In this article, we discuss 10 stocks to buy according to Peter Simmie’s Bristol Gate Capital. If you want to skip our detailed analysis of Simmie’s history, investment philosophy, and hedge fund performance, go directly to 5 Stocks to Buy According to Peter Simmie’s Bristol Gate Capital.
Peter Simmie earned his BA in English and Economics from the University of Manitoba and an MBA from the Kellogg School of Management. He worked as vice president and portfolio manager at Nigel Stephens Counsel Inc. from 1995 to 2005. Richard Hamm and Peter Simmie created Bristol Gate Capital in 2006.
Bristol Gate Capital is a hedge fund established in Toronto, Canada. For advisers, family offices, and institutions, the hedge fund leverages data science with fundamental analysis to run concentrated high dividend growth portfolios. Bristol Gate Capital believes that by focusing its investments over the next 12 months on a small number of firms with strong dividend growth prospects, it will be able to develop a portfolio that will beat the market while reducing potential losses.
Based on its patented dividend growth estimation technique, Bristol Gate Capital runs a US Equity Strategy and a Canadian Equity Strategy. Since its inception in 2009, Bristol Gate’s US Equity Strategy has shown outstanding results, with a compound annual return of 17.86% from 2009 to January 2020. In 2019, the strategy had one of its finest years ever, with returns of 35.53%. The strategy had another excellent year in 2017, with a return of slightly over 20%. Its holdings have an average annual dividend growth rate of 20.4% and a 1.6% yield. At the end of the third quarter, the US Equity Strategy’s trailing 12-month median dividend growth was 12.0%, as opposed to the S&P 500 component median of 6.2% and actual cash dividend growth of 2.7%. The hedge fund predicted a 15% median dividend increase for its portfolio businesses over the next 12 months. Bristol Gate Capital’s portfolio had 33 long positions and a value of $2.22 billion at the end of the fourth quarter of 2021, with a 50.57% concentration of the top 10 holdings.
The most notable stocks held by Peter Simmie’s Bristol Gate Capital in Q4 2021 include Canadian National Railway Company (NYSE:CNI), Mastercard Incorporated (NYSE:MA), and Starbucks Corporation (NASDAQ:SBUX).
Canadian National Railway Company (NYSE:CNI) represents 0.05% of Bristol Gate Capital’s Q4 portfolio, with the fund holding 9,405 shares worth roughly $1.15 million. Argus analyst John Eade upgraded Canadian National Railway Company (NYSE:CNI) to Buy from Hold on February 17, with a $145 price objective. The analyst said in a research report that the stock had a strong balance sheet and an attractive valuation.
Source:Pixabay
In Mastercard Incorporated (NYSE:MA), Peter Simmie’s Bristol Gate Capital owns 218.70 million shares. The considerable investment covers an impressive 3.53% of the fund’s Q4 portfolio. On March 4, Tigress Financial analyst Ivan Feinseth raised his price target on Mastercard Incorporated (NYSE:MA) to $472 from $460 and reiterated a Strong Buy rating on the shares.
Another notable stock in Peter Simmie’s portfolio is Starbucks Corporation (NASDAQ:SBUX). The investor owns an $86.08 million stake in the company. On February 1, Starbucks Corporation (NASDAQ:SBUX) declared a quarterly dividend of $0.49 per share, in line with the previous.
Our Methodology
Here is the list of 10 stocks to buy according to Peter Simmie’s Bristol Gate Capital. We used the Q4 portfolio of Bristol Gate Capital for this analysis. The hedge fund sentiment for each stock was assessed using data from 924 top hedge funds tracked by Insider Monkey in the fourth quarter of 2021.
Stocks to Buy According to Peter Simmie’s Bristol Gate Capital
10. Moody’s Corporation (NYSE:MCO)
Bristol Gate Capital Stake Value: $104,731,000
Percentage Bristol Gate Capital’s 13F Portfolio: 4.7%
Number of Hedge Fund Holders: 58
Moody’s Corporation (NYSE:MCO) is a commercial and financial services firm based in the United States. After Moody’s Corporation (NYSE:MCO)’s Q4 earnings failed to meet estimates owing to lower than expected profits and overall market volatility, BMO Capital analyst Jeffrey Silber lowered his price target on Moody’s Corporation (NYSE:MCO) to $402 from $430 on February 14. On the other hand, the analyst kept an Outperform rating on the stock.
Bristol Gate Capital acquired a stake in Moody’s Corporation (NYSE:MCO) in Q2 2020, purchasing 196,423 shares of the company, worth $53.96 million. In Q4 2021, the hedge fund increased its stake in Moody’s Corporation (NYSE:MCO) by 1%, and its position in the company is now worth about $104.73 million.
58 out of the 924 hedge funds tracked by Insider Monkey held stakes in Moody’s Corporation (NYSE:MCO) in the fourth quarter of 2021, worth $16.85 billion, compared to the same number of funds in the preceding quarter, holding stakes in Moody’s Corporation (NYSE:MCO) worth $15.70 billion. Among the hedge funds being tracked by Insider Monkey, Warren Buffett’s Berkshire Hathaway is a leading shareholder in Moody’s Corporation (NYSE:MCO), with 24.67 million shares worth more than $9.64 billion.
In addition to Canadian National Railway Company (NYSE:CNI), Mastercard Incorporated (NYSE:MA), and Starbucks Corporation (NASDAQ:SBUX), Peter Simmie’s Bristol Gate Capital is quite bullish on Moody’s Corporation (NYSE:MCO).
In its Q4 2020 investor letter, Baron Funds highlighted a few stocks, and Moody’s Corporation (NYSE:MCO) was one of them. Here is what the fund said:
“Moody’s Corporation provides credit ratings, financial intelligence, and analytical tools to assist businesses in making decisions. Moody’s reported excellent financial results due to continued growth in rated debt issuance. However, the stock detracted on investor expectations that issuance trends will moderate into 2021.The announced retirement of long-time CEO Ray McDaniel may have also weighed on sentiment. We continue to own the stock due to our views of the company’s long runway for growth and strong competitive advantages.”
9. Cintas Corporation (NASDAQ:CTAS)
Bristol Gate Capital Stake Value: $107,022,000
Percentage Bristol Gate Capital’s 13F Portfolio: 4.81%
Number of Hedge Fund Holders: 42
Cintas Corporation (NASDAQ:CTAS) provides corporate identification uniforms to businesses through rental and sales programs. Cintas Corporation (NASDAQ:CTAS) declared a quarterly dividend of $0.95 per share on January 11. As of March 6, the stock’s dividend yield was 1.00%.
On December 29, Argus analyst John Eade maintained a Buy rating on Cintas Corporation (NASDAQ:CTAS) and boosted his price objective to $490 from $410. With collective stakes worth $1.21 billion, 42 hedge funds tracked by Insider Monkey held positions in Cintas Corporation (NASDAQ:CTAS) in Q4, up from 36 in the previous quarter.
John Allison’s Unio Capital is Cintas Corporation (NASDAQ:CTAS)’s largest stakeholder in Q4, owning shares worth over $926.26 million. Bristol Gate Capital started building its position in Cintas Corporation (NASDAQ:CTAS) during the second quarter of 2016. In Q4 2021, the hedge fund held 241,491 shares in Cintas Corporation (NASDAQ:CTAS), valued at $107.02 million. The company constituted 4.81% of Peter Simmie’s portfolio.
Artisan Partners Limited Partnership, an asset management firm, highlighted a few stocks in its Q4 2020 investor letter, and Cintas Corporation (NASDAQ:CTAS) was one of them. Here is what the fund said:
“We concluded our campaigns in Cintas during Q4. We have held Cintas since the portfolio’s inception on the thesis that the acquisition of G&K created significant opportunities for revenue and cost synergies. We had high confidence in Cintas’ management team to achieve those synergies, and we have been rewarded accordingly for that conviction. We think the stock’s valuation now more appropriately reflects the strength of the franchise and profit cycle, and therefore we ended our successful campaign.”
8. Intuit Inc. (NASDAQ:INTU)
Bristol Gate Capital Stake Value: $108,693,000
Percentage Bristol Gate Capital’s 13F Portfolio: 4.88%
Number of Hedge Fund Holders: 82
Intuit Inc. (NASDAQ:INTU) is a financial software company based in the United States. In Q4 2021, Bristol Gate Capital reduced its position in Intuit Inc. (NASDAQ:INTU) by 16% and held shares worth roughly $108.69 million. The company made up 4.88% of Peter Simmie’s portfolio.
On February 25, Deutsche Bank analyst Brad Zelnick reduced his price target on Intuit Inc. (NASDAQ:INTU) to $650 from $700 but kept a Buy rating on the shares. According to Zelnick in a research note, Intuit Inc. (NASDAQ:INTU)’s fiscal Q2 results were better than expected, signaling a slower start to this year’s tax season overall.
In Q4 2021, Intuit Inc. (NASDAQ:INTU) experienced positive hedge fund sentiment, as 82 elite funds reported owning stakes worth $7.99 billion in the company, up from 64 in the preceding quarter valued at $6.15 billion.
In its fourth quarter 2021 investor letter, L1 Capital, an investment management firm, mentioned Intuit Inc. (NASDAQ:INTU). Here is what the fund said:
“We trimmed our investment in Intuit following a period of strong share price performance. Our decision to reduce the size of Intuit’s position in the portfolio was solely due to our views on Intuit’s valuation relative to alternative investment opportunities, and reflects our valuation discipline, even for Quality 1 rated businesses. We would welcome the opportunity to increase our investment in Intuit should the share price fall further from current levels.”
