In this article, we will discuss the 10 best dividend stocks to buy according to Traci Lerner’s Chescapmanager. If you want to skip our detailed analysis of Lerner’s history and hedge fund performance, go directly to the 5 Best Dividend Stocks to Buy According to Traci Lerner’s Chescapmanager.
Traci Lerner is one of the few women hedge fund managers in the U.S. She runs Chescapmanager LLC, which she founded with her husband in 1991. Lerner had to shut down her fund for outside money in 2016 amid struggles which started after the 2008 financial crisis. The fund is now a family office used to manage Lerner’s money. Lerner rose to fame after her stake in Cronos Group Inc. paid off in 2018 after tobacco company Altria disclosed a stake in the company. The development resulted in a $79 million gain for Lerner, according to Bloomberg.
Chescapmanager LLC’s 13F portfolio is valued at approximately $937.97 million as of the end of the first quarter of 2021. In 2020 the hedge fund gained 53.89% returns compared to 18.25% return posted by SPDR S&P 500 ETF Trust (NYSE: SPY). It lost about 4.63% in the first quarter of 2021 compared to 5.17% return posted by S&P 500.
Among the notable holdings of Lerner as of the first quarter of 2021 include Amazon.com, Inc. (NASDAQ: AMZN), Alphabet Inc. (NASDAQ: GOOG), and General Motors Company (NYSE: GM) (Lerner has a CALL option stake in General Motors, worth $28 million).
Amazon.com, Inc. (NASDAQ: AMZN), in which Lerner has a $34.04 million stake, is gaining a lot of investor attention. On June 30, Amazon.com, Inc. (NASDAQ: AMZN) proclaimed that it is scheduling to have 10,000 of its EV conveyance fleet ready as early as 2022.
Lerner also has a $26 million stake in Alphabet Inc. (NASDAQ: GOOG). Alphabet Inc. (NASDAQ: GOOG) has gained 75.76% over the past 12 months. On July 1, Google entered into an agreement with AT&T Inc. (NYSE: T) to install Google messages as the default messaging application for AT&T’s Android phones in the United States.
Another notable stock in Lerner’s portfolio is General Motors Company (NYSE: GM). The investor owns a $28.73 million call option of the company. On July 2, General Motors Company (NYSE: GM) declared a financing and commercial association with Restraint Thermal Reserves targeted at obtaining local and affordable lithium. On July 1, General Motors reported sales for the second quarter of 2021. The company sold 688,236 units in the period, up 40% YoY. On June 29, General Motors Company (NYSE: GM) and Volkswagen were titled “alluring” by UBS.
In this article, however, our focus would be on the stocks in Lerner’s Q1 portfolio that pay dividends.
Diversifying your portfolio and investing in strong dividend stocks is extremely important, especially during turbulent times like these when even the smart money is struggling. The hedge fund industry’s reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26, 2021, our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017, and they lost 13% through November 16. That’s why we believe hedge fund sentiment is a handy indicator that investors should consider. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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With this context and industry outlook in mind, let’s start the list of the 10 best dividend stocks to buy according to Traci Lerner’s Chescapmanager. We used Traci Lerner’s Q1 portfolio for this analysis.
Best Dividend Stocks to Buy According to Traci Lerner’s Chescapmanager
10.Vertiv Holdings Co (NYSE: VRT)
Lerner’s Stake Value: $30,577,000
Percentage of James Parsons’ 13F Portfolio: 3.25%
Dividend Yield: 0.04%
Number of Hedge Fund Holders: 39
Vertiv Holdings Co (NYSE: VRT) is a worldwide provider of vital digital structure and continuity solutions. It was founded in 2016 and ranks tenth on the list of 10 best dividend stocks to buy according to Traci Lerner’s Chescapmanager. Vertiv shares have gained about 91.54% over the last 12 months.
Just like Amazon.com, Inc. (NASDAQ: AMZN), Alphabet Inc. (NASDAQ: GOOG), and General Motors Company (NYSE: GM), Vertiv Holdings Co (NYSE: VRT) is one of the best stocks to buy according to Traci Lerner. On April 28, Vertiv Holdings Co (NYSE: VRT) posted earnings results for the first three months of 2021. The earnings per share was $0.21, beating market predictions by $0.09. The revenue over the period was $1.09 billion, up 21.5% YoY, beating the estimates by $40 million. On April 8, JPMorgan analyst C. Stephen Tusa Jr. initiated coverage on Vertiv Holdings Co. with an “Overweight” rating and a price target of $25.
