In this article we discuss the billionaire Chuck Akre’s top 5 stock holdings. If you want to read our detailed analysis of these software companies, go directly to Chuck Akre’s Top 10 Stock Holdings.
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5. CoStar Group, Inc. (NASDAQ: CSGP)
Ranking 5th on the list of billionaire Chuck Akre’s top 10 stock picks list is Costar. As per the latest 13F reporting period, Akre boosted his holding in CoStar Group, Inc. (NASDAQ: CSGP) by 0.75%, and it was valued at $892.8 million. Initially, he initiated a position in Costar in the fourth quarter of 2019 with 250k shares and kept adding shares until reaching 965.96k shares, accounting for nearly 6.03% of his total portfolio. The company’s share price increased by nearly 29% over the last twelve months.
CoStar provides online marketplace information and analytics for the United States’ and the United Kingdom’s commercial real estate industry. Their wide array of digital marketplace and information center lies on three pillars that provide a substantial marketplace: comprehensive national databases, a large research department, and many participating organizations.
Last quarter, CoStar Group announced the acquisition of Homesnap Inc., which provides residential real estate agents and consumers with an intuitive technology facilitating the buying and selling activity. The all-cash deal worth $250 million is expected to boost CoStar Group revenues. Active agents using the platform are expected to reach 400K compared to 100K before the acquisition. Moreover, the number of property listings across the United States will increase to 2.6 million compared with 1.35 million listings.
As per CoStar Group founder and CEO Andy Florance:
“Adding Homesnap to CoStar Group’s network provides significant complementary value to our existing arsenal of broker and agent-centric tools, directly benefiting the entire industry, we share a common goal of strengthening connections that drive the real estate industry forward and are excited that regulatory review was completed so rapidly, allowing us to close this transaction quickly.”
4. Visa Inc. (NYSE: V)
Chuck Akre is an investor in Visa Inc. (NYSE: V) since 2012, which is part of his long-term investment strategy. Currently, the stock has a weight of 7.75% in the portfolio, as stated in Akre’s 13F portfolio with 5.24 million shares.
Shares of Visa remained flat during the last twelve months, its quarterly dividend increased by $0.02 per share. That is merely a 6.67% dividend increase, far below its 5-year average dividend increase of 20%.
Visa is known for its worldwide payments technology, which facilitates digital payments among consumers, merchants, financial institutions, and other significant players in the economy. The card processor company is expected to benefit more from further migration in business payments from a cash-based behavior to a cashless economy.
Recently, Visa followed other fintech companies in launching crypto services. This pilot program is expected to provide banks with crypto APIs allowing their customers to purchase, hold, and trade major digital currencies.
Jack Forestall, chief product officer stated:
“With this pilot program, we want to extend the value of Visa to our neobank and financial institution clients by providing an easy bridge to crypto assets and blockchain networks,”
3. American Tower Corporation (NYSE: AMT)
American Tower Corporation (NYSE: AMT) was the third stock on the top 10 holdings list of Chuck Akre. By allocating 10.82% of the portfolio to one of the largest global REITs, the position has been increased by 1.38%, ending the quarter with 7.13 million shares valued at $1.60 billion.
Based in Boston, American Tower Corporation is a leading real estate investment trust owning wireless and broadband communications infrastructure with a portfolio of approximately 181,000 sites.
Year-to-date, American Tower Corporation stock lost 11.34% of its value. However, the company has a strong returns history with recurring cash flows and a 5G technology underway, which might boost its market share.
Akre was the largest shareholder in the company as of the end of the fourth quarter. The real estate giant pays a quarterly dividend of $1.21 per share, representing a $4.84 annual dividend and a yield of 2.13%.
2. Moody’s Corporation (NYSE: MCO)
Moody’s Corporation (NYSE: MCO) was the second largest holdings of Chuck Akre, with a position valued at $1.63 billion. The asset manager has been investing in Moody’s since 2012 and owns 5.6 million shares with an 11.05% weight in the portfolio.
Moody’s Corporation is known as one of the major credit rating agencies operating through two segments: Moody’s Investors Service and Moody’s Analytics. The company enjoys strong revenues regardless of the economy’s state, since credit rating services increase during potential crisis periods. In fact, Moody’s has increased its dividend for 18 consecutive years. It is currently paying $0.62 per share on a quarterly basis. Moreover, the company executed regular share buybacks and is expected to return $1.5 billion to its shareholders through share repurchases, which will further boost its earnings per share over time.
Moody’s was very active recently on the acquisition level:
- It acquired ZM Financial Systems to broaden its enterprise risk solutions for the U.S. banking sector;
- It entered into a definitive agreement to acquire Cortera, which provides credit data and workflow solutions in North America;
- It acquired Catylist, a provider of commercial real estate solutions for brokers, expanding its analytical solutions offerings to the brokerage market.
For 2021, diluted EPS is forecasted in the range of $9.70 to $10.10 while free cash flow is expected to be in the range of $1.9 billion to $2.1 billion.
1. MasterCard Incorporated (NYSE: MA)
As of the fourth quarter of 2020, Mastercard Incorporated (NYSE: MA) was the largest holding of Chuck Akre’s fund. His fund owned the stock since 2010, which is compliant with the long term investment strategy followed by Akre. As the largest investment in the fund, it constituted 14.18% of the overall portfolio, valued at $2.10 billion. MasterCard share price remained unchanged during the last twelve months.
This position was initiated in 2010 and it represents another successful example of Akre’s long term investment philosophy.
MasterCard operates in a duopoly environment, where it competes directly with Visa. Akre allocates nearly 21% of his portfolio to the cards business. The emergence of COVID-19 is expected to be a catalyst amid extensive migration to digital solutions.
MasterCard’s diluted EPS decreased by 20% during 2020 while revenues reached $15.3 billion, decreasing by 9%. The global company pays $0.44 quarterly dividend and its board have authorized a stock buyback program allowing to repurchase up to 1.8% of the company’s outstanding shares.
After reviewing Chuck Akre’s top 10 holdings for the fourth quarter of 2020, we can clearly realize what he meant by “the power of compounding”. Holding investments for many years allows the internal compounding to do its work. Akre Capital Management has always been consistent in applying the fund’s philosophy when selecting its potential investments.
You can also take a peek at 10 Best Bank Stocks for 2021 and 15 Most Valuable Cloud Computing Companies.
