hunter”. His contrarian and value investing approach resulted in strong performance frequently beating the S&P 500 index. Jeremy Grantham’s Portfolio Performance in recent years was mixed, and in 2023 it saw a decline of 2.85%.

Jeremy Grantham’s portfolio has 473 holdings, diversified among several sectors, and geography regions. His biggest holdings include Microsoft, Meta, UnitedHealth Group, Alphabet Class A, and Inc (NASDAQ:AMZN). The whole portfolio is valued at $22.8 billion which is an increase by $4 billion in the last two years.

Besides his investment career, he is a fierce fighter for fighting environmental problems, and a frequent supporter of left-wing organizations. He in 2019 donated $1 billion to fight climate change, and he is sure that those investors that focus on companies that are garnering good ESG practices will win in the long run. Keep reading for more info about Grantham’s background and investment strategy.

Key Holdings

  • Microsoft Corporation (NASDAQ:MSFT) with 5.33% of the portfolio

Currently, GMO owns 3 million Microsoft shares valued at $1.22 billion. During 2023 they conducted 4 trades, including 3 sales, and one buy. This resulted in a trimming of this holding by 323 thousand shares. Since 2013 when Grantham started trading Microsoft stocks, he invested $104 million, which means that this holding has brought a massive gain of 1074%.

  • Meta Platforms (NASDAQ:META) with 3.77% of the portfolio

Grantham restarted trading Meta stocks in 2018 four years after he exited this position. Now he owns 1.87 million stocks valued at $861 million. During 2022 when the stock price went down, he piled up an additional 1.6 million stocks. During 2023 the stock price was on the rise which he anticipated and sold a million Meta stocks. His total investment in this holding is #310 million netting Grantham a gain of 177%.

  • UnitedHealth Group (NYSE:UNH) with 3.59% of the portfolio

UnitedHealth has been a regular part of the GMO portfolio since 2013. They now own 1.59 stocks, making them the 3td biggest stake owner in the company. During 2022, when the stock price was at its maximum, GMO timed its sales to generate the highest income. Then, when in 2023 the stock price lost in value they to fortify their position. When we compare the investment in the holding of $172 million and its current value of $821 million we get a gain for the investor of 378%.

  • Alphabet Inc Class A (NASDAQ:GOOGL) with 3.23% of the portfolio

Grantham loves trading Alphabet stocks and likes to have a solid stake in the company. During 2023 he has been increasing this position and he now owns 5.06 million stocks valued at $738 million. His investment in the company is at $243 million, which means that smart trade timing brought him a gain of 204%.

  • Johnson & Johnson (NYSE:JNJ) with 2.73% of the portfolio

After Ken Fisher, Grantham is the biggest stakeholder in this pharmaceutical giant. He used 2023 and the slight decline in stock price to build up this holding by acquiring about 1 million stocks which raised his stake to 4 million stocks. Since 2013 he invested a total of $346 million, while the holding is now valued at $624 million, resulting in a gain of 80%.

  • Apple Inc (NASDAQ:AAPL) with 2.58% of the portfolio

In the last three years, Grantham has been reducing his stake in Apple. Now he owns 3.2 million shares valued at $589 million. When we note that his investment was a mere $74.8 million, we get that Apple’s holding brought a massive gain of 687% so far. Apple stock price is on the rise so we will have to wait and see if will Grantham continue to trim this holding or wait for an opportunity to buy at low prices.

Sector Allocation

Although the single biggest sector is the tech industry, Grantham’s portfolio is heavily diversified among other sectors. The current sector allocation of the GMO investment fund is:

  1. Technology with 38.5% of the portfolio valued at $8.79 billion
  2. Finance with 16.2% of the portfolio valued at $3.71 billion
  3. Healthcare with 15.7% of the portfolio valued at $3.58 billion
  4. Consumer Discretionary with 8.5% of the portfolio valued at $1.94 billion
  5. Industrials with 5.6% of the portfolio valued at $1.27 billion
  6. Consumer Staples with 5.1% of the portfolio valued at $1.16 billion
  7. Energy with 4% of the portfolio valued at $904 million
  8. Materials with 3.2% of the portfolio valued at $742 million
  9. Utilities with 1.6% of the portfolio valued at $361 million
  10. Telecommunication with 1.1% of the portfolio valued at $250 million
  11. Real Estate with 0.5% of the portfolio valued at $114 million.

Performance Review

In the last 10 years, Grantham’s GMO delivered a compound return of 231%. If we look at the last 5 years, that return stagnated at 53.3%, resulting in lower annual returns. And the most recent analysis showed that in the last 3 years, returns were measured at only 3.46%.

Notable Success

  • An “accidental” big win with QuantumScape. He invested in this battery maker before it made it big and merged with Kensington Capital Acquisition. Before the acquisition Grantham’s stake in the company was worth $4.8 million. After the merger was finalized the stock price skyrocketed, and his stake jumped to $210 million.
  • Predicting the Japanese asset bubble in the late 80s. During the mid-80s Grantham was concerned with the unsustainable growth of the Japanese stock and real estate markets. IN 1989 the Japanese Nikkei stock index reached a maximum value of 39,000. In the next couple of years, it crashed by more than 80%.
  • A big win with a small investment in Snap. He invested a total of $55 thousand in Snap, the developer of the Snapchat app. Later the stock multiplied in value resulting in a rise from an initial investment to $12 million.
  • Predicting the bubble. He pointed out the possibility of a tech bubble in the late 90s. He switched his focus to finance and other sectors to minimize his losses.

Take A Look At Jeremy Grantham Says He Predicted the Dotcom Bubble Too Early:

Notable Failure

  • Missing out on big wins with tech companies. Although he did accurately predict the bubble, he missed an opportunity to achieve significant gains during bull markets in the late 90.
  • Recent low performance. In the last couple of years, GMOs have performed poorly when compared to earlier times. This is mostly due to Grantham’s focus on value stocks and their underperforming growth stocks in the bull market.

Brief Biography of Jeremy Grantham

Jeremy Grantham was born in 1938 in Hertfordshire, England. His father was a business executive and his mother a homemaker. From an early age, he learned to appreciate hard work and the value of an earned salary.

While in high school he showed a special interest in mathematics and economics. Those passions brought him to the University of Sheffield where he studied economics. He earned a bachelor’s in 1961, but he didn’t stop there. In 1966 he acquired a master’s degree in business administration from Harvard Business School.

During his time at Harvard, he was mentored by Benjamin Graham and David Dodd. He quickly picked up on their value investing principles and later utilized them during his investment career.

His learning at Harvard was wide and included behavioral analysis and other key concepts that later helped him in his career. There he learned the importance of patience, discipline, and long-term perspective.

His investment career started as an economist at Royal Dutch Shell, but quickly in 1969, he founded an investment firm called Batterymarch Financial Management. There the first steps of his investment career were taken, and he embraced the contrarian approach for which he became known.

He honed his skills, and in 1977 together with Richard Mayo and Eyk Van Otterloo founded Grantham, Mayo, Van Otterloo & Co. They were quickly picked up as a team of disciplined value investors.

Jeremy Grantham Investment Strategy

Long-term Value Investing Principles

Following Benjamin Graham’s footsteps Grantham identified the potential for solid long-term returns by utilizing the value investing principles. Just like Graham, he believes that the market is not always fair and that it can misjudge assets. In those cases, the price of assets would be on a massive discount, ready for plucking.

To identify the potential investment target he conducts a deep analysis. Once he proves that the company is trading below its intrinsic value he wants to know how much it could produce in the future.

To do so he uses historical data to predict future outcomes and valuations. To accomplish this feat he often invests in companies and sectors that are overlooked and not popular at the moment. There to full effect comes his long-term and patience waiting for the company to reach its full potential.

One of his investing principles is mean reversion where sudden and big market movements are followed by corrections by the market. So he often buys securities when they are underpriced, and later sells them when they reach their top value.

Emphasis on Environmental, Social, and Governance (ESG) Factors

In 2017 Grantham started a GMO climate change strategy. With it, he wanted to emphasize the importance of ESG factors in business. He then pointed out that he holds high regard for companies who are willing to commit their resources to combating climate change.

He also recommended other investors focus on companies that are upholding high standards with ESG factors. Since 2017 Grantham has been actively working with businesses on following and improving on their ESG standards.

Although he is still committed to following his value investing standards, he said that focusing on ESG factors may come at the expense of value investing principles. Another issue that he discovered is that it is difficult to measure a company’s commitment to upholding ESG standards. This is attributed mostly to a lack of defined metrics that would help in this task.

His new approach also sheds some new light on impact investing. Grantham was involved in several impact investing decisions. He saw that businesses that are willing to offer something good back to nature and the planet, deserve a so-called shout-out.

Risk Management

The two major risk management practices that Grantham has implemented throughout his career are diversification and buying companies with a solid margin of safety.

He is diversifying across industry sectors, geographical regions, and asset classes. That way he is minimizing the chance of the impact of sudden market twists.

By utilizing value investing principles he is committing to buying companies at a cheap price. When he buys a company with a margin of safety, he is already creating a hedge. Even if the market turns against him the margin of safety provides some protection, and in either case, he won’t lose much.

Outlook and Commentary

Grantham is currently 85 years old, and it won’t be too long before he will consider forfeiting his position and function to a successor. The best bets for that position are Ben Inker and Ed Harrison who occupy senior positions in GMO.

He is still chief investment strategist, and Grantham is making all the key investment decisions. His current focus is on cooperation with companies that are aiming to create a sustainable business environment. Grantham has become active with impact investing to find a way to save the world.

Grantham recently warned that the current AI bubble will burst and will result in a major blow to the United States economy. He pointed out that the S&P 500 did deliver about 30% but no bullish market is sustainable.

The AI will create a significant change but it will take time, and Grantham’s opinion is that it will harm the stock price of the Magnificent Seven. He also called out investors massively buying companies that manufacture chips for AI but still don’t know what will use it for.


How Much Is Jeremy Grantham’s Net Worth?

Jeremy Grantham’s net worth is estimated at $1 billion.

Who Is the CEO of GMO Investments?

The current CEO of GMO Investments is Scott Hayward. He assumed this position in December 2013 succeeding Michael Moe.

Final Thoughts

Jeremy Grantham had a very long investment career in which he made some astonishing predictions like the Japanese asset bubble, or dot net bubble. His focus throughout most of his career was on value investing. In recent times his interest has partly shifted to impact investing and following up on ESG factors.

This has taken a toll on his returns since they have been lower in the last couple of years. Grantham said himself that this new road will likely not be as productive as the old, but that he is thinking ahead. He is making a strategy for other investors to follow, with the greater goal of sustainability in business.

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Jacob Wolinsky is the founder of HedgeFundAlpha (formerly ValueWalk Premium), a popular value investing and hedge fund focused intelligence service. Prior to founding the company, Jacob worked as an equity analyst focused on small caps. Jacob lives with his wife and five kids in Passaic NJ. - Email: jacob(at) FD: I do not purchase any equities to avoid conflict of interest and any insider information. I only purchase broad-based ETFs and mutual funds.