In this article, we will look at 5 blue-chip stocks to buy according to billionaire Richard Chilton. If you want to read about Richard Chilton’s investment philosophy and his hedge fund’s performance, you can go to 10 Blue Chip Stocks To Buy According To Billionaire Richard Chilton.
5. Alphabet Inc. (NASDAQ:GOOG)
Chilton Investment Company’s Stake Value: $91 million
Percentage of Chilton Investment Company’s 13F Portfolio: 2.18%
Number of Hedge Fund Holders: 160
The parent company of the prominent and widely used search engine, Google, Alphabet Inc. (NASDAQ:GOOG) is a California-based tech conglomerate. One of the largest tech companies in the world based on revenue, it is a part of the Big Five tech firms. As of Q1 2022, Chilton Investment Company owns 32,749 shares of the tech giant, valued at approximately $91 million.
On June 1, Morgan Stanley analyst Brian Nowak lowered the price target on Alphabet Inc. (NASDAQ:GOOG) to $3,000 from $3,270 and maintained an Overweight rating on the shares. The analyst lowered estimates in the internet space to reflect a more conservative online advertising and e-commerce view amid “rising macro and micro uncertainty.” Given the probability of a recession, the analyst states that he is taking a more “pragmatic approach” with his online ad and e-commerce estimates.
At the close of Q1 2022, 160 hedge funds were long Alphabet Inc. (NASDAQ:GOOG) with stakes worth $29.58 billion. This is compared to 158 positions in the previous quarter with stakes worth $36.62 billion.
Farrer Wealth Advisors mentioned Alphabet Inc. (NASDAQ:GOOG) in its first-quarter 2022 investor letter. Here is what they said:
“We won’t waste much time trying to explain to our clients why Alphabet is such a phenomenal business, we believe that is quite self-evident. The better explanation is why we never bought Alphabet before. The reason was a personal bias we held based on three beliefs (which we now believe to be incorrect)
Growth in YouTube would stall as the increased ad-load would turn-off viewers (the double ad-load at the beginning of videos for example). Consumers will focus on discovery rather than search to purchase new items. For example – using Instagram/TikTok to decide what new clothes to buy instead of ‘googling’ for clothes. Other Bets: In general, we felt that capital spent on “Other Bets” has been a bit wasteful with the segment earning just around $3.1bn in revenue versus nearly $21bn in operating losses over the last five years…” (Click here to see the full text)
4. Mastercard Incorporated (NYSE:MA)
Chilton Investment Company’s Stake Value: $145 million
Percentage of Chilton Investment Company’s 13F Portfolio: 3.48%
Number of Hedge Fund Holders: 136
Mastercard Incorporated (NYSE:MA) is an American multinational financial services corporation that operates through a payment network that is widely spread across the globe, facilitating electronic transactions between merchants’ banks and the customers’ banks for “Mastercard” brand credit and debit cards. Chilton Investment Company’s stake in the company amounts to $145 million as of the first quarter of 2022.
Earlier this May, Goldman Sachs analyst Will Nance initiated coverage of Mastercard Incorporated (NYSE:MA) with a Buy rating and $460 price target, implying a 38% upside. After what he calls “lackluster returns in 2021 and a choppy start to 2022,” the analyst is constructive on the payments sector, stating that relative valuations have fallen significantly over the past six months and that the companies are positioned well to navigate a low-growth, inflationary world. He believes Mastercard Incorporated (NYSE:MA) will continue to deliver “best-in-class” earnings growth, supported by “strong secular tailwinds, and strong operating leverage as the company continues to add scale.”
Among the hedge funds being tracked by Insider Monkey, Virginia-based investment firm Akre Capital Management is a leading shareholder in Mastercard Incorporated (NYSE:MA) with 5.8 million shares worth more than $2 billion. Overall, 136 elite funds reported holding stakes in the payment services company.
Here is what Ensemble Capital had to say about Mastercard Incorporated (NYSE:MA) in its Q1, 2022 investor letter:
“Mastercard (7.6% weight in the Fund): This company literally earns a percent based fee on dollars spent. When inflation increases the prices of goods across the economy, Mastercard’s revenue increases along with inflation. Thus, the company in some respects is perfectly hedged against inflation with their revenue accelerating automatically when inflation surges.”
3. The Home Depot, Inc. (NYSE:HD)
Chilton Investment Company’s Stake Value: $220 million
Percentage of Chilton Investment Company’s 13F Portfolio: 5.28%
Number of Hedge Fund Holders: 75
The Home Depot, Inc. (NYSE:HD) is an American multinational home improvement retail corporation that sells tools, construction products, appliances, and services. At the end of Q1 2022, Richard Chilton’s hedge fund owned 735,171 shares of The Home Depot, Inc. (NYSE:HD), valued at over $220 million, making up 5.28% of Richard Chilton’s portfolio.
On May 20, Citi analyst Steven Zaccone raised his price target on The Home Depot, Inc. (NYSE:HD) to $348 from $327 and kept a Buy rating on the shares. The analyst increased fiscal 2022 earnings estimates following the company’s earnings report.
