Alphabet Inc (GOOGL), Analog Devices, Inc. (ADI), More: This $7 Billion Hedge Fund Is Unwavering On Its Top Picks

William von Mueffling became a revered name on Wall Street in the late 90’s, when he held on to his conviction and shorted tech stocks aggressively during the tech bubble. While other well-known financial wizards of the time burned their hands trying to do the same thing, Mr. Mueffling generated phenomenal average annual returns of 30% in the period between 1998 and 2003 through his shorts. The famed fund manager is again displaying the same conviction, but this time around by holding on to his stock picks.

According to the latest 13F filing submitted by Mr. Mueffling’s hedge fund Cantillon Capital Management, the value of the fund’s public equity portfolio increased to $7.08 billion at the end of September from nearly $6 billion at the end of June. However, during the same period, the fund’s equity portfolio had a quarterly turnover of only 10.23% and its top equity holdings remained the same. Though Cantillon reduced its stake in most of its top stock picks during that time, the reduction at best can be described as marginal. In this article, we are going to take a look at Cantillon’s top five equity holdings entering the final quarter of 2016 and discuss their recent performance.

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Alphabet Inc (NASDAQ:GOOGL)

– Shares Owned by Cantillon Capital Management (as of September 30): 471,001

– Value of the Holding (as of September 30): $378.71 Million

Cantillon Capital Management sold 1,960 shares of Alphabet Inc (NASDAQ:GOOGL) during the third quarter. The search giant has lost a considerable amount of its market cap since Mr. Trump was elected as the new President, pushing the stock down to marginal losses in 2016. On November 11, Alphabet Inc (NASDAQ:GOOGL) filed its official response to allegations made against its mobile OS, Android, by regulators in the European Union. Although the company has rejected all the antitrust charges against Android, if it is found guilty, EU regulators can impose a hefty fine on it and it could also see significant monetary damages due to the legal costs associated from the battle. Earlier this month, analysts at RBC Capital Markets reiterated their ‘Outperform’ rating and $1,025 price target on the stock, which suggests potential upside of 37.15%.

Willis Towers Watson PLC (NASDAQ:WLTW)

– Shares Owned by Cantillon Capital Management (as of September 30): 3.3 Million

– Value of the Holding (as of September 30): $437.18 Million

Willis Towers Watson PLC (NASDAQ:WLTW) was the only stock among Cantillon Capital Management’s top-10 equity holdings in which the fund increased its stake during the third quarter, by 12%. Cantillon initiated its stake in the company during the first quarter. Although Willis Towers Watson PLC (NASDAQ:WLTW)’s stock performed well after the fund initiated its stake, it has fallen heavily since the start of October and now trades down by 5.57% year-to-date. The company currently pays a quarterly dividend of $0.48 per share, which translates into a forward yield of 1.58%. For its third quarter, Willis Towers Watson reported dismal financial numbers, though that only led analysts at Jefferies Group to lower their price target on the stock ever so slightly, to $147 from $150 on November 8, while keeping their rating on it unchanged at ‘Buy’.

We’ll check out three more of the fund’s stock picks on the next page.

Analog Devices, Inc. (NASDAQ:ADI)

– Shares Owned by Cantillon Capital Management (as of September 30): 7 Million

– Value of the Holding (as of September 30): $450.83 Million

Moving on, Cantillon Capital Management lowered its holding in Analog Devices, Inc. (NASDAQ:ADI) by 26,000 shares during the July-September period. Analog Devices, Inc. (NASDAQ:ADI) has been one of the best performing stock picks of the fund in 2016, having appreciated by 19% so far. In July, the company revealed that it will be acquiring Linear Technology Corporation (NASDAQ:LLTC) in a cash-and-stock deal valued at $14.8 billion. Analog Devices is expected to report its third quarter financial results next week and the current consensus estimate of analysts is for EPS of $0.89 on revenue of $941.95 million. For the same quarter of the previous year, the company had reported EPS of $1.03 on revenue of $978.72 million.

S&P Global Inc (NYSE:SPGI)

– Shares Owned by Cantillon Capital Management (as of September 30): 3.87 Million

– Value of the Holding (as of September 30): $489.31 Million

Amid an 18% rise in S&P Global Inc (NYSE:SPGI)’s stock during the third quarter, Cantillon Capital Management lowered its holding in the company by less than 1%. Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners was another hedge fund that reduced its stake in the company during that time, by 54% to 13,230 shares. S&P Global Inc (NYSE:SPGI)’s stock has been on a consistent uptrend this year and is currently trading at its lifetime highs. The bull run has had a negative impact on the stock’s forward yield, which at present stands at only 1.15%. Nevertheless, most analysts expect the stock to continue its charge going forward. The stock currently sports an average rating of ‘Overweight’ and an average price target of $135.58 from the 16 leading analysts and research firms on the Street which track it.

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Fidelity National Information Servcs Inc (NYSE:FIS)

– Shares Owned by Cantillon Capital Management (as of September 30): 7.5 Million

– Value of the Holding (as of September 30): $578.8 Million

Fidelity National Information Servcs Inc (NYSE:FIS) continued to remain Cantillon Capital Management’s top stock pick at the end of third quarter, as the fund sold only 30,600 shares of the company during the July-to-September period. After taking a breather last year, shares of Fidelity National Information Servcs Inc (NYSE:FIS) have again resumed their multi-year bull run in 2016 and are currently trading up 26.2% year-to-date. On November 1, the company reported its third quarter results, declaring EPS of $1.00 on revenue of $2.35 billion versus analysts’ estimate of EPS of $0.98 on revenue of $2.33 billion. Last month, analysts at Cantor Fitzgerald initiated coverage on the stock with a ‘Buy’ rating and $89 price target, signifying potential upside of 16.4%.

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