International Business Machines Corporation (NYSE: IBM) began in 1911, from the merger of three manufacturing businesses by financier Charles Flint. At the time, the company was named The Computing-Tabulating-Recording Company and had $800,000 in net income. The company sold time clocks, computing scales, and tabulating machines, which were the precursors to calculators and mainframe computers.
With the exception of the tabulating machines, the business was stagnant until Thomas Watson Sr. came on board as the company's first CEO in 1914. Watson galvanized the corporate culture and spearheaded IBM's transformation into an information technology company, capitalizing on the success of the tabulating machine. The company expanded its distribution of products globally and aptly renamed itself International Business Machines. IBM evolved into global information technology products and services giant with revenues of $77.1 billion in 2019. IBM's popular cognitive technology platform "Watson" was named in recognition of Thomas Watson Sr.
IBM is a component in both the Dow Jones Industrial Average (DJIA) and Standard and Poor's 500 index (S&P 500). IBM released Q3 2020 earnings on October 19, 2020. The information technology company reported revenues of $17.6 billion this quarter, compared to $18 billion over the same period of 2019.
|The top 4 mutual fund holders of IBM (Reported as of Q3 2020)|
|Holder||# Shares||Date Reported||% Outstanding||$ Value|
|Vanguard Total Stock Market Index Fund||24,970,776||Sep 29, 2020||2.80%||3,038,194,315|
|Vanguard 500 Index Fund||18,269,491||Sep 29, 2020||2.05%||2,222,848,969|
|SPDR S&P 500 ETF Trust||9,595,111||Nov 29, 2020||1.08%||1,185,188,110|
|Fidelity 500 Index Fund||8,025,695||Sep 29, 2020||0.90%||976,486,310|
1. Vanguard Total Stock Mkt Idx Inv (VTSMX)
The top mutual fund holder of IBM is the Vanguard Total Stock Mkt Idx Inv (VTSMX). VTSMX was created in 1992 and is designed to give broad exposure to the total U.S. stock market through all capitalization growth and value stocks. As of Q3 2020, the $921.44 billion fund owns just under 25 million shares or 2.8% of IBM. The fund has a 23.88% exposure to the technology sector. The three-year average annual return is 10.57% and the minimum required investment is $3,000.
2. Vanguard 500 Index Fund (VFINX)
Created on August 31, 1978, the Vanguard 500 Index Fund is the industry's first index fund for individual investors. The $414.7 billion fund is the second-largest mutual fund holder of IBM. The fund's 18.2 million shares of IBM amount to 2.05% of the company. As of December 2020, VFINX has a three-year average annual return of 10.28% and a minimum required investment of $3,000.
3. SPDR S&P 500 ETF (SPY)
The SPDR S&P 500 ETF (SPY) is the first-ever ETF introduced in the U.S. public market and remains one of the most popular to this day. This $322.48 billion fund has a 27.58% allocation in the technology sector. As of December 2020, the fund held 9.1 million shares of IBM, about 1.02% of the total company. SPDR has a 30-day SEC yield of 1.65% and an expense ratio of 0.09%.
4. Fidelity 500 Index Fund (FXIAX)
The Vanguard 500 Index Index Fund (FXAIX) is one of the lowest-cost ways to access diversified exposure to the broader U.S. stock market. The fund is made up of the 500 largest American companies, which make up about 75% of the total U.S. equity market. As of Q3 2020, the fund holds 8 million shares of IBM, or roughly 0.90% of the company. FXAIX has total assets of $275 billion and an expense ratio of just 0.015%.
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