In this article, we discuss 10 stocks to buy according to GuardCap Asset Management. If you want to skip our detailed analysis of the hedge fund’s history, investment philosophy, and its performance, go directly to 5 Stocks to Buy According to GuardCap Asset Management.
GuardCap Asset Management is a specialized investing hedge fund with headquarters in London, England. Its entire concentration is on managing focused, bottom-up strategies for index-agnostic institutional investors. Global Equities and Global Emerging Market Equities are the hedge fund’s strategies. GuardCap Asset Management is a wholly-owned indirect subsidiary of Guardian Capital Group Limited (GCGL), a Canadian company incorporated in 1962 and whose shares are traded on the Toronto Stock Exchange.
As of Q1 2022, GuardCap Asset Management held a 13F portfolio valued at over $7.63 billion, down from $8.05 billion in the previous quarter, and a top 10 holdings concentration of 81.78%. In the first quarter, the hedge fund added 1 new stock to its portfolio, increased existing stakes in 19 stocks, sold out of 2 firms, and decreased holdings in 5 others. GuardCap Asset Management made investments in the communications, consumer discretionary, consumer staples, finance, healthcare, information technology, and industrial sectors. Some of the hedge fund’s significant holdings include Microsoft Corporation (NASDAQ:MSFT), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and Alibaba Group Holding Limited (NYSE:BABA).
In Microsoft Corporation (NASDAQ:MSFT), GuardCap Asset Management increased its hold by 3% in the first quarter. On May 23, Jefferies analyst Brent Thill cut his price objective on Microsoft Corporation (NASDAQ:MSFT) from $400 to $325 while maintaining a Buy rating. Given increasing economic headwinds and the approaching prospect of recession, Thill cut projections for 28 software businesses he covers.
Photo by Joshua Mayo on Unsplash
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is another company in which GuardCap Asset Management has a significant investment. Hans Engel of Erste Group lowered Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) from Buy to Hold on April 14. Due to low global economic growth, Engel advised investors that the company’s sales and profitability expectations for 2022 had recently been slashed.
Alibaba Group Holding Limited (NYSE:BABA) is another large-cap stock in GuardCap Asset Management’s portfolio, in which the fund upped its stake by 6% in Q1. Alibaba Group Holding Limited (NYSE:BABA)’s price objective was trimmed to $200 from $220 on May 27 by Benchmark analyst Fawne Jiang, who maintained a Buy recommendation on the stock. Apart from economic and regulatory concerns, Jiang claimed that Alibaba’s stock had underperformed in the previous year due to weaker monetization of its central marketplace and a significant decline in profitability due to increased investment.
Our Methodology
With this industry outlook in mind, let’s start our list of 10 stocks to buy according to GuardCap Asset Management. We used the hedge fund’s 13F portfolio for Q1 2022 for this analysis.
Stocks to Buy According to GuardCap Asset Management
10. Accenture plc (NYSE:ACN)
GuardCap Asset Management’s Stake Value: $414,579,000
Percentage of GuardCap Asset Management’s 13F Portfolio: 5.43%
Number of Hedge Fund Holders: 63
Clients in approximately 40 sectors, including health care, insurance, automobile manufacturing, finance, energy, travel, retail, media, and technology rely on Accenture plc (NYSE:ACN) for information technology assistance. On April 8, Baird analyst David Koning boosted his price target on Accenture plc (NYSE:ACN) to $378 from $360 and maintained a Neutral rating on the shares.
Accenture plc (NYSE:ACN) announced on May 31 that it had entered into a partnership agreement with A2Z Smart Technologies Corp. (NASDAQ:AZ) to increase brand recognition and market presence of the Cust2Mate Smart Cart Platform in Europe through its subsidiary and European partners.
In the first quarter of 2022, GuardCap Asset Management bought an additional 27,136 shares of Accenture plc (NYSE:ACN), bringing its total stake in the firm to 1.23 million shares, amounting to $414.58 million.
At the end of the first quarter of 2022, 63 hedge funds monitored by Insider Monkey had holdings in Accenture plc (NYSE:ACN). This is an increase over the past quarter when 50 hedge funds declared ownership of Accenture plc (NYSE:ACN).
In addition to Microsoft Corporation (NASDAQ:MSFT), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and Alibaba Group Holding Limited (NYSE:BABA), Accenture plc (NYSE:ACN) is one of the stocks to buy according to GuardCap Asset Management.
