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About the Editor
David Harrell is the editor of the Morningstar StockInvestor, a monthly newsletter that focuses on a wide-moat stock investing strategy. For illustration purposes, issues highlight activities pertaining to Morningstar, Inc. portfolios invested in accordance with a strategy that seeks to focus on companies with stable or growing competitive advantages. David served in several senior research and product development roles and was part of the editorial team that created and launched Morningstar.com. He was the co-inventor of Morningstar's first investment advice software.

David joined Morningstar in 1994. He holds a bachelor's degree in biology from Skidmore College and a master's degree in biology from the University of Illinois at Springfield.

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Matthew Coffina, CFA, is the portfolio manager for Morningstar Investment Management LLC’s Hare strategy. Matt was previously a senior healthcare analyst, covering managed care and pharmaceutical services companies. Matt also developed the discounted cash flow model used by Morningstar analysts to assign fair value estimates to most of the companies in its global coverage universe.

Matt joined Morningstar in 2007. He holds a bachelor's degree in economics from Oberlin College and also holds the Chartered Financial Analyst (CFA) designation.

Michael Corty, CFA, is the portfolio manager for Morningstar Investment Management LLC’s Tortoise strategy. Before focusing his attention on the Tortoise, Michael co-managed five equity strategies offered by Morningstar Investment Management LLC and Morningstar Investment Services LLC since December 2013. Michael was previously a senior equity analyst on Morningstar Inc.’s equity research team covering companies in the media, business services, and consumer industries. Michael also spent several years on Morningstar’s moat committee, which assigns economic moat and moat trend ratings to their global coverage.

Prior to joining Morningstar in 2004, Michael worked at a public accounting firm and in the business lending arm of a major commercial bank. He has an undergraduate accounting degree from Loyola Marymount University, an MBA from Cornell University and is a CFA charterholder.

About the Editor David Photo
David Harrell
Editor, Morningstar StockInvestor
David Harrell is the editor of the Morningstar StockInvestor, a monthly newsletter that focuses on a wide-moat stock investing strategy. For illustration purposes, issues highlight activities pertaining to Morningstar, Inc. portfolios
Featured Posts
Roundup 8/5/22 -- Results for Enbridge, Enterprise, Uber, and More
StockInvestorSM focuses on the activities of portfolios of Morningstar, Inc. that are invested in accordance with the Tortoise and Hare strategies. These portfolios are managed by Morningstar Investment Management LLC, a registered investment adviser, which manages other client portfolios using these strategies.

Please see new analyst notes and updates below from Morningstar Research Services for Amazon.com AMZN, Becton Dickinson BDX, Booking BKNG, CVS Health CVS, eBay EBAY, Enbridge ENB, Enterprise Products Partners EPD, ExxonMobil XOM, Fidelity National Information Services FIS, Lyft LYFT, Magellan Midstream Partners MMP, Sanofi SNY, and Uber Technologies UBER. Several holdings were tagged in a general note about drug pricing policy in the Inflation Reduction Act, which is also included below.

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Amazon Shows Signs of Life With Solid Results and Guidance; FVE $192
by Dan Romanoff, CPA | Morningstar Research Services LLC | 07-28-22

Amazon reported good second-quarter top-line and bottom-line results which were ahead of FactSet consensus expectations and provided an encouraging revenue outlook for the third quarter. While AWS remains a tremendous opportunity and performed well once again, the more important takeaway this quarter is that retail-related businesses, especially third-party seller services, are coming back and even delivered some upside compared with our expectations. We are not ready to declare victory for the company just yet, but we are encouraged by results and note that the pandemic-fueled growth surge is now removed from prior-year comparisons, so growth should optically improve going forward.

We are maintaining our $192 fair value estimate for wide-moat Amazon. Even with shares up as much as 14% after hours, we continue to view shares as attractive, as Amazon remains one of our top picks.

Second-quarter revenue grew 7% year over year as reported, or 10% in constant currency, to $121.2 billion, compared with guidance of $116 billion to $121 billion. The currency headwind was 120 basis points worse than what was called for within guidance. For perspective, the comparison last year was 27% growth, so still challenging. In short, the top-line performance is showing improvement and was solid. From a retail perspective, online stores declined 3% year over year, physical stores improved 12%, third-party seller services grew 9%, and subscription services increased 10%. Increases on Prime membership fees and third-party seller fees helped revenue while Prime member churn was better than expected. Unit growth was 1%. The two most critical segments, AWS and advertising, grew 33% and 18% over the year-ago period, respectively. Compared with our model, third-party seller services and AWS drove the largest revenue outperformance.

Becton Dickinson Continues Growing Even as COVID-19 Testing Pulls Back
by Alex Morozov, CFA | Morningstar Research Services LLC | 08-04-22

We are maintaining our $306 fair value estimate for narrow-moat Becton Dickinson as we update our model following fiscal third-quarter results and updated full-year guidance. BD increased its revenue forecast to $18.75 billion-$18.83 billion with higher COVID-only testing revenue. Including COVID-only testing revenue, the firm expects fiscal 2022 revenue to be down approximately 1.6%-2% from fiscal 2021 levels. We anticipate that much of the remaining COVID-focused production equipment will be quickly repurposed as the demand for COVID tests diminishes to push overall growth going forward.

BD saw over 9% base revenue growth year over year to $4.6 billion in the third quarter (8.8% organic). Across the segments, BD saw mid-single-digit growth from third-quarter 2021 base revenue levels. With COVID-only testing revenue declining drastically, from $300 million to $76 million year over year, BD Life Sciences unsurprisingly saw a 5% decline in total revenue. Despite continuing effects of COVID-19 in China, the region grew almost 2% year over year in the quarter, and management expects double-digit growth in China for fiscal 2022, barring no additional COVID-19 waves.

With concerns about global inflation and a possible recession, BD is well positioned with approximately 85% of its revenue recurring and unlikely to be affected by limitations on large-scale capital expenditures by hospitals. Additionally, BD has increased its inventory of strategic components and raw materials due to continuing transportation delays. We forecast these shipping challenges will slowly improve through the remainder of calendar 2022. Until then, the added inventory could provide BD with a cushion if supply challenges persist.

Booking's Shares Attractive, as Its Network Strengthens Amid Demand Moderation From High Levels
by Dan Wasiolek| Morningstar Research Services LLC | 08-03-22

Investors would be wise to seek out shares of Booking Holdings' and its strengthening network advantage (source of its narrow moat) at current levels, as concerns over currency headwinds and demand moderation or overblown, in our view. Confidence in competitive position has led the firm to accelerated share repurchases ($2 billion in recent months) at what we view as attractive levels, supporting our Exemplary capital allocation rating. We do not plan a materially change our $3,000 valuation.

Second-quarter bookings reached a stout 138% of 2019's level, above our 124% estimate, and the 107% reported last quarter, which compared with just 83% of prepandemic marks for main narrow-moat peer Expedia in its first quarter (Expedia has yet to report its second-quarter results). Further, the firm's bookings were 152% of 2019's level in constant currency, a transitory headwind that starts to face easing comparisons at the end of this year. We are not disheartened with signs that near-term demand is moderating from staggering levels, which in part might be driven by temporary air travel disruptions. For context, the company notes room nights in July were 104% of 2019's level, compared with 116% in the second quarter, while current rates have held around the 125% (constant currency) of prepandemic marks seen in the second quarter. We do not expect a major change to our third- and fourth-quarter booking forecasts of 121% and 102%, respectively, of 2019 levels, which we think already factor in near-term currency and demand moderation.

We continue to see many signs of travelers and suppliers finding value in Booking's strengthening network. For instance, second-quarter direct traffic mix was up from last year and versus 2019 (unquantified); integration of airline content drove tickets in that segment up 31% from a year ago, with one fourth of these bookers new to the platform; and the investment behind facilitation of payments is being used on 38% of bookings versus 16% in 2019.

CVS Shares Remain Undervalued After Turning in Solid Q2 and Increasing 2022 Outlook
by Julie Utterback, CFA | Morningstar Research Services LLC | 08-03-22

Narrow-moat CVS Health turned in solid second-quarter results, and management slightly increased its outlook for 2022. At first glance, the firm's performance is tracking mildly above our cash flow estimates for the year. After tweaking our 2022 expectations a bit and recognizing cash flows generated since our last valuation update, we are raising our fair value estimate 5% to $113 per share from $108 previously. Shares continue to appear mildly undervalued to us.

In the quarter, CVS profits remained roughly flat year over, as headwinds began emerging in its retail pharmacy business, but those results were slightly stronger than previously anticipated. The retail stores' adjusted operating income contracted by 9% in the quarter, as lower COVID-19 vaccinations, continued reimbursement pressure, and rising wages weighed on margins. The company's other businesses fared better than the retail operations. CVS' medical insurance business turned in strong results with solid membership (4%) and top-line (11%) growth primarily on its continued expansion in Medicare Advantage and Medicaid plans; it also delivered 13% increase adjusted operating profits as its medical benefits ratio improved year over year. The PBM reported solid trends, too, including ongoing expansion of its relatively high-margin specialty pharmacy business. Overall, claims processed increased 4%, while adjusted operating income grew 6% for the PBM during the quarter.