Chescapmanager LLC increased its stake in Vertiv Holdings Co (NYSE: VRT) by 48% in the first quarter of 2021, ending the period with $30.6 million worth of the company’s stock. Out of the hedge funds being tracked by Insider Monkey, Brahman Capital is a leading shareholder in Vertiv Holdings, with 7.10 million shares worth more than $142 million.
9. Martin Marietta Materials, Inc. (NYSE: MLM)
Lerner’s Stake Value: $9,168,000
Percentage of Traci Lerner’s 13F Portfolio: 0.97%
Dividend Yield: 0.65%
Number of Hedge Fund Holders: 41
Martin Marietta Materials, Inc. (NYSE: MLM) is a multinational company which supplies natural resource-based building materials to the construction industry. It was founded in 1939, and the company stands ninth on the list of 10 best dividend stocks to buy according to Traci Lerner’s Chescapmanager. In addition, Martin stock has returned 63.75% to investors during the course of the past 12 months. Just like Amazon.com, Inc. (NASDAQ: AMZN), Alphabet Inc. (NASDAQ: GOOG), and General Motors Company (NYSE: GM), Martin Marietta Materials, Inc. (NYSE: MLM) is one of the best stocks to buy according to Traci Lerner.
On June 25, Philip Ng, an analyst at Jefferies, initiated coverage on Martin Marietta Materials, Inc. (NYSE: MLM), rating the stock as “Buy,” with a price target of $424.
The hedge fund run by Traci Lerner owns 27,300 shares in the company worth $9.17 million, representing 0.97% of their investment portfolio. In the first quarter of 2021, 41 hedge funds in the database of Insider Monkey held stakes worth $1.95 billion in Martin, the same as the preceding quarter worth $2.01 billion.
8. NIKE, Inc. (NYSE: NKE)
Lerner’s Stake Value: $1,329,000
Percentage of Traci Lerner’s 13F Portfolio: 0.14%
Dividend Yield: 0.69%
Number of Hedge Fund Holders: 78
NIKE, Inc. (NYSE: NKE), jointly with its subsidiaries, sketches, develops, deals, and sells sports footwear, clothes, equipment, and accessories. The company was founded in 1964, and ranks eighth on the list of 10 best dividend stocks to buy according to Traci Lerner’s Chescapmanager. NIKE, Inc. (NYSE: NKE) has returned 62.29% to investors in the last 12 months. Just like Amazon.com, Inc. (NASDAQ: AMZN), Alphabet Inc. (NASDAQ: GOOG), and General Motors Company (NYSE: GM), NIKE, Inc. (NYSE: NKE) is one of the best stocks to buy according to Traci Lerner.
On June 24, NIKE, Inc. (NYSE: NKE) posted earnings results for the first three months of 2021. The earnings per share was $0.93, beating market predictions by $0.42. The revenue over the period was $12.34 billion, beating the estimates by $1.32 billion. On June 25, Evercore ISI rated the stock as “Outperform.” Bank of America rated the stock as “Neutral” and raised the financial year 2022 earnings per quarter estimates by 14% to $4.24 from $3.72. BTIG initiated a coverage on the stock, rating it as “Buy,” with a price target of $177. UBS initiated a rating on the stock and rated it as “Buy,” the firm set a price target at $185.
The hedge fund run by Traci Lerner owns 10,000 shares in NIKE, Inc. (NYSE: NKE) worth $1.329 million, representing 0.14% of their investment portfolio. Chescapmanager LLC added this stock to its portfolio in the latest quarter. Terry Smith’s Fundsmith LLP is the company’s most significant stakeholder, with 7.93 million shares worth $1.05 billion.
