In this article, we discuss the 5 best stocks according to Al Gore’s Generation Investment Management. If you want to read our detailed analysis of Gore’s hedge fund and latest developments, go directly to read Al Gore’s Generation Investment Portfolio: Top 10 Stock Picks.
5. Cisco Systems, Inc. (NASDAQ:CSCO)
Number of Hedge Fund Holders: 63
Cisco Systems, Inc. (NASDAQ:CSCO) is an American technology company that mainly specializes in hardware, software, and telecommunication equipment. Generation Investment Management started building its position in the company during the third quarter of 2020, with a stake worth $726.1 million. In Q3 2021, the hedge fund holds shares worth $1.04 billion in Cisco Systems, Inc. (NASDAQ:CSCO), which represented 4.31% of Al Gore’s portfolio.
In Q3 2021, Cisco Systems, Inc. (NASDAQ:CSCO) reported revenue of $12.9 billion, up 8% from the prior-year quarter. Moreover, the company also reported a 33% year-over-year growth in its total product order. Acknowledging the company’s product portfolio and growth in nearly all segments, recently, Erste Group upgraded Cisco Systems, Inc. (NASDAQ:CSCO) to Buy from Hold.
As of Q3 2021, 63 hedge funds tracked by Insider Monkey reported owning stakes in Cisco Systems, Inc. (NASDAQ:CSCO), up from 60 in the previous quarter. These stakes are valued at roughly $4 billion. Ken Fisher’s Fisher Asset Management was the company’s largest shareholder in Q3, owning a stake worth $1.24 billion.
ClearBridge Investments mentioned Cisco Systems, Inc. (NASDAQ:CSCO) in its Q1 2021 investor letter. Here is what the firm has to say:
“Also in IT, we added Cisco Systems, which provides IT and networking services in the form of network security, software development and cloud computing. Cisco continues to derive over 50% of its sales from on-premise deployments of its products of enterprise and small and midsize customers, while recurring revenues from software are becoming a larger part of the mix. Return-to-office enterprise spending should offer upside to its core campus business. Cisco was an early technology leader in sustainability over two decades ago, through its Internet-connecting capabilities which supported live concerts in partnership with the United Nations Development Program to raise awareness and funds to fight poverty. Cisco has very strong environmental standards (including driving lower energy consumption in IT departments through new product innovations and a longstanding goal to reduce emissions and reliance on non-renewable energy sources). Its data privacy and supply chain management policies are best in class.”
4. Jones Lang LaSalle Incorporated (NYSE:JLL)
Number of Hedge Fund Holders: 30
Jones Lang LaSalle Incorporated (NYSE:JLL) is a real estate services company that also offers investment management services worldwide. Since the start of 2021, the stock is up 74.9%, as of the close of December 18.
As per Insider Monkey’s Q3 data, 30 hedge funds tracked by Insider Monkey reported owning stakes in Jones Lang LaSalle Incorporated (NYSE:JLL), compared with 31 in the previous quarter. These stakes hold a consolidated value of $2.1 billion, up significantly from $1.5 billion in Q2.
In Q3, Jones Lang LaSalle Incorporated (NYSE:JLL) reported revenue of $4.9 billion and fee revenue of $2.1 billion, presenting a 22% and 45% year-over-year growth, respectively. Generation Investment Management holds shares worth $1.15 billion in Jones Lang LaSalle Incorporated (NYSE:JLL) in Q3, which represented 4.79% of Al Gore’s portfolio. This November, Raymond James lifted its price target on Jones Lang LaSalle Incorporated (NYSE:JLL) to $302, while maintaining an Outperform rating on the shares.
Ariel Investments mentioned Jones Lang LaSalle Incorporated (NYSE:JLL) in its Q3 2021 investor letter. Here is what the firm has to say:
“In addition, real estate expert Jones Lang LaSalle (JLL) was another strong performer over the trailing one-year period. Despite pandemic related headwinds for commercial real estate transaction activity, the company continued to prudently manage expenditures to preserve cash. JLL’s diverse business model and annuity-like nontransaction revenue mix, such as corporate outsourcing, helped offset weakness in the cyclical leasing and capital market businesses until vaccination rates rose. Then, this summer, JLL reported a broad recovery across the firm’s transaction-based businesses. Strong capital market and leasing activity drove management to meaningfully raise the company’s EBITDA margin outlook. Meanwhile, JLL continues to return excess capital through share repurchases. At current levels, we remain optimistic about JLL’s value proposition for key stakeholders.”
3. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 242
Amazon.com, Inc. (NASDAQ:AMZN), an American e-commerce and tech company, was recently listed as one of the top internet stocks by JPMorgan for 2022, due to the company’s e-commerce and subscription business.
Generation Investment Management started investing in Amazon.com, Inc. (NASDAQ:AMZN) during the first quarter of 2011. In Q3 2021, the company represented 5.64% of Al Gore’s portfolio. Recently, Cowen called Amazon.com, Inc. (NASDAQ:AMZN) the Best Idea for 2022 and top mega-cap pick, lifting the stock’s price target to $4,500, with an Outperform rating on the shares.
