In this article, we will discuss the top 10 safe stocks to buy according to billionaire Richard Chilton.
Chilton Investment Company, founded by Richard L. Chilton, Jr. in 1992, aims to achieve appealing long-term returns while minimizing volatility. Since its establishment, the company has diligently adhered to a fundamental bottom-up investment approach, characterized by an ownership mindset. Its primary aim is to acquire fractional ownership in outstanding businesses rather than engaging in short-term stock trading.
Richard L. Chilton Jr. is the chairman, CEO, and chief investment officer of Chilton Investment Co. He has been a hedge fund manager for 18 years, which is a significant tenure in the challenging hedge fund industry. Chilton began his career in 1983 as an analyst with Alliance Capital Management, working alongside small-cap equity managers Frank Burr and Paul Jenkel. In 1990, he started a money management business for Allen & Co., a private bank, but left after two years to establish his own hedge fund company.
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Drawing on lessons in shorting stocks learned from Julian Robertson of Tiger Management Corp., Chilton set up his firm in a small, one-room office in New York, managing a classic long/short equity hedge fund. Chilton’s decision to start his own hedge fund was influenced by Art Samberg, a board member of the mutual fund Chilton co-managed. After expressing his desire to leave Allen & Co., where he had established a money management business, Samberg encouraged him to start his own fund, recognizing his talent. In January 1992, Chilton left Allen & Co., declined an offer from CEO Herbert Allen to buy a stake in his new venture, and instead accepted $1 million in investment from Allen, combining it with family money to launch his hedge fund with $5 million.
Starting his hedge fund in July 1992, Chilton aimed to create a classic long/short equity hedge fund, inspired by the first hedge fund model launched by Alfred Winslow Jones. His strategy was to always remain both long and short, without attempting to time the market. Chilton’s reputation grew through word of mouth, attracting prominent investors, endowments, and foundations. Pension funds later followed.
Chilton Investment’s appeal to institutional investors lies in its client-first approach and strong performance. The firm has been a leader in transparency and SEC registration. During the 2008 financial crisis, Chilton allowed clients to withdraw funds, which later returned. Chilton’s background in managing pension money at Alliance Capital gave him crucial experience in transparency and accountability, making his firm attractive for investors seeking long/short strategies. Chilton sees current opportunities in blue-chip companies with strong financials, solid dividend yields, and steady earnings growth. He expects these “dividend aristocrats” to outperform in a flat S&P environment, offering stability and consistent returns through growing dividends. Today, Chilton’s firm has grown significantly, with offices worldwide, a team of sector specialist analysts, and $7 billion under management across various strategies in global markets.
Richard L. Chilton Jr. graduated with a B.S. degree in Finance and Economics from Alfred University. Acknowledged for his business acumen, Forbes ranks Richard Chilton 773rd among the world’s wealthiest individuals, estimating his net worth at $1.3 billion. Chilton Investment Company caters to 9 clients, managing discretionary assets totaling $1,266,939,000, as per their Form ADV dated March 2024. Their 13F filing for Q1 2024 revealed managed 13F securities amounting to $3.6 billion.
Richard Chilton of Chilton Investment Company
Our Methodology
This article highlights the 10 safe stocks to buy according to billionaire Chilton, including analyst ratings and key details about each company, as well as the number of hedge funds invested in them.
Why focus on the stocks that hedge funds invest in? Our research shows that following the top picks of leading hedge funds can result in returns that beat the market. We use this strategy in our quarterly newsletter, where we choose 14 small-cap and large-cap stocks each quarter. Since May 2014, this approach has generated a 275% return, outperforming the benchmark by 150 percentage points. (see more details here)
10 Safe Stocks to Buy According to Billionaire Chilton
10. Mettler-Toledo International Inc. (NYSE:MTD)
Chilton Investment Company’s Stake Value: $130,116,291
Number of Hedge Fund Holders: 42
Mettler-Toledo International (NYSE:MTD) is one of the safe stocks to buy according to billionaire Chilton. Mettler-Toledo International (NYSE:MTD) is a top global supplier of precision instruments and services, catering to laboratory, industrial, and food retail sectors. Mettler-Toledo International (NYSE:MTD) reported Q2 sales of $943.8 million, a 2% decrease year-over-year, mainly due to foreign exchange headwinds, with China’s sales dropping 21% from a high base in FY’23. Operating income fell to $284 million, reflecting an 800 basis point year-over-year decline, driven by a 130 basis point contraction in operating margin.