Here is what Baron Funds has to say about Accenture plc (NYSE:ACN) in its Q1 2022 investor letter:
“Another good example is the leading consulting company, Accenture, plc (NYSE:ACN), whose stock was down 18% during the quarter despite the company reporting sparkling results with mid-20s year-over-year growth rates in revenues, EBIT, and EPS, driven by double-digit growth across all markets, industries, and services while continuing to gain market share (growing at nearly 3 times the market rate). In addition to expected strength in smaller deals, Accenture had 36 clients booking over $100 million worth of business in the last quarter alone. While most investors remain concerned about a pull-forward of demand, the company is not seeing a slowdown as digital transformations became a must for organisations to remain competitive as described by the company in its latest earnings conference call:
‘Pre-pandemic, what we saw were clients much more into – they did transformation quite sequentially, right? The pandemic was a major shock. You saw the leaders who were kind of coming into that saying we’ve got to go even faster, and you saw a bunch of companies saying we need to leapfrog, right? We need to move online. We need to do digital transformation. And that meant that we saw companies starting to take on not sequential transformation but what we call compressed transformation, where they’re at the same time doing manufacturing as well as sales’.”
9. Illumina, Inc. (NASDAQ:ILMN)
GuardCap Asset Management’s Stake Value: $476,912,000
Percentage of GuardCap Asset Management’s 13F Portfolio: 6.24%
Number of Hedge Fund Holders: 54
Illumina, Inc. (NASDAQ:ILMN) develops, manufactures, and sells life science instruments and systems for large-scale genetic variation and function investigation. As of May 31, the stock is down 36.21% year to date, however, GuardCap Asset Management increased its position in Illumina, Inc. (NASDAQ:ILMN) by 3% in the first quarter of 2022, thereby consisting of 1.36 million shares worth $476.91 million. This represented 6.24% of the fund’s total portfolio.
Following the Q1 report, Piper Sandler analyst David Westenberg decreased his price objective on Illumina, Inc. (NASDAQ:ILMN) to $360 from $460 and maintained an Overweight rating on the stock. In addition, the analyst cut pricing estimates in the life science equipment and genomics domains to reflect changes in comp values.
Overall, hedge funds are loading up on Illumina, Inc. (NASDAQ:ILMN). 54 hedge funds reported bullish bets on the company shares at the end of the first quarter of 2022, up from 53 hedge funds a quarter ago.
Ensemble Capital, in its Q4 2021 investor letter, mentioned Illumina, Inc. (NASDAQ:ILMN). Here is what the fund has to say:
“Illumina (7.6% weight in the Fund): The far and away leader in genetic sequencing equipment, used to develop the COVID mRNA vaccines, has a 90% market share. As the dominant provider of one of the most fundamental tools in genetic research and clinical applications, the company can essentially set any price they choose to for their equipment. However, the company recognizes that the big opportunity is not to squeeze customers today, but rather to relentlessly work to improve their technology and reduce the price in order to spur along massive increased usage. But while their goal is to bring down the cost of sequencing, this is a strategic choice on their part, not something they are forced to do via competition. We are confident that to the degree the company faces increased costs, they can raise prices to fully offset these increases and ensure that their profits are inflated along with the general level of prices across the economy.”
8. MarketAxess Holdings Inc. (NASDAQ:MKTX)
GuardCap Asset Management’s Stake Value: $497,255,000
Percentage of GuardCap Asset Management’s 13F Portfolio: 6.51%
Number of Hedge Fund Holders: 39
MarketAxess Holdings Inc. (NASDAQ:MKTX) is an electronic trading platform that enables financial professionals to trade corporate bonds and other fixed-income securities. MarketAxess Holdings Inc. (NASDAQ:MKTX) has attracted the attention of hedge funds lately. At the end of Q1 2022, 39 hedge funds declared favorable bets on the company’s stock, compared to 32 hedge funds in the previous quarter.
Analyst Brian Bedell of Deutsche Bank decreased his price objective on MarketAxess Holdings Inc. (NASDAQ:MKTX) to $270 from $300 on May 19, maintaining a Hold rating. According to Bedell in a research note, despite the equities market downturn, more purchasing opportunities are appearing in the brokerage, asset management, and exchange sectors.
GuardCap Asset Management started investing in MarketAxess Holdings Inc. (NASDAQ:MKTX) during the fourth quarter of 2018, purchasing shares worth over $27.24 million. At the end of Q1 2022, the hedge fund owned a $497.26 million stake in the company, which accounted for 6.51% of the 13F portfolio. It is the most significant stakeholder of MarketAxess Holdings Inc. (NASDAQ:MKTX) as of the first quarter of 2022.