As of Q3 2021, 242 hedge funds tracked by Insider Monkey were bullish on Amazon.com, Inc. (NASDAQ:AMZN), down from 271 in the preceding quarter. These stakes hold a consolidated value of $42.5 billion. Fisher Asset Management was one of the major shareholders of the company in Q3, owning a stake worth $6.34 billion.
Davis Funds mentioned Amazon.com, Inc. (NASDAQ:AMZN) in its Q3 2021 investor letter. Here is what the firm has to say:
“E-commerce, online search and advertising, social media and software are another component of the portfolio that have proven, attractive businesses. The online portion of the Fund is currently dominated by such market leaders as Amazon.com. We are attracted to these names based on the size and rapid expansion of their market opportunities globally, their ability to generate and grow new revenue sources through constant innovation, ample operating leverage as they continue to scale and capable, focused, highly competitive leadership teams. If purchased at sensible prices, these types of businesses in our experience can contribute meaningfully to long-term results.”
2. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 156
As Alphabet Inc. (NASDAQ:GOOG) has increased its focus on artificial intelligence to drive greater product functionality, recently, Tigress Financial raised its price target on the stock to $3,540, with a Strong Buy rating on the shares. In Q3, Generation Investment Management held 528,259 shares in Alphabet Inc. (NASDAQ:GOOG), worth over $1.4 billion. The company accounted for 5.85% of Al Gore’s portfolio. In the third quarter, Alphabet Inc. (NASDAQ:GOOG) presented a 41% year-over-year growth in its revenue at $65.1 billion.
As of Q3 2021, 156 hedge funds tracked by Insider Monkey were bullish on Alphabet Inc. (NASDAQ:GOOG), up from 155 in the previous quarter. The total value of these stakes is roughly $35 billion, compared with $33.7 billion in Q2.
Saturna Capital mentioned Alphabet Inc. (NASDAQ:GOOG) in its Q3 2021 investor letter. Here is what the firm has to say:
“Alphabet was a new addition to the Fund this year, as we believed it important to have exposure to the top online media and advertising company in the world. Some have raised concerns surrounding Alphabet’s exposure to political interference, but we take comfort from the belief that were the company to be broken up, it would quite likely be worth even more than as a single entity.”
1. Baxter International Inc. (NYSE:BAX)
Number of Hedge Fund Holders: 42
Baxter International Inc. (NYSE:BAX) is an American multinational healthcare company that focuses on products to treat serious ailments. In Q3, the company reported a 26% year-over-year growth in its net income at $450 million, driven by recovery from the pandemic period. Also, the global sales of Baxter International Inc. (NYSE:BAX) grew by 9% at $3.2 billion.
As per Insider Monkey’s data for Q3, 42 hedge funds reported owning stakes in Baxter International Inc. (NYSE:BAX), down from 46 in the previous quarter. The consolidated value of these stakes is over $3.48 billion, up from $2.9 billion in Q2.
As of Q3, Baxter International Inc. (NYSE:BAX) is the largest holding of Generation Investment Management. The hedge fund holds shares worth $1.66 billion in the company, which accounted for 6.93% of its 13F portfolio. Acknowledging the company’s new strategic acquisitions, JPMorgan reinstated its coverage on Baxter International Inc. (NYSE:BAX) with an Overweight rating and a $95 price target.
Cooper Investors mentioned Baxter International Inc. (NYSE:BAX) in its Q3 2021 investor letter. Here is what the firm has to say:
“During the quarter we exited our position in Baxter, having originally bought in 2017 as a Low Risk Turnaround with clear Stalwart attributes. In essence, the core businesses were highly durable, providing life sustaining or saving medical products such as IV medication or pumps and dialysis machines.
They had been mismanaged prior to the company spinning off its biopharmaceutical business in 2015 which had generated most of the Baxter’s operating profit. With a new CEO in Joe Almeida, who came with a successful track record leading another medical device company (Covidien) we identified three sources of value latency for the new standalone Baxter.
Firstly, optimising the cost structure. Baxter were successful here – they were able to effectively double operating margins from low single digits to mid-to-high teens over a relatively short four-year period. Secondly, accelerating sales growth through a more focused R&D effort. This is inherently more difficult than cost optimisation and on this front success has been muted with only moderate impact to revenues from new product introductions. Finally, capital deployment through Baxter’s significantly under-levered balance sheet. Several smaller bolt-on acquisitions were nicely complementary to the existing portfolio, but in early September the company announced the acquisition of Hil-Rom Holdings, a medical device company with leading positions in bed systems and patient monitoring. The deal is significant at US$12.5bn in size, and exhausts all balance sheet latency in one fell swoop.
Whilst it is “EPS accretive” we believe the high single digit ROIC management are targeting over five years is most reflective of the financial merits of the deal. Put another way, despite visions of providing digital and connected healthcare (think a Baxter IV pump combined with a Hil-Rom smart bed), ultimately the combined entity will likely remain a low-to-mid-single digit grower. Baxter look like they are getting bigger but not necessarily better.
This combination of uncertainty around the merits of the Hil-Rom acquisition and the underwhelming performance on the product development side of the business led us to conclude that the investment proposition today is less attractive relative to other opportunities.”
You can also take a look at Michael Burry’s Top Stock Picks and Marc Lasry’s Avenue Capital Portfolio: Top Stock Picks
