V - Wedgewood Partners Q2 2024 Client Letter
2024-07-18 10:30:00 ET
Summary
- Wedgewood Partners is a money manager founded in 1988 with the goal of providing investors with a superior approach to managing investment portfolios.
- Top performance contributors for the second quarter include Taiwan Semiconductor Manufacturing, Alphabet, Apple, Motorola Solutions and Meta Platforms.
- There has been no portfolio activity during the quarter.
- We expect other collaborations with AI large language modeling tools from Alphabet and Anthropic.
"Apple Computer's sustainable growth, we believe, is a powerful function of a multi-product foundation whose growth is driven by product excellence, ease-of-use adoption and the significant new influx of first-time customers to the Apple product line… Ironically, where once the Company's 30-year history of independent hardware and software development was without a doubt a limiting factor to growth, operating leverage and profitability, we believe, if not paradoxically so, that such tight hardware and software development has morphed into not only the Company's greatest competitive advantage, but arguably the Company's "Crown Jewel." In this reversal of fortune, Apple is now the only major PC company that is vertically integrated - profitability does not lie. Apple has the highest operating margins of any major PC company."
"With the stock currently trading at $75 (ED. $3 per share, split-adjusted in 2024, versus $230 today), the valuation is certainly not cheap at 32X our 2006 earnings (expectations). Even after factoring the cash per share of $10, the shares are valued at a more reasonable 28X. At current valuations we are only adding partial positions. Actually, we would welcome a pullback in these shares in order to position the company as one of our larger holdings."
- Wedgewood Partners. Apple of Our Eye. January 2006.
| 2Q |
| YTD |
| 1-Year |
| 3-Year |
| 5-Year |
| Wedgewood Composite Net |
| 3.7 |
| 15.7 |
| 25.7 |
| 7.9 |
| 16.4 |
| Standard & Poor's 500 Index |
| 4.3 |
| 15.3 |
| 24.6 |
| 10.0 |
| 15.1 |
| Russell 1000 Growth Index |
| 8.3 |
| 20.7 |
| 33.5 |
| 11.3 |
| 19.3 |
| Russell 1000 Value Index |
| -2.2 |
| 6.6 |
| 13.1 |
| 5.5 |
| 9.0 |
| 10-Year |
| 15-Year |
| 20-Year |
| 25-Year |
| 30-Year |
| Wedgewood Composite Net |
| 11.9 |
| 14.6 |
| 10.7 |
| 9.2 |
| 12.9 |
| Standard & Poor's 500 Index |
| 12.9 |
| 14.8 |
| 10.3 |
| 7.7 |
| 10.8 |
| Russell 1000 Growth Index |
| 16.3 |
| 17.3 |
| 12.2 |
| 8.2 |
| 11.5 |
| Russell 1000 Value Index |
| 8.2 |
| 11.8 |
| 8.1 |
| 6.9 |
| 9.6 |