Despite these challenges, Bernard Holdings’ Analyst Zach Bristow remains bullish on Mettler-Toledo International (NYSE:MTD), citing the company’s ability to generate $700 million to $1 billion in free cash flow annually. This strength is attributed to Mettler-Toledo International (NYSE:MTD)’s high returns on investor capital, exceeding 50%, and its highly sought-after product lines, which deliver post-tax margins of over 23% on sales with capital turnover greater than 1x. These economic characteristics support a strong buy rating, reinforcing Mettler-Toledo International (NYSE:MTD)’s potential for long-term growth.
Mettler-Toledo International (NYSE:MTD) landed on the 10th spot in our list of safe stocks to buy according to billionaire Chilton. At the end of the first quarter of 2024, Chilton Investment Company owned 97,737 shares of Mettler-Toledo International (NYSE:MTD), valued at $130,116,291. This investment made up 3.56% of Chilton Investment Company’s portfolio, according to regulatory filings.
9. Arthur J. Gallagher & Co. (NYSE:AJG)
Chilton Investment Company’s Stake Value: $138,135,098
Number of Hedge Fund Holders: 39
Arthur J. Gallagher & Co. (NYSE:AJG) is one of the safe stocks to buy according to billionaire Chilton. Arthur J. Gallagher & Co. (NYSE:AJG) is a global insurance brokerage, risk management, and consulting firm headquartered in Rolling Meadows, Illinois, founded in 1927. Arthur J. Gallagher & Co. (NYSE:AJG) operates in more than 150 countries, and has grown to become one of the largest insurance brokers in the world. Arthur J. Gallagher & Co. (NYSE:AJG) recently expanded its benefits consulting services by acquiring Cleary Benefits Group Inc., a firm specializing in advisory services for mid-size to large businesses. This acquisition enhances Arthur J. Gallagher & Co. (NYSE:AJG)’s expertise in health and welfare benefits and boosts its presence in the northeast region.
Arthur J. Gallagher & Co. (NYSE:AJG)’s growth strategy is driven by a robust mergers and acquisitions (M&A) pipeline. In the first quarter of 2024 alone, Arthur J. Gallagher & Co. (NYSE:AJG) completed 12 acquisitions, adding $69.2 million in annualized revenues. Arthur J. Gallagher & Co. (NYSE:AJG) posted a 13.37% increase in quarterly revenue, reaching $2.64 billion in Q2 2024, which contributed to a 17.58% year-over-year rise, bringing the total revenue for the past twelve months to $10.39 billion. Revenue is expected to keep climbing, potentially hitting $12.86 billion by 2025.
Analysts are optimistic about Arthur J. Gallagher & Co. (NYSE:AJG)’s future, with many issuing a “Buy” rating, with an average price target of $269, and a high estimate of $310, suggesting a possible 10% increase from current levels. Additionally, Arthur J. Gallagher & Co. (NYSE:AJG)’s earnings per share (EPS) are projected to grow by nearly 12% in 2025.
Arthur J. Gallagher & Co. (NYSE:AJG) ranked 9th on our list of safe stocks to buy according to billionaire Chilton. As of the end of the first quarter of 2024, Chilton Investment Company held 552,452 shares of AJG, valued at $138,135,098. This investment made up 3.78% of Chilton Investment Company’s total portfolio, based on regulatory filings.
