In this article, we discuss 10 stocks to buy according to BlueSpruce Investments. If you want to skip our detailed analysis of the fund’s investment philosophy and performance, go directly to 5 Stocks to Buy According to BlueSpruce Investments.
BlueSpruce Investments is a Chicago-based investment business that manages around $4.5 billion in assets. It employs a detailed fundamental research process to develop a focused portfolio that it preserves for the long term, similar to a private equity strategy. It aims to hold 10 to 15 business names, with long and short stock positions and high-yield bonds and senior loans as prospective investments. It invests in businesses that provide communications, finance, consumer discretionary, and information technology.
Tim Hurd and Edward Magnus, who formerly worked together at Madison Dearborn Partners, established BlueSpruce Investments in February 2013.
BlueSpruce Investments’ portfolio had 14 long positions and a value of $6.17 billion at the end of the first quarter of 2022, with a 90.11% concentration of the top 10 holdings.
The most notable stocks held by BlueSpruce Investments in Q1 2022 include The TJX Companies, Inc. (NYSE:TJX), Automatic Data Processing, Inc. (NASDAQ:ADP), and VeriSign, Inc. (NASDAQ:VRSN).
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Our Methodology
We used the Q1 portfolio of BlueSpruce Investments for this article.
Stocks to Buy According to BlueSpruce Investments
10. Dollar General Corporation (NYSE:DG)
BlueSpruce Investments’ Stake Value: $223,528,000
Percentage of BlueSpruce Investments’ Portfolio: 3.62%
Number of Hedge Fund Holders: 53
Dollar General Corporation (NYSE:DG) is a retailer that operates retail locations. Dollar General Corporation (NYSE:DG) was raised to Overweight from Equal Weight by Morgan Stanley analyst Simeon Gutman on June 16, with a price objective of $250, up from $225.
Insider Monkey’s data shows that 53 elite hedge funds held stakes in Dollar General Corporation (NYSE:DG) at the end of the first quarter, up from 44 funds a quarter earlier. The collective value of these stakes is over $2.25 billion, showing considerable growth from $2.20 billion worth of stakes held by hedge funds in Q4 2021.
In the fourth quarter of 2021, BlueSpruce Investments held about 1 million shares of Dollar General Corporation (NYSE:DG), worth $223.53 million, representing 3.62% of the hedge fund’s total 13F securities. The hedge fund reduced its stake in Dollar General Corporation (NYSE:DG) by 63% in Q1 2022. BlueSpruce Investments started building its position in Dollar General Corporation (NYSE:DG) in the third quarter of 2020.
Along with Dollar General Corporation (NYSE:DG), The TJX Companies, Inc. (NYSE:TJX), Automatic Data Processing, Inc. (NASDAQ:ADP) and VeriSign, Inc. (NASDAQ:VRSN) are also some of the stocks to buy according to BlueSpruce Investments.
William B. Gray’s Orbis Investment Management held a notable stake in Dollar General Corporation (NYSE:DG) at the end of the first quarter of 2022, worth $519.28 million. Dollar General Corporation (NYSE:DG) shares have offered investors 10% in returns over the past year as of June 16.
LRT Capital Management mentioned Dollar General Corporation (NYSE:DG) in its Q3 2021 investor letter. Here is what the firm said:
“Executive Summary
At LRT Capital Management we are continuously searching the market for great investment opportunities. Our favorite finds are companies with moats and growth opportunities that justify a higher price than what the stock is trading for. One of our holdings (approximately 1.5% of our long exposure) is Dollar General (DG), so today, we wanted to tell you a bit about this great company.…” (Click here to read the full text)
9. Ross Stores, Inc. (NASDAQ:ROST)
BlueSpruce Investments’ Stake Value: $345,553,000
Percentage of BlueSpruce Investments’ Portfolio: 5.6%
Number of Hedge Fund Holders: 44
Ross Stores, Inc. (NASDAQ:ROST) owns and operates off-price retail clothing and home accessory stores. BlueSpruce Investments initiated a new stake in Ross Stores, Inc. (NASDAQ:ROST) in the first quarter of 2022, buying 3.82 million shares of the apparel retail company, valued at $345.55 million.
On May 23, Barclays analyst Adrienne Yih kept an Overweight rating on Ross Stores, Inc. (NASDAQ:ROST) but cut her price objective for Ross Stores to $85 from $119. In a research note, Yih stated that the company had a poor first quarter, underperforming sales, margins, and profitability targets.
8. PayPal Holdings, Inc. (NASDAQ:PYPL)
BlueSpruce Investments’ Stake Value: $403,532,000
Percentage of BlueSpruce Investments’ Portfolio: 6.54%
Number of Hedge Fund Holders: 100
As of the end of the first quarter of 2022, 100 hedge funds in Insider Monkey’s database of 912 funds held stakes in PayPal Holdings, Inc. (NASDAQ:PYPL) compared to 110 funds in the previous quarter.
During Q1 2022, BlueSpruce Investments bought additional 564,642 shares in PayPal Holdings, Inc. (NASDAQ:PYPL) and held a collective stake worth over $403.53 million. Ken Fisher’s Fisher Asset Management is PayPal Holdings, Inc. (NASDAQ:PYPL)’s most significant stakeholder, with 16.78 million shares worth $1.94 billion.
Baron Funds, in its first-quarter 2022 investor letter, mentioned PayPal Holdings, Inc. (NASDAQ:PYPL). Here is what the fund said:
“PayPal Holdings, Inc. enables digital payments for consumers and merchants worldwide. Shares fell on disappointing 2022 guidance that called for 15% to 17% revenue growth but flat EPS growth due to higher credit costs and a higher tax rate. Management also tempered user growth expectations due to a strategic shift toward improving engagement of existing users and away from less-productive new user acquisition. Despite reduced earnings expectations, we believe the share price decline is overdone given PayPal’s growth opportunities and competitive advantages. We reduced PayPal Holdings, Inc.as it became clear that strong growth trends during the early part of the pandemic were not persisting in a more normal environment.”
7. GoDaddy Inc. (NYSE:GDDY)
BlueSpruce Investments’ Stake Value: $412,108,000
Percentage of BlueSpruce Investments’ Portfolio: 6.68%
Number of Hedge Fund Holders: 43
GoDaddy Inc. (NYSE:GDDY) is a company that specializes in domain name registration and web hosting. In addition, it offers website creation, hosting, and security services. Insider Monkey hedge fund database reveals that in the fourth quarter of 2021, 41 hedge funds were bullish on Charter Communications, Inc. (NASDAQ:CHTR). In the first quarter of 2022, the number rose to 43 hedge funds.
Brent Thill of Jefferies maintained a Buy recommendation on GoDaddy Inc. (NYSE:GDDY) but dropped his price objective to $100 from $110 on May 31.
According to the 13F filings for the first quarter of 2022, BlueSpruce Investments held over 4.92 million shares of GoDaddy Inc. (NYSE:GDDY), amounting to more than $412.11 million in worth. GoDaddy Inc. (NYSE:GDDY) was the fifth-largest holding of the hedge fund and represented 6.68% of its 13F portfolio.
6. Charter Communications, Inc. (NASDAQ:CHTR)
BlueSpruce Investments’ Stake Value: $473,042,000
Percentage of BlueSpruce Investments’ Portfolio: 7.67%
Number of Hedge Fund Holders: 73
Charter Communications, Inc. (NASDAQ:CHTR) is a company that provides high-speed internet access. BlueSpruce Investments owns a position worth $473.04 million in Charter Communications, Inc. (NASDAQ:CHTR), representing 7.67% of the fund’s Q1 portfolio. The hedge fund trimmed its stake in the firm by 20% in the first quarter of 2022.
On June 2, Wolfe Research analyst Peter Supino retained his Underperform rating on Charter Communications, Inc. (NASDAQ:CHTR) while lowering his price objective to $515 from $582. The analyst projected unrelenting pressure on subscriber acquisition expenses and price as more vendors competed for the same clients.
73 out of the 912 hedge funds held stakes in Charter Communications, Inc. (NASDAQ:CHTR) in the first quarter of 2022, worth $8.52 billion, compared to the same number of funds in the preceding quarter, holding stakes in Charter Communications, Inc. (NASDAQ:CHTR) equaling $16.59 billion. Harris Associates held the most prominent stake in Charter Communications, Inc. (NASDAQ:CHTR), with 4.13 million shares worth $2.25 billion.
In addition to The TJX Companies, Inc. (NYSE:TJX), Automatic Data Processing, Inc. (NASDAQ:ADP), and VeriSign, Inc. (NASDAQ:VRSN), Charter Communications, Inc. (NASDAQ:CHTR) is one of the stocks in the Q1 portfolio of BlueSpruce Investments.
ClearBridge Investments discussed Charter Communications, Inc. (NASDAQ:CHTR) in its investor letter of Q1, 2021, and here is what they had to say:
“We also added to Charter Communications (NASDAQ:CHTR), a historically strong performer that has faced headwinds recently due to a deceleration in broadband subscriber growth following a period of robust results during the pandemic.”
Click to continue reading and see 5 Stocks to Buy According to BlueSpruce Investments.
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Disclosure: None. 10 Stocks to Buy According to BlueSpruce Investments is originally published on Insider Monkey.