7. The Home Depot, Inc. (NYSE:HD)
Bristol Gate Capital Stake Value: $109,717,000
Percentage Bristol Gate Capital’s 13F Portfolio: 4.93%
Number of Hedge Fund Holders: 68
The Home Depot, Inc. (NYSE:HD) is a home improvement retailer based in the United States that offers tools, construction materials, appliances, and related services. On February 25, Edward Jones analyst Brian Yarbrough upgraded The Home Depot, Inc. (NYSE:HD) to Buy from Hold.
On February 22, The Home Depot, Inc. (NYSE:HD) declared a quarterly dividend of $1.90 per share, up 15.2% from the previous payout of $1.65. Bristol Gate Capital started investing in The Home Depot, Inc. (NYSE:HD) during the fourth quarter of 2015, with shares worth $23.32 million. In Q4 2021, The Home Depot, Inc. (NYSE:HD) accounted for 4.93% of the hedge fund’s portfolio.
In Q4 2021, Ken Fisher’s Fisher Asset Management was a prominent stakeholder of The Home Depot, Inc. (NYSE:HD), with 7.83 million shares worth $3.25 billion. Overall, 68 hedge funds were bullish on The Home Depot, Inc. (NYSE:HD) in the fourth quarter of 2021, up from 58 in the previous quarter.
In its Q4 2021 investor letter, Ensemble Capital Management mentioned The Home Depot, Inc. (NYSE:HD). Here is what Ensemble Capital Management has to say about the company:
“On the more positive side, we saw notable performance contribution from Home Depot. In the midst of a housing shortage and rising home prices, Americans turned to home improvement projects with Home Depot’s startlingly fast growth in 2020 continuing throughout 2021. With each quarter that passed showing a continuation of strong growth rather than the slowdown that many investors expected, the stock led the S&P 500 for most of the year and turned in a heady 27% rally in the fourth quarter to close out the year. Notably, while Do It Yourself homeowners did indeed shop at Home Depot less than they did during record setting 2020, almost half of the company’s revenue comes from Pro contractors where strong growth continues.”
6. Microsoft Corporation (NASDAQ:MSFT)
Bristol Gate Capital Stake Value: $110,808,000
Percentage Bristol Gate Capital’s 13F Portfolio: 4.98%
Number of Hedge Fund Holders: 262
Microsoft Corporation (NASDAQ:MSFT) is a global technology conglomerate holding corporation headquartered in Redmond, Washington, with a market capitalization of $2.17 trillion. On March 4, Microsoft Corporation (NASDAQ:MSFT) announced the completion of its acquisition of Nuance Communications, Inc. (NASDAQ:NUAN).
Morgan Stanley analyst Keith Weiss initiated coverage of Microsoft Corporation (NASDAQ:MSFT) on February 8, rating it as Overweight and setting a price objective of $372. In the fourth quarter, Peter Simmie increased his stake in Microsoft Corporation (NASDAQ:MSFT) by 1%, and his shares in the company are now worth about $110.81 million.
Among the hedge funds tracked by Insider Monkey in Q4 2021, Fisher Asset Management held the most significant stake in Microsoft Corporation (NASDAQ:MSFT), owning 26.84 million shares worth roughly $9.03 billion. Overall, 262 hedge funds were bullish on the stock in the fourth quarter.
Bristol Gate Capital’s fourth-quarter holdings included Canadian National Railway Company (NYSE:CNI), Mastercard Incorporated (NYSE:MA), and Starbucks Corporation (NASDAQ:SBUX), in addition to Microsoft Corporation (NASDAQ:MSFT).
Polen Capital, in its fourth quarter 2021 investor letter, mentioned Microsoft Corporation (NASDAQ:MSFT). Here is what the fund said:
“Microsoft remains a beneficiary of accelerated digital tailwinds in a post-pandemic era. The company reported a nearly 22% yearover-year increase in third-quarter revenues. It maintains its momentum as a leading provider of cloud-based productivity solutions across different parts of the technology stack and various applications.”
Click to continue reading and see 5 Stocks to Buy According to Peter Simmie’s Bristol Gate Capital.
Suggested articles:
- 10 Dividend Stocks to Buy According to Matthew Barrett’s Glendon Capital Management
- 10 Energy Stocks to Buy According to Blackstone Group
- 10 Best Dividend Stocks to Buy According to Kahn Brothers
Disclosure: None. 10 Stocks to Buy According to Peter Simmie’s Bristol Gate Capital is originally published on Insider Monkey.