With these solid trends and an improved outlook primarily for its retail store segment, management increased its bottom-line and cash flow guidance slightly, and we have raised our near-term estimates mildly, too. While we have tinkered with our near-term assumptions to account for recent trends, our long-term assumptions remain largely intact, and our fair value estimate primarily resulted from recognizing recently generated cash flows.

Solid Q2 for eBay, but Trimming Our Fair Value Estimate on Macro Headwinds; Shares Still Look Cheap
by Sean Dunlop | Morningstar Research Services LLC | 08-04-22

Narrow-moat eBay posted positive second-quarter results, with $2.4 billion in sales and $0.99 in adjusted earnings per share edging our respective $2.36 billion and $0.75 estimates. Focused categories and ads were two bright spots, with the former growing 9 points faster than the rest of the platform (excluding trading cards), while the latter has now achieved a run rate of 1.5% of gross merchandise volume as the firm rolls out new advertising formats, remaining on track with investor day targets to double that business by 2025. We view management's investment priorities as cogent and see meaningful benefits from emphasizing non-new products like refurbished goods and collectibles, where consumers are less sensitive to direct price comparisons and shipping speed (both of which favor marketplaces with first-party inventory and extensive logistics operations, like wide-moat Amazon). Nevertheless, we expect to modestly decrease our $65 fair value estimate as we now expect consumer pressure to bleed into 2023, attributable to persistent inflationary pressure, higher interest rates, and tangled supply chains, particularly for the international business. The shares still look cheap, trading at about a 20% discount to our revised intrinsic valuation.

We view eBay as relatively well positioned to navigate consumer pressure despite the marketplace's discretionary product suite, featuring two important countercyclical buffers: principally, indexation toward refurbished and non-new products, which permit trade-down for pressured consumers, and secondarily, meaningful consumer-to-consumer sales, which users may turn to as a source of supplemental income during periods of economic stress.

Finally, the focused category playbook continues to progress as expected, with the firm maintaining its full-year guidance. We continue to view low 30s adjusted EBITDA margins and low-single-digit top-line growth as attainable, underpinning our valuation.

Enbridge Reports Good Q2; Partners on Woodfibre LNG and Expands U.S. LNG Efforts
by Stephen Ellis | Morningstar Research Services LLC | 07-29-22

Enbridge's second-quarter results were good, in our view. Management reiterated its expectations of a midpoint of CAD 15.3 billion in 2022 EBITDA compared with our CAD 15.4 billion forecast. We continue to expect wide oil and gas spreads to convey incremental marketing opportunities across Enbridge's footprint in the second half of the year, contributing some modest upside. With no material changes to our near-term outlook, our Canadian fair value remains unchanged, while our U.S. fair value declines to $41 per share based on updated exchange rates. Our narrow moat rating is also unchanged. Notably, about 80% of Enbridge's EBITDA has a level of protection against inflation via fixed revenue escalators or cost of service contracts.

With over CAD 3.6 billion in new projects added to the backlog in the quarter, we think the most interesting one is the investment into the Woodfibre LNG project. This project is expected to export 2.1 billion cubic feet per day of LNG and enter in service in 2027. Rather than a typical equity ownership, Enbridge expects to invest $1.5 billion in return for a preferred equity distribution based on the capital costs for the facility. This essentially converts the investment to a more stable predictable stream of income with limited to no commodity price risk. Enbridge also launched a binding open season to expand its T-South pipeline at a cost of CAD 2.5 billion-plus, which will replace volumes moving to the Pacific Northwest, allowing the Pacific volumes to feed Woodfibre.

Beyond Canadian LNG efforts, Enbridge has several others U.S. Gulf Coast projects awaiting a final investment decision. The Venice extension, the Rio Bravo pipeline, and the Valley Crossing pipeline represent another $2 billion in investments linked to the Plaquemines LNG project and connecting Haynesville to LNG efforts.

Enterprise Sees Immediate Benefits From Navitas Deal in Q2
by Stephen Ellis | Morningstar Research Services LLC | 08-04-22

Enterprise Products Partners' second-quarter results were healthy, as the full benefits of the Navitas deal flowed through to drive earnings improvements. Distributable cash flow was up 30% year over year to $2 billion. With Navitas and other earnings drivers, 2022 EBITDA is now expected to top $9 billion, an incremental $300 million-$400 million improvement. While we had initially modeled in Navitas' contributions, the difference looks to be better-than-expected fees across gathering and processing operations due to the high oil and gas price environment. After updating our model, our fair value estimate of $27.50 remains unchanged, as does our wide-moat rating.

Growth capital spending for 2022 was nudged up $100 million to $1.6 billion, while 2023 spending is now $2 billion, up from our $1.75 billion expectation. The higher spending levels are due to expansion efforts in the Permian, including two new gas processing plants. With the expansion in processing capacity due to higher expected gas demand, more takeaway capacity is also needed. Enterprise is also moving forward with an expansion of the Shin Oak natural gas liquids pipeline via looping and modifying existing pump stations to add 275,000 barrels per day of capacity. All three efforts are due in service in 2024.

While Enterprise has typically increased its distribution in the fourth quarter, it elected to boost it 5.6% this quarter to an annualized $1.90 a unit. A second increase is likely coming in the fourth quarter as part of a more robust capital return approach. Enterprise bought back $35 million in units during the quarter and plans to buy back another $300 million in units over the remainder of the year. We are pleased to see the larger unit buybacks, given Enterprise's persistent undervaluation.

Exxon's Investments, Cost Reductions Pay Off as Q2 Earnings Nearly Quadruple
by Allen Good, CFA | Morningstar Research Services LLC | 07-29-22

Exxon reported a sharp increase in earnings that exceeded market expectations as it leveraged past investments and cost reductions to fully capitalize on high commodity prices and strong refining margins. Second-quarter adjusted earnings soared to $17.6 billion from $4.7 billion the year before.

Despite the strong performance, management maintained is existing share repurchase program of $30 billion through 2023 (about 7% of market cap), which it increased from $10 billion previously during the first-quarter earnings announcement. During the quarter, it returned $7.6 billion to shareholders including $3.7 billion in dividends. Management remains circumspect about increasing the dividend and repurchases further, wanting to improve the balance sheet including a higher cash balance in the event of a down cycle so it can maintain investment, which it views as a competitive advantage. Given strong market conditions, we expect it will be able to do this while eventually increasing shareholder returns. High commodity prices and strong refining margins appear to be in place for a few years, absent an economic slowdown, given structural issues. A low-cost position combined with attractive upstream and downstream growth, should make Exxon a winner.

Our fair value estimate and narrow moat rating are unchanged, leaving shares fully valued after the post-earnings rise.

Upstream adjusted earnings increased to $11.1 billion from $3.2 billion last year due to higher commodity prices. Production increased to 3,732 mboe/d compared with 3,582 mboe/d a year ago. This stands in contrast to many peers that reported declines in production. Continued growth from high quality assets like the Permian and Guyana during the next five years set Exxon apart and should increase its ability to capitalize on high commodity prices. Permian production averaged 550 mboe/d during the quarter and remains on track to grow 25% from 2021 for the full year.

FIS Posts Solid Growth in Second Quarter, but Results Point to Some Headwinds
by Brett Horn, CFA | Morningstar Research Services LLC | 08-04-22

FIS' second-quarter results were solid, in our view; like its peers, the company is benefiting from some bounceback in its acquiring operations this year. However, the stronger dollar and higher interest rates will create some drags as we move through the year, and FIS modestly lowered its revenue and earnings per share targets for 2022 as a result. These issues don't concern us much, and we will maintain our $137 fair value estimate for the narrow-moat company.

The merchant segment at FIS posted year-over-year growth of 12%, or 14% on a constant-currency basis, during the second quarter. This level of growth is roughly in line with what we saw from peers during the period. We're encouraged by the strong year-over-year growth of 28% that FIS saw in e-commerce channels, believing that full participation in the growth of the e-commerce channel would be a material long-term positive for the firm. On top of that, the company's banking and capital markets segments saw year-over-year revenue growth of 6% and 7%, respectively, roughly in line with growth in the last quarter.

Despite the top-line improvement, adjusted EBITDA margins declined to 43.0% from 43.7% last year. Management pointed to a reduction in relatively high-margin revenue in the banking and merchant segments as an issue, along with some wage inflation. Longer term, we continue to believe that the scalability of FIS' business model will allow for modest margin improvement.

Lyft's Q2 Results Demonstrate its Network Effect Remains Intact; Shares Attractive
by Ali Mogharabi | Morningstar Research Services LLC | 08-04-22

Lyft reported strong second-quarter results with top-line and bottom-line figures coming in ahead of the FactSet consensus estimates as the firm increased riders and rider monetization. Strengthening demand also attracted more drivers to the platform and reduced the firm's driver acquisition costs, firmly demonstrating Lyft's network effect moat source. We were pleased that for the first time management provided long-term guidance, which is within the range of our projections, but we have reduced our 2022 net revenue projection mainly due to increased uncertainty surrounding the macro environment. However, that adjustment did not affect our fair value estimate, which remains at $65. Like its peer Uber, Lyft stock remains undervalued in our view.

Total net revenue of $990.7 million increased 30% year over year due to a continuing increase in demand for rides on the platform. Average number of active riders during the quarter stood at 19.9 million up 12% and 16%, sequentially and year over year, respectively. Higher demand was also driven by the strong return to leisure and business travel. Airport rides requested on the platform reached their highest ever and represented 10.2% of total rides, while business rides increased 105% from last year.

Lyft's network effect is evident as on the supply side. While the firm reduced driver incentives 17% from a year ago, higher rider demand attracted drivers to the platform and increased the driver count to the highest level in two years. We think increase in demand on the Uber platform also contributed to Lyft's growth as drivers can work for both platforms. Revenue generated per rider increased 12% year over year and 1% from the first quarter to $49.89.

Magellan's Q2 Results Reveal Yet More Unit Buybacks
by Stephen Ellis | Morningstar Research Services LLC | 07-28-22

Magellan's second-quarter results were solid, as the partnership held its full-year guidance of $1.09 billion in distributable cash flow unchanged. Broadly, lower oil and gas prices and higher forecast expenses in the second half of the year will offset better-than-expected crude oil earnings so far in 2022 due to higher volumes. With inflationary expectations very high, Magellan could see a potential 10%-15% increase in its indexed rates in 2023. With no major changes to its outlook, we expect to maintain our fair value estimate and wide-moat rating.

From a capital allocation perspective, Magellan's focus remains on buying back units. It added another $190 million in purchases during the quarter, bringing total purchases to $1.04 billion to date. With the purchases taking place below our fair value, we see the program as a good use of capital. With only $1.5 billion authorized under its repurchase program through 2024, we'd expect an expanded program shortly. The incremental funds from the $447 million sale of its independent terminals completed in June 2022 could easily be used to fund more buybacks in the second half of the year. Capital spending for 2022 remains at $80 million, as Magellan has not found any new attractive projects to put capital to work for the time being, reflecting its strong investment discipline.

Decreasing Sanofi's Fair Value Estimate
by Damien Conover, CFA | Morningstar Research Services LLC | 08-03-22

We are decreasing our fair value estimate to $58 from $61 due to changes in currency rates that more than offset slightly higher margin assumptions driven by the growing strength of high-margin specialty drugs (especially Dupixent). As a reminder, we project cash flows based on the reported currency and then convert the valuation for the ADR fair value.

Overall, we project a five-year average annual revenue growth rate of 5%, largely driven by steady Dupixent gains along with gains in consumer products and vaccines along as well as new product launches offsetting patent losses and deteriorating pricing for Lantus. Following a sharp patent cliff in 2013, Sanofi faces relatively mild patent losses, and diverse operations in vaccines, consumer products, and emerging markets should lead to steady growth over the long term. Also, we expect the streamlining of operations, cost-cutting and gains in high margin specialty drugs to offset falling Lantus pricing in the U.S., resulting in operating margin expansion over the next three years. Furthermore, we estimate the company's weighted average cost of capital at 7%, which is in line with the company's peer group.

Uber's Q2 Results Show Supply-Side Improvement Meeting Growth in Demand; Shares Attractive
by Ali Mogharabi | Morningstar Research Services LLC | 08-02-22

We have three main takeaways from Uber's second-quarter results. First, the supply side of the platform continues to improve, not because of higher incentives but mainly because of higher demand and an increase in driver or vehicle utilization across many markets in the United States. Second, we think the network effect is driving further adoption of Uber's subscription offering, Uber One, which now has 10 million members and whose growth is likely to expand margins. Third, to our surprise, management is not seeing much impact from inflation—contrary to what most businesses have been experiencing—nor the threat of an economic recession.

