To investigate what prominent investors are doing, whether it's Warren Buffett, Bill Miller, or John Rogers, it always helps to look at what they're doing.
Morningstar reviewed seven diversified mutual funds with respect for their managers. Then it chose three undervalued stocks that are held by at least four of the funds.
Concentrated funds are funds that hold between 20 and 50 stocks, thus making them more discerning about what they purchase, according to Morningstar.com's director of content.
The seven funds are:
Get FMI Large Cap Fund Investor Class Report from FMIHX.
Loomis Sayles Growth (LGRNX) - Get Your Loomis Sayles Growth Fd Cl N Report
Get the Parnassus Core Equity Fund-Investor Shares Report from Parnassus Core Equity (PRBLX)
Get AMG Yacktman Global Focused Fund - Class N Report, AMG Yacktman Focused (YAFFX)
Get Jensen Quality Growth Fund Cl J Report for free.
Get a FREE Oakmark Select Fund Investor Class Report and a PDF version of Oakmark Select Funds.
Get the Sound Shore Fund - Institutional Class Report at Sound Shore (SSHVX).
Three stocks are:
Get Alphabet Inc. Report, owned by all seven funds at the Alphabet (GOOG);
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Book Booking Holdings (BKNG) - Get the Booking Holdings Inc. Report, the online travel agency conglomerate, held by four funds; and
Microsoft (MSFT) - Get the Microsoft Corporation Report, which is also owned by four of the funds.
Morningstars Take on Alphabet
Morningstar analyst Ali Mogharabi assigns the company a broad moat and assesses fair value at $169. It recently traded at $116.
In a July commentary, Alphabets second-quarter results failed consensus estimates, but we found the companies' search advertising and cloud numbers encouraging.
Google's diversified advertising offerings appear to be partially offset by macro concerns, while digital transformation to the cloud remains at the top of many businesses' priorities list.
Given the persistent economic and geopolitical challenges, we have modestly lowered our short- and medium-term projections, bringing his fair-value estimate down from $180.
Morningstars Take on Booking Holdings
Dan Wasiolek, a Morningstar analyst, gives the company a light moat and fair value of $3,000. It last traded at $1,933.
We expect Booking's global online travel agency leadership position to increase over the next decade.
Wasiolek expects a strong position in Asia-Pacific, a strong European position, and an expanding presence in vacation rentals, restaurants, experiences, flights, and payments. All of this is backed by a leading marketing and technology scale.
Morningstars take on Microsoft.
Morningstar analyst Dan Romanoff gives the company a broad moat and puts fair value for the stock at $352. It recently traded at $280.
Microsoft's latest quarterly results were lower than predicted, but we believe that its fundamentals are still solid, according to the author.
The company's performance was primarily harmed by factors beyond its control, such as a stronger dollar, persistent supply chain issues, continued scaling back in Russia, and general macroeconomic pressures.
We are encouraged by several pockets of weakness, such as Azure, the continued migration to Office E5, and the continued use of the Power platform, according to Romanoff.