In its first-quarter 2022 investor letter, Upslope Capital Management mentioned MarketAxess Holdings Inc. (NASDAQ:MKTX). Here is what the fund said:
“After what appeared to be bottoming fundamentals for MKTX, the two most recent months of trading volume and market share data have been increasingly disappointing. Given a not-obviously-cheap valuation (inconsistent with a takeout bid – for now) and management commentary seemingly in denial about obvious problems, I sold the small remainder of our shares post-Q1. The back-and-forth has been frustrating but warranted. I know MKTX better than just about any company Upslope has been involved with, so at least the distraction has been mild. This is likely not the last time Upslope will be involved with the stock.”
7. Colgate-Palmolive Company (NYSE:CL)
GuardCap Asset Management’s Stake Value: $502,775,000
Percentage of GuardCap Asset Management’s 13F Portfolio: 6.58%
Number of Hedge Fund Holders: 50
Colgate-Palmolive Company (NYSE:CL) has evolved into a multinational consumer goods corporation. Colgate-Palmolive Company (NYSE:CL) also makes shampoos, shower gels, deodorants, and home care products, which are distributed in over 200 countries. International sales account for about 70% of its consolidated revenue, including approximately 45% from emerging regions.
On May 23, Barclays analyst Lauren Lieberman cut her price objective on Colgate-Palmolive Company (NYSE:CL) to $71 from $77 while maintaining an Equal Weight rating. For 2023, the analyst cut expectations for the large-cap home and personal care industry by an average of 2% to 3%.
At the end of the first quarter of 2022, elite funds were seen pumping money into Colgate-Palmolive Business (NYSE:CL), with 50 hedge funds holding stakes in the company, up from 48 funds a quarter earlier.
During Q1 2022, GuardCap Asset Management increased its position in Colgate-Palmolive Company (NYSE:CL) by 3% and held shares worth over $502.78 million. The company made up 6.58% of the hedge fund’s portfolio. With $7.55 million in shares, the hedge fund began building its position in the firm in 2018.
6. NIKE, Inc. (NYSE:NKE)
GuardCap Asset Management’s Stake Value: $510,025,000
Percentage of GuardCap Asset Management’s 13F Portfolio: 6.68%
Number of Hedge Fund Holders: 67
NIKE, Inc. (NYSE:NKE) designs, develops, manufactures, and markets footwear, clothes, equipment, and accessories worldwide. At the end of the first quarter of 2022, 67 hedge funds in the database of Insider Monkey held stakes worth $3.98 billion in NIKE, Inc. (NYSE:NKE), down from 68 in the preceding quarter worth $5.40 billion.
During Q1 2022, GuardCap Asset Management boosted its position in NIKE, Inc. (NYSE:NKE) by 3% and held a stake worth over $510.03 million. The company accounted for 6.68% of the hedge fund’s portfolio. Of the 67 hedge funds that were bullish on NIKE, Inc. (NYSE:NKE), according to the first quarter database of Insider Monkey, Fisher Asset Management is the leading stakeholder of the company, holding 8.28 million shares worth $1.11 billion.
Following the firm’s monthly sneaker-release tracker, Wedbush analyst Tom Nikic dropped his price objective on NIKE, Inc. (NYSE:NKE) to $139 from $163 and maintained an Outperform rating on the stock. In Q4 2022, the analyst predicted a 25% drop in constant-FX revenues for China, while earlier forecasting flat revenues.
Like Microsoft Corporation (NASDAQ:MSFT), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and Alibaba Group Holding Limited (NYSE:BABA), NIKE, Inc. (NYSE:NKE) is gaining the attention of GuardCap Asset Management.
Here is what ClearBridge Investments, an investment management firm, has to say about Q4 2021 investor letter:
“Nike is another play on e-commerce as well as the anticipated growth in consumer spending as we learn to live with COVID-19. After selling out of the stock in 2016 due to competitive concerns, we were motivated to repurchase shares because of optimism around a new management team’s focus on accelerating Nike’s shift toward e-commerce and direct-to-consumer (DTC) distribution. Near-term supply chain issues in Vietnam and retail weakness in China that we see as ephemeral provided a good buying opportunity. We do not believe the market is giving proper credit to Nike’s potential to deliver attractive, high-single-digit revenue growth while delivering operating margin expansion as more merchandise is sold direct. Nike is also still under indexed to the women’s category, which we see as a significant ongoing catalyst.
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Disclosure: None. 10 Stocks to Buy According to GuardCap Asset Management is originally published on Insider Monkey.