For the quarter, the mobility segment continued its impressive growth while demand for delivery displayed resilience after the pandemic. All-time highs in Uber users and trips approaching prepandemic highs display improvement in the firm's network effect moat source. For the second quarter in a row, all business segments generated positive adjusted EBITDA. The firm also generated free cash flow for the first time, which management expects will continue. We remain confident that Uber will hit GAAP profitability in 2024 as the network effect drives operating leverage. We are not making any significant adjustments to our model and are maintaining our $73 fair value estimate.

Drug Pricing Policy in the Inflation Reduction Act a Moderate But Manageable Negative to Biopharma
by Karen Andersen, CFA | Morningstar Research Services LLC | 08-01-22

The likelihood of drug-pricing policy changes in the United States changed dramatically over the course of July, and we are now assessing the impact of the various measures included in the Inflation Reduction Act of 2022 in our Big Biopharma valuation models. Assuming the bill is eligible to pass via reconciliation (the Senate parliamentarian is reviewing the bill), we think Democrats will be able to pass the Senate bill, paving the way for it to be signed into law. Overall, we don't expect major changes to our fair value estimates or moat ratings, as the changes net out to a moderate negative that we believe is manageable, likely through a combination of cost-cutting, agreements with generic firms for limited authorized generic launches (to avoid the list for negotiated drugs), and higher launch prices (to counter pressure on price increases and earlier declines due to negotiation).

From the perspective of patients, the bill reduces potential out-of-pocket costs in Medicare, making it widely popular. While government savings are highly driven by Medicare drug price negotiation and inflation caps (roughly $100 billion in savings from each measure, according to Congressional Budget Office estimates), we see three key impacts to drug firm revenue streams from the bill: shifting Medicare Part D cost-sharing to biopharma firms with more expensive drugs; penalizing biopharma firms that raise Medicare prices by more than the rate of inflation annually; and mandatory price cuts on the top-selling Medicare drugs that have extended patent protection. We had previously included potential modest U.S. drug policy changes in our Big Biopharma valuation models related to Part D redesign and inflation caps, but these didn't result in any significant fair value estimate changes.

While the House-passed Build Back Better Act stalled in the Senate earlier this year, the Senate Committee on Finance released a focused draft of potential prescription drug pricing policy changes on July 6 that largely mirrored drug policy changes included in the BBBA, albeit with slightly longer times to implementation. On July 8, the Congressional Budget Office released its assessment of the potential drug pricing legislation, estimating roughly $288 billion in savings through 2031 from prescription drug policy changes. On July 27, Sen. Joe Manchin announced his support for a larger reconciliation bill (now called the Inflation Reduction Act of 2022), which includes the prescription drug pricing policy changes released earlier in the month.

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David Harrell may own stocks from the Tortoise and Hare Portfolios in his personal accounts.


 
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David Harrell is the editor of the Morningstar StockInvestor, a monthly newsletter that focuses on a wide-moat stock investing strategy. For illustration purposes, issues highlight activities pertaining to Morningstar, Inc. portfolios invested in accordance with a strategy that seeks to focus on companies with stable or growing competitive advantages. David served in several senior research and product development roles and was part of the editorial team that created and launched Morningstar.com. He was the co-inventor of Morningstar's first investment advice software.

David joined Morningstar in 1994. He holds a bachelor's degree in biology from Skidmore College and a master's degree in biology from the University of Illinois at Springfield.


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Nabil Salem, CFA, is an Associate Portfolio Manager within Morningstar's Investment Management group. He is a member of our Select Equity Portfolio team and took over as the lead manager for the International Equity ADR strategy in 2022 after serving as a co-portfolio manager on the strategy from 2021.

Previously, Nabil was an associate portfolio manager within the Investment Management group's multi-asset team where he served as the asset class lead for emerging markets research. He joined Morningstar, Inc. in 2013. Nabil holds a bachelor's degree in Economics and Finance from Washington University in St. Louis and an MBA from the University of Chicago Booth School of Business.

Investment Strategy



Tortoise Portfolio. The objective of Morningstar, Inc.’s Tortoise Portfolio is to focus on “high-quality” businesses, defined as having both durable competitive advantages and strong balance sheets. These are often well-established market leaders with economic moats (preferably wide). Morningstar’s aim for the portfolio is to generate risk-adjusted returns that outperform the S&P 500 over a full market cycle.

Hare Portfolio. The objective of Morningstar, Inc.’s Hare Portfolio is to seek long-term capital appreciation ahead of the S&P 500 Index, focusing on companies with strong and growing competitive advantages. Morningstar is willing for the Hare to accept greater risk in exchange for higher total return potential.