In this article, we discuss the 10 best stock picks of Mason Hawkins’ Southeastern Asset Management. If you want to see the top 5 holdings of the hedge fund, check out 5 Best Stock Picks of Mason Hawkins’ Southeastern Asset Management.
Mason Hawkins is an American value investor who founded Southeastern Asset Management in 1975, which is a Tennessee-based global hedge fund. Hawkins serves as the founder, chairman, and CEO of Southeastern Asset Management, managing a portfolio for its clients worth approximately $6 billion as per the 13F filings for Q4 2021. He also established Longleaf Partners Funds in 1987, an investment advisory firm managing mutual funds and UCITS funds.
Mason Hawkins’ Southeastern Asset Management is known to look out for value stocks at discounted prices. The hedge fund leans towards stable and mature businesses with solid management. The Q4 2021 portfolio is rather concentrated, with 35 stocks in total, belonging to the utilities and telecommunications, transports, real estate, industrials, finance, energy, consumer discretionary, and communications sectors.
In the December quarter, Southeastern Asset Management purchased 8 new stocks, bought additional stakes in 12 securities, sold out of 2 companies, and reduced holdings in 12 equities. The hedge fund has a top ten holdings concentration of 61.58%. The top buys in Q4 were Fiserv, Inc. (NASDAQ:FISV), Vimeo, Inc. (NASDAQ:VMEO), and XPO Logistics, Inc. (NYSE:XPO). Whereas, Mason Hawkins’ Southeastern Asset Management sold out of Baidu, Inc. (NASDAQ:BIDU) and Eastman Kodak Company (NYSE:KODK).
The most notable securities in the Q4 portfolio of Mason Hawkins’ Southeastern Asset Management included FedEx Corporation (NYSE:FDX), General Electric Company (NYSE:GE), and Alibaba Group Holding Limited (NYSE:BABA), among others discussed in detail below.
Mason Hawkins of Southeastern Asset Management
Our Methodology
We used the Q4 2021 portfolio of Mason Hawkins’ Southeastern Asset Management for this analysis, selecting the hedge fund’s top 10 stock picks.
Best Stock Picks of Mason Hawkins’ Southeastern Asset Management
10. Affiliated Managers Group, Inc. (NYSE:AMG)
Southeastern Asset Management’s Stake Value: $252,879,000
Percentage of Southeastern Asset Management’s 13F Portfolio: 4.24%
Number of Hedge Fund Holders: 32
Affiliated Managers Group, Inc. (NYSE:AMG) is an asset management firm offering financial management services to mutual funds, institutional clients, and high net worth individuals in the United States. Mason Hawkins’ Southeastern Asset Management held 1.5 million shares of Affiliated Managers Group, Inc. (NYSE:AMG) in Q4 2021, worth close to $253 million, representing 4.24% of the total 13F portfolio.
On May 2, Affiliated Managers Group, Inc. (NYSE:AMG) reported earnings for the first fiscal quarter of 2022. The company announced an EPS of $4.65, above consensus estimates by $0.31. Revenue for the period increased 8.62% year-over-year to $607.30 million, but fell short of analysts’ predictions by $55.50 million.
Deutsche Bank analyst Brian Bedell on May 3 raised the price target on Affiliated Managers Group, Inc. (NYSE:AMG) to $162 from $152 and reiterated a Buy rating on the shares after the “good” Q1 results. The analyst sees Affiliated Managers Group, Inc. (NYSE:AMG)’s affiliate investment strategy, including accretion from the upcoming BPEA transaction, as a “differentiator amid a challenging market backdrop”.
According to Insider Monkey’s Q4 data, 32 hedge funds were bullish on Affiliated Managers Group, Inc. (NYSE:AMG), compared to 30 funds in the prior quarter. The collective stakes held in the fourth quarter of 2021 amounted to $788 million, up from roughly $754 million. John W. Rogers’ Ariel Investments is a prominent stakeholder of the company, with a position worth $147.6 million.
