In this article, we will take a look at Billionaire Howard Marks’ Top 10 Stock Picks.
A decade of peerless returns. That’s what billionaire investor Howard Marks expects in the aftermath of Donald Trump’s assuming the position of the leader of the biggest economy in the world. He expects the US economy to remain the envy of the world and grow in strength with the slashing of red tape and easing taxes.
“Warren Buