Invest Like a Pro: Dodge & Cox

Imitation is the best form of flattery, right? Well, when you're learning a new skill, imitation can also be a great way to hone your craft.

If you're learning guitar, you might pick up a book of Jimi Hendrix's licks or download the chords to a couple of Bob Dylan's songs. So when you're trying to become a better investor, it only makes sense to peek at what the professional investors are up to.

For Fools who lack the time or inclination to pick individual stocks on their own, Shannon Zimmerman, editor of our Champion Funds newsletter, has put together a buffet of mutual funds that have collectively outperformed their benchmarks by more than 13%. Meanwhile, the rest of us can tune directly into what some of the major funds are holding.

You see, the SEC requires institutional investment managers who manage $100 million or more to show their cards via quarterly 13-F filings. This week, I've dug in to look at some of the moves made by mutual fund manager Dodge & Cox. To make things even more interesting, I cross-referenced its holdings against the opinions of the Fool's CAPS community.

Below are three stocks that Dodge & Cox bought more of between its March filing and June filing:

... and three in which the firm lightened its position:

Now, before you make any hasty moves, remember that we're looking at what Dodge & Cox has done in retrospect. For all we know, since the last 13-F filing, the firm has drastically changed its holdings in any or all of the above stocks. With that in mind, here are some further thoughts to kick off your research.

Dropping a billion apiece
Similar to Davis Advisors, which I profiled a couple weeks back, Dodge & Cox doesn't mess around when it takes a position in a stock. In all, D&C manages more than $200 billion in assets, and does so with just slightly more than 200 stocks in its portfolio. On average, that means it's investing nearly $1 billion in each of its holdings. Also like Davis, when D&C makes an investment, it typically isn't turned over for years.

Take Hewlett-Packard (NYSE:HPQ), for instance. There's currently more than $5 billion worth of HP in D&C's portfolio, making it the fund's single largest holding. D&C has been building this position for more than five years now, significantly growing its stake over time.

It's a similar story with GlaxoSmithKline, a pick that D&C shares in common with James Early over at our Income Investor newsletter. D&C has had some Glaxo stock in its portfolio for more than five years now, and it started building a significant stake in late 2004. Today, the stock is D&C's fifth-largest holding, and last quarter's 22% ownership bump suggests that the managers at D&C still like it.

CAPS players are also bullish on Glaxo's stock. CAPS player kevolution recently weighed in, noting that the stock is a "defensive health care pick" for him. He continues: "I like it because it's European (read: favorable exchange rate), they make alli (the new weight loss pill that has huge potential), and they've stepped up the game to develop an anti-malaria vaccine to help Africa, which is just plain good."

So has D&C highlighted some winners here for us? Hop on over to CAPS and start interacting with the other 65,000-plus CAPS players. While you're weighing in on these stocks, you can also find out more about the more than 5,000 other stocks currently rated on CAPS.