Like FedEx Corporation (NYSE:FDX), General Electric Company (NYSE:GE), and Alibaba Group Holding Limited (NYSE:BABA), Affiliated Managers Group, Inc. (NYSE:AMG) is a notable stock from Mason Hawkins’ Southeastern Asset Management portfolio.
Here is what Longleaf Partners Fund has to say about Affiliated Managers Group, Inc. (NYSE:AMG) in its Q4 2021 investor letter:
“Affiliated Managers Group (AMG) (61%, 3.53%; 9%, 0.68%), the diversified asset management holding company, was the top contributor after three consecutive quarters of >20% earnings per share (EPS) growth. Despite the strong, consistent FCF and long-term revenue growth, the primary reason that the stock has traded for low multiples was the company’s consolidated net outflows in the last few years. While most AMG strategies have grown their AUM with good performance and positive inflows, several large quantitative strategies with lower fees than the rest of AMG had been shrinking quickly. However, this year’s third quarter marked AMG’s first consolidated positive net inflows since 2018 due to strong demand for its Alternatives and Multi-Asset funds. Another reason that AMG sells for such a low multiple is that many supposed peers sell for similar multiples, but in reality most of these “peers” are tethered far more to the S&P than the majority of AMG’s public equity managers, and AMG has far more alternative asset managers than is widely recognized. AMG also closed the acquisition of a majority stake in Parnassus, a successful ESG manager and great addition to its portfolio. Our appraisal of AMG’s value is up over 40% this year, and the stock appreciated even more. Yet shares still trade for less than 65% of our appraisal value and 9.5x forward FCF.”
9. IAC/InterActiveCorp (NASDAQ:IAC)
Southeastern Asset Management’s Stake Value: $259,369,000
Percentage of Southeastern Asset Management’s 13F Portfolio: 4.35%
Number of Hedge Fund Holders: 47
IAC/InterActiveCorp (NASDAQ:IAC) is headquartered in New York, operating as a media and internet company worldwide. Mason Hawkins’ hedge fund boosted its IAC/InterActiveCorp (NASDAQ:IAC) stake by 19% in Q4 2021, holding close to 2 million shares worth $259.3 million, representing 4.35% of the total 13F securities.
BMO Capital analyst Daniel Salmon on April 26 maintained an Outperform rating on IAC/InterActiveCorp (NASDAQ:IAC) but lowered the firm’s price target on the shares to $154 from $173. According to the analyst, IAC/InterActiveCorp (NASDAQ:IAC) is comparatively well positioned for a recession given its robust balance sheet, possible catalysts like the TURO IPO, and reacceleration at its subsidiary, Angi Inc. (NASDAQ:ANGI). The analyst added that although he slashed his 2022 digital revenue estimate due to continued repositioning of the Meredith properties, it is sufficiently compensated by higher Print revenue/EBITDA.
Insider Monkey’s fourth quarter database suggests that 47 hedge funds were bullish on IAC/InterActiveCorp (NASDAQ:IAC), with collective stakes worth $1.98 billion, compared to the same number of funds in the earlier quarter, holding stakes in the company valued at $1.42 billion. Dennis Hong’s ShawSpring Partners is the largest shareholder of IAC/InterActiveCorp (NASDAQ:IAC), with 3.74 million shares amounting to $490 million.