8. Cintas Corporation (NASDAQ:CTAS)
Chilton Investment Company’s Stake Value: $140,606,873
Number of Hedge Fund Holders: 46
One of the companies that made it to the safe stocks to buy according to billionaire Chilton is Cintas Corporation (NASDAQ:CTAS). Cintas Corporation (NASDAQ:CTAS) specializes in renting and selling uniforms, as well as offering products and services like restroom supplies, mops, and first aid kits. On July 18th, Cintas Corporation (NASDAQ:CTAS) shareholders saw a 5.4% increase in the company’s share price. This rise followed the release of financial results for the last quarter of fiscal year 2024 and forecasts for fiscal year 2025. Management’s guidance suggests that 2025 will be even better than 2024.
In the final quarter of fiscal year 2024, Cintas Corporation (NASDAQ:CTAS) set a record with $2.47 billion in revenue, up 8.2% from the previous year. The core uniform rental and facility services segment saw a 7.8% revenue increase to $1.91 billion, driven by new and existing customers. Revenue from first aid and safety services grew by 11.2%, and ‘all other’ operations rose by 7.9%. For fiscal year 2025, Cintas Corporation (NASDAQ:CTAS) projects revenue growth of 6.4% to 8% and earnings per share between $16.25 and $16.75.
In its Q4 2024 Earnings Call Transcript, Cintas Corporation (NASDAQ:CTAS) announced that its business across various sectors continues to perform well:
“Fourth quarter net income was $414.3 million, an increase of 19.7%. Earnings per diluted share for the fourth quarter were $3.99, an increase of 19.8% over the prior year fourth quarter. These results conclude a strong fiscal year marked by significant accomplishments, including robust revenue growth and margin expansion and excellent cash generation, which continue to fuel our balanced capital allocation strategy. The following are specific highlights of fiscal ’24. I’d like to begin with revenue. Fiscal year revenue was a record $9.6 billion, an increase of 8.9%. Organic growth was 8% for the year. Our First Aid and Safety Services operating segment exceeded $1 billion in annual revenue for the first time. Our top line growth is a function of the total value proposition we offer customers of all sizes and across industries and unique Cintas culture that drives our partners to deliver an outstanding customer experience.
Business across our focused verticals of health care, hospitality, education, and state and local government continue to perform well. We experienced strong demand for our services not only from existing customers but across our new business pipeline. About two-third of our new customers continue to come from no-programmers, underscoring our ability to capitalize on the vast growth opportunity that remains ahead. In addition, our retention rates remain strong. Our strong revenue performance also translated into continued growth in profits and earnings, including the following highlights. Fiscal ’24 operating income grew 14.8% for the year, and our operating margin of 21.6% was an all-time high. EPS grew 16.6% for the year. Our enhanced profitability and earnings growth is a reflection of our relentless focus on operational excellence in every aspect of our business, spanning strategic sourcing and supply chain initiatives, route and energy optimization opportunities with SmartTruck, and leveraging the SAP system to support greater stockroom visibility and efficient garment sharing.”
Investment analyst Quad 7 Capital predicts that Cintas Corporation (NASDAQ:CTAS) will continue to grow into fiscal year 2025. Although Cintas Corporation (NASDAQ:CTAS) currently has a high price-to-earnings ratio of 46X, its ongoing growth and share repurchases indicate potential for future appreciation. Despite the current high price, Cintas Corporation (NASDAQ:CTAS)’s strong financial results, efficient operations, and positive growth outlook justify its premium. Cintas Corporation (NASDAQ:CTAS) is recommended for long-term investors, particularly if there are chances to buy during market dips.
Cintas Corporation (NASDAQ:CTAS) is ranked 8th on our list of safe stocks to buy according to billionaire Chilton. By the end of the first quarter of 2024, Chilton Investment Company held 818,636 shares of Cintas Corporation (NASDAQ:CTAS), valued at $140,606,873. This investment represented 3.85% of Chilton’s total portfolio, based on regulatory filings.