Dynamo Cougar, in their fourth quarter 2020 investor letter, mentioned NIKE, Inc. (NYSE: NKE). Here is what the fund said:
“Nike used to have a very traditional IT infrastructure, which was the starting point for their transformation. Back in 2013 the company had most of their IT in one data center and two distinct IT and software development teams. The infrastructure was organized in a way that all IT solutions, such as Nike.com and Nike apps, were running on the same servers and databases. The result was that any change had to be approved and then deployed with the next release. It was a very manual process, depended on a number of different vendors, and had to be approved by a waterfall process involving both the software and the IT teams. As of 2018, the company has four AWS regions, 150 software engineers, three development locations, and multiple data center locations. In the process, the company decided that they would not just lift and shift their existing applications from their own servers to the public cloud, but instead decided to rethink every single component of their IT organization. The results show that this transformation worked. The organization went from one software deployment every two months to 2.6 deployments per day. Nike went from 90% manual software testing to 100% automated testing, which freed up a lot of developer time. They managed to reduce the time to make small changes on the website and apps from 3 hours to 5 seconds, which means they could react to sports and similar live events. In the past it took more than six months to add a new experience to their digital services, and today it takes one day. In the past they would have a 3-month lead time for new hardware and today they can scale and deploy without any lead time.5 The IT infrastructure now supports 50+ commerce countries versus 6 in 2012, supports 25 languages versus 7, and enables the e-commerce site to access the inventory of 500+ retail stores.
The early move to the cloud and the willingness to adapt to the new environment also allowed Nike to benefit from some significant learnings. For instance, the company first used the Cassandra database when they moved to the cloud. However, due to many technical limitations, it would not allow them to scale for peak demand. Peak demand was becoming a big problem because the Nike SNKRS App would launch products with very limited availability, which meant that millions of people would access the app at the same time. Nike then decided to move to the AWS DynamoDB database (a platform offering), which allowed them to scale up prior to these launches, and thereby spend 98% less than with Cassandra, while offering the same service. In addition, they managed to monitor the launches in real time, which allowed them to react to problems and error messages within seconds. The vast amount of data that is generated within this very short period is now analyzed with machine learning techniques to improve the stability, reliability, and optimization of future launches. The company is working on a number of other efforts that benefit from the cloud environment, such as the implementation of RFID whose data output is managed through the AWS IoT offering.
The benefits of this transformation to the consumer are clear. Nike can now deal with higher demand, deal with sudden spikes in orders, offer better product recommendations, offer more customization, provide better product fulfillment, and more. In addition, the company benefits from a leaner and more efficient IT organization, better product conversion, more feedback data from customers, social integration into products, and ultimately a more satisfied costumer. We think Nike’s continued investment into their modern IT stack will be a key differentiator for their competitive positioning.”
7. Microsoft Corporation (NASDAQ: MSFT)
Lerner’s Stake Value: $16,714,000
Percentage of Traci Lerner’s 13F Portfolio: 1.78%
Dividend Yield: 0.81%
Number of Hedge Fund Holders: 251
Microsoft Corporation (NASDAQ: MSFT) is a software and Cloud company. The company was founded in 1975 and is placed seventh on the list of 10 best dividend stocks to buy according to Traci Lerner’s Chescapmanager. Microsoft Corporation (NASDAQ: MSFT) shares have gained about 34.61% in value over the last 12 months.
On June 30, AT&T Inc. (NYSE: T) struck a tactical deal with Microsoft Corporation. AT&T will shift its 5G mobile web to Microsoft’s Azure for Operators cloud and trade its Network Cloud to Microsoft. The agreement will help Microsoft secure access to AT&T’s highbrow property to multiply its cloud services globally. On June 30, Paysafe (NYSE: PSFE) extended its agreement with Microsoft Corporation (NASDAQ: MSFT) by allowing digital cash payments on Microsoft Store on Xbox using its eCash payment solution – paysafecard. Paysafecard is now accessible on Xbox control panels for millions of clients in 22 Caucasian countries.
Chescapmanager LLC increased its stake in the tech company Microsoft by 17% in the first quarter of 2021, ending the period with $16.71 million worth of the company’s stock. The biggest stakeholder of the company is Fisher Asset Management, with 23.99 million shares, worth $5.66 billion. Microsoft ranks 3rd in our list of the 30 Most Popular Stocks Among Hedge Funds.
Just like Amazon.com, Inc. (NASDAQ: AMZN), Alphabet Inc. (NASDAQ: GOOG), and General Motors Company (NYSE: GM), Microsoft Corporation (NASDAQ: MSFT) is one of the best stocks to buy according to Traci Lerner.
ClearBridge Investments, in their first quarter 2021 investor letter, mentioned Microsoft Corporation (NASDAQ: MSFT). Here is what the fund said:
“We also made adjustments to the portfolio’s top 10 holdings to increase the participation of select stocks. The FAANGs and Microsoft delivered mixed results during the quarter and we continue to be mindful of our weighting to these mega cap growth stocks to ensure they are not limiting our ability to add diversity through new ideas. Our repositioning has been encouraging so far with the portfolio performing better on up days in the market while maintaining good down capture during more turbulent sessions.”
6. Nielsen Holdings plc (NYSE: NLSN)
Lerner’s Stake Value: $5,772,000
Percentage of Traci Lerner’s 13F Portfolio: 0.61%
Dividend Yield: 0.97%
Number of Hedge Fund Holders: 34
In unison with its subsidiaries, Nielsen Holdings plc (NYSE: NLSN) functions as an evaluation and data modeling company. The company was incorporated in 1923 and is ranked sixth on the list of 10 best dividend stocks to buy according to Traci Lerner’s Chescapmanager. In addition, the company stock has offered investors returns of 68.07% over the course of the past 12 months.
On June 17, Nielsen Holdings plc (NYSE: NLSN) started The Gauge, which gives a monthly idea of how viewers utilize streaming services and where those services stand compared to conventional broadcast and cable television systems. In addition, on June 15, Nielsen Holdings plc (NYSE: NLSN) partnered with IHS Markit Ltd. (NYSE: INFO) to incorporate complete locomotive data from Polk Automotive Solutions into its audience. The collaboration is an essential step for publishers and traders.
The hedge fund run by Traci Lerner owns 229,509 shares in Nielsen Holdings plc (NYSE: NLSN) worth $5.77 million, representing 0.61% of their investment portfolio. Windacre Partnership is the biggest stakeholder in the company, with 35.21 million shares worth $885.41 million.
Ariel Investments, in their fourth-quarter 2020 investor letter, mentioned Nielsen Holdings plc (NYSE: NLSN). Here is what the fund said:
“In the fourth quarter, we steadily increased our position in Nielsen Holdings PLC (NLSN). While Envista and Core Labs were both contributors for the year, Nielsen and MSGE were detractors. Our considerations and actions throughout such an eventful year, as well as the subsequent performance of these companies—two that soared and two that we believe will soar—illustrate our approach to long-term, patient investing.
We believe Nielsen Holdings PLC continues to present a compelling opportunity. The stock languished until the bottom fell out for no apparent reason. The abrupt price dislocation enabled us to buy shares in size. The company’s television ratings are the de facto currency for media and advertising decisions totaling hundreds of billions of dollars globally. Nielsen’s consumer purchase data is unmatched in scope and scale and remains mission-critical information for the world’s leading consumer packaged goods players. Lately, its languishing share price reflects a company attempting a turnaround in an industry that is being disrupted. In terms of coronavirus impact, the overall business is resilient and highly recurring, but there are discretionary businesses around the edges that are feeling the pain from tighter budgets and unique situations, like limited live sports. While leverage on its balance sheet heightens the degree of difficulty, the company is fast-tracking its cost cutting and efficiency efforts to preserve margins and liquidity. Recent headwinds have reignited long-standing bear arguments that increasing consumer fragmentation poses an existential threat to the business. By contrast, we believe fragmentation makes Nielsen’s total audience measurement data more valuable. Spinning off the challenged Connect business which measures grocery sales was a good move since the area is fraught with competition and scalability issues. Early indications are that Wall Street agrees, as Nielsen shares continue to recover from their summer lows. With the stock more or less flat over the last twelve months, we believe more value is likely to be unlocked in the years to come.”
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Disclosure: None. 10 Best Dividend Stocks to Buy According to Traci Lerner’s Chescapmanager is originally published on Insider Monkey.