Here is what White Brook Capital has to say about IAC/InterActiveCorp (NASDAQ:IAC) in its Q1 2022 investor letter:
“During the quarter, White Brook exited IAC/InteractiveCorp (IAC) on socially responsible investing grounds. White Brook invested in the Company several years ago and benefitted as the company spun to investors, Match Group, Inc (MTCH) and Vimeo, Inc (VMEO) – stakes which were quickly disposed of. However, in the depths of the pandemic, IAC also invested in MGM Resorts. It was a relatively small investment for the company, and to my understanding at the time represented an opportunistic investment by an opportunistic value investment firm. White Brook noted the transgression of principles, put the company on its “Watch List”, but given the relatively small amount of the value that it represented to IAC as a whole, continued to own the stock. If the MGM holding was relatively transitory and the position relatively small, in my view, like the alcohol content of a freshly juiced orange, it did not taint the whole. The Company’s hiring of the former CFO of the NFL during the first quarter this year, however, was an unmistakable sign that gambling would be a bigger part of their future, and an order to sell was initiated, but due to the price action that day not executed. When they increased their stake in MGM later in the quarter, I accepted the market price at the moment and the order was immediately executed. IAC was a very successful investment for the Fund.”
8. MGM Resorts International (NYSE:MGM)
Southeastern Asset Management’s Stake Value: $262,397,000
Percentage of Southeastern Asset Management’s 13F Portfolio: 4.40%
Number of Hedge Fund Holders: 55
Headquartered in Las Vegas, Nevada, MGM Resorts International (NYSE:MGM) owns and operates casino, hotel, and entertainment resorts in the United States and Macau. In Q4 2021, Southeastern Asset Management increased its stake in MGM Resorts International (NYSE:MGM) by 6%, holding 5.8 million shares worth $262.3 million, representing 4.40% of the total 13F holdings.
MGM Resorts International (NYSE:MGM) announced on May 2 earnings for Q1, posting an EPS of $0.01, above consensus estimates by $0.06. The $2.85 billion revenue grew 73.22% year-over-year, outperforming market predictions by $45.50 million.
On May 3, JPMorgan analyst Joseph Greff reinstated coverage of MGM Resorts International (NYSE:MGM) with an Overweight rating and a $53 price target. The analyst likes the 15% pullback to the low $40s share price levels amid an ongoing recovery in Las Vegas, where hotel pricing remains robust. In addition to that, MGM Resorts International (NYSE:MGM) is effectively utilizing its higher cash flow towards share repurchases while maintaining a low domestic net leverage position, the analyst told investors in a bullish thesis.
According to the fourth quarter database of Insider Monkey, 55 hedge funds were long MGM Resorts International (NYSE:MGM), up from 50 funds in the last quarter. Keith Meister’s Corvex Capital is the biggest shareholder of the company, with 15.6 million shares worth $703.4 million.
Here is what Longleaf Partners Fund has to say about MGM Resorts International (NYSE:MGM) in its Q4 2021 investor letter:
“MGM Resorts (43%, 2.54%; 4%, 0.29%), the casino and online gaming company, was another strong performer. The company’s third quarter Las Vegas revenues grew massively over 2020, approaching within 8% of 2019 levels despite some lingering COVID restrictions. MGM has gained nearly 10 percentage points of Vegas Strip market share since 2019, an extraordinary achievement for CEO Bill Hornbuckle, who has also done a terrific job controlling corporate costs. Though its current Las Vegas margins are unsustainably high at 39%, MGM’s Vegas EBITDA should grow steadily from this year’s $1.6 billion as national reopening boosts travel in the next year(s). MGM’s regional casinos are now exceeding their 2019 EBITDA levels as well, while MGM’s digital iGaming revenues grew 17% sequentially for an excellent 32% market share. MGM repurchased shares at a 13% annualized pace during the last quarter at a $40 average price, while our growing value is now approaching $60. MGM acquired the Cosmopolitan, a “tuck-in” casino with achievable synergies, at a reasonable price and recently announced the sale of the Mirage for a headline price over $1billion, well above our appraisal for the asset. We are delighted with the progress of this management team and business over the last two years.”
7. Discovery, Inc. (NASDAQ:DISCA)
Southeastern Asset Management’s Stake Value: $285,945,000
Percentage of Southeastern Asset Management’s 13F Portfolio: 4.79%
Number of Hedge Fund Holders: 42
Discovery, Inc. (NASDAQ:DISCA) used to operate as a New York-based multinational mass media television conglomerate. In May 2021, AT&T Inc. (NYSE:T)’s subsidiary, WarnerMedia, announced its plan to merge with Discovery, Inc. (NASDAQ:DISCA). The merger was concluded on April 8, 2022, consequently forming Warner Bros. Discovery, Inc. (NASDAQ:WBD).
In the fourth quarter of 2021, Mason Hawkins’ Southeastern Asset Management boosted its Discovery, Inc. (NASDAQ:DISCA) stake by 20%, holding 12.4 million shares worth about $286 million, representing 4.79% of the total 13F securities.
According to Insider Monkey’s Q4 database, Discovery, Inc. (NASDAQ:DISCA) was found in the public stock portfolios of 42 hedge funds, with collective stakes worth over $580 million.
Like FedEx Corporation (NYSE:FDX), General Electric Company (NYSE:GE), and Alibaba Group Holding Limited (NYSE:BABA), Discovery, Inc. (NASDAQ:DISCA) is a popular entity among elite investors.
6. General Electric Company (NYSE:GE)
Southeastern Asset Management’s Stake Value: $299,383,000
Percentage of Southeastern Asset Management’s 13F Portfolio: 5.02%
Number of Hedge Fund Holders: 57
General Electric Company (NYSE:GE) was incorporated in 1892 and is headquartered in Boston, Massachusetts. The company operates via Power, Renewable Energy, Aviation, and Healthcare segments in Europe, China, Asia, the Americas, the Middle East, and Africa.
Securities filings for Q4 2021 reveal that Mason Hawkins’ Southeastern Asset Management held 3.16 million shares of General Electric Company (NYSE:GE), worth $299.3 million, representing 5.02% of the total 13F securities. The hedge fund boosted its position in the company by 23% in the December quarter.
On April 26, General Electric Company (NYSE:GE) reported earnings for Q1 2022, posting an EPS of $0.24, ahead of analysts’ estimates by $0.04. The $17.04 billion revenue also outperformed market forecasts by approximately $123 million.
Barclays analyst Julian Mitchell on April 29 reiterated an Overweight rating on General Electric Company (NYSE:GE) and lowered the firm’s price target on the stock to $100 from $115. The analyst was not overly optimistic about General Electric Company (NYSE:GE)’s 2023 guidance after the Q1 earnings. The doubling of operating profit over two years “looks very challenging”, the analyst told investors.
According to the fourth quarter database of Insider Monkey, General Electric Company (NYSE:GE) was found in the public stock portfolios of 57 hedge funds, up from 53 funds in the preceding quarter. Billionaire Andreas Halvorsen’s Viking Global is the largest shareholder of the company, with more than 18 million shares worth $1.70 billion.
Here is what Vulcan Value Partners has to say about General Electric Company (NYSE:GE) in its Q3 2021 investor letter:
“During the quarter, we sold our positions in General Electric Co. General Electric is a company we followed for a long time. In the past, we removed GE from the MVP list due to management’s poor capital allocation decisions which resulted in value instability. Larry Culp, the former CEO of Danaher, became CEO of General Electric in 2018. The company implemented a vast restructuring program to simplify the industrial side of its business, sold off non-core assets, paid down debt with the proceeds, and drastically shrunk GE Capital. These restructuring activities allowed its world-class jet engine and healthcare businesses to shine through, and improved value stability. As a result, we added the company back to the MVP list. While the pandemic negatively impacted General Electric’s aviation business in the short run, it also gave us the opportunity to buy General Electric in the second quarter of 2020 with a substantial margin of safety. GE is a good example of a competitively entrenched, yet slower growing MVP business. As its stock price rose rapidly over the last year, its value growth did not keep up, and the price to value gap closed quickly. As our margin of safety diminished, we sold our position in GE and allocated it to more discounted companies.”
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Disclosure: None. 10 Best Stock Picks of Mason Hawkins’ Southeastern Asset Management is originally published on Insider Monkey.