The Home Depot, Inc. (NYSE:HD) maintains a 14-year track record of consistent dividend growth, and on May 19, the retail corporation announced announced a quarterly payout of $1.90 per share, with a dividend yield of 2.81%, as of the close of June 17.
In the first quarter of 2022, the company experienced a positive hedge fund sentiment, with 75 elite funds tracked by Insider Monkey owning stakes in the company, up from 68 in the previous quarter. The aggregate value of these stakes is roughly $5.6 billion. Ken Fisher’s Fisher Asset Management was the company’s largest shareholder in Q1 2022, with shares worth over $2.4 billion.
Ensemble Capital mentioned The Home Depot, Inc. (NYSE:HD) in its Q1 2022 investor letter. Here is what the firm has to say:
“Home Depot (7.7% weight in the Fund): The demand surge for remodeling and home improvement goods sparked by shelter in place orders, remote work going mainstream, and a shortage of homes on the market to buy, ran headlong into the supply chain crisis, triggering surging prices in the products Home Depot sells. But the company has been able to pass nearly all of these increased costs on to customers, with revenue growing 37% over the past two years while gross profits, or the profits the company makes on each item they sell, increased by 35%. Even this small difference appears to be due not to inflation eating away at Home Depot’s profits, but rather be a function of the huge increase in revenue the company has been generating in low margin lumber sales.”
2. Costco Wholesale Corporation (NASDAQ:COST)
Chilton Investment Company’s Stake Value: $243.36 million
Percentage of Chilton Investment Company’s 13F Portfolio: 5.84%
Number of Hedge Fund Holders: 61
Costco Wholesale Corporation (NASDAQ:COST) is an American multinational corporation that operates a chain of membership-only big-box retail stores. The company is one of the oldest holdings of Chilton Investment Company, as the hedge fund started investing in the company over a decade ago, purchasing shares worth over $33.5 million. As of Q1 2022, the company is the fifth-largest holding of the hedge fund, accounting for 5.84% of its 13F portfolio.
On June 2, Jefferies analyst Corey Tarlowe raised his price target on Costco Wholesale Corporation (NASDAQ:COST) to $580 from $560 and maintained a Buy rating on the shares as he took over coverage of the name. According to the analyst’s survey of 900+ warehouse club members about renewal intentions and shopping behaviors, the results proved to be “bullish” for Costco Wholesale Corporation (NASDAQ:COST). With renewal intentions appearing strong, data suggests there is an opportunity to raise membership prices, and members indicated that they are visiting clubs more frequently and spending more versus compared to prior surveys.
According to Insider Monkey’s database, Costco Wholesale Corporation (NASDAQ:COST) was spotted on 61 investment portfolios by the end of the first quarter of 2022. The total stakes of these funds in the company amounted to approximately $5.41 billion, up from $5.40 billion in the previous quarter with 57 positions. As of March 31, Fisher Asset Management is the largest stakeholder in Costco Wholesale Corporation (NASDAQ:COST), with stakes valued at $2.43 billion.
Here is what ClearBridge Investments had to say about Costco Wholesale Corporation (NASDAQ:COST) in its “Sustainability Leaders Strategy” fourth-quarter 2021 investor letter:
“Portfolio gains were led by a diverse group of contributors. Also in consumer discretionary, Costco, which operates a chain of membership-only big-box retail stores, continues to impress as it takes to share and becomes more relevant for the consumer even as the world opens up.”
1. Microsoft Corporation (NASDAQ:MSFT)
Chilton Investment Company’s Stake Value: $317.42 million
Percentage of Chilton Investment Company’s 13F Portfolio: 7.62%
Number of Hedge Fund Holders: 259
Microsoft Corporation (NASDAQ:MSFT) is a Washington-based tech giant with exposure in various industries ranging from cloud computing, consumer electronics, gaming consoles, personal computer, and software. The second-largest holding in billionaire Richard Chilton’s portfolio, it accounted for 7.62% of his hedge funds portfolio by the end of the fiscal first quarter of 2022.
On June 13, Jefferies analyst Brent Thill spoke about the company’s Intelligent Data Platform, and placed a Buy rating on the shares of Microsoft Corporation (NASDAQ:MSFT), alongside a $320 price target. He views the company as a diversified business better positioned to weather potential macro weakness than others and thinks that its enhancements should sustain durable revenue growth for “the foreseeable future.”
As per Insider Monkey’s database for the first quarter, 259 hedge funds owned stakes in Microsoft Corporation (NASDAQ:MSFT), down from 262 in the previous quarter. These stakes hold a consolidated value of over $65.6 billion. With stakes worth roughly $8.6 billion, Fisher Asset Management held the largest position in the company in Q1.
Baron Funds, an asset management firm, mentioned Microsoft Corporation (NASDAQ:MSFT) in its Q1 2022 investor letter. Here is what the firm said:
“Microsoft (NASDAQ:MSFT) re-enters our portfolio after a long gap. MSFT sells enterprise and consumer software products as well as hardware products such as the Xbox video game console and Surface laptops. All business segments experienced double-digit revenue growth and earnings per share have compounded in the mid-double digits over the last 5 years. We believe MSFT continues this momentum in the years ahead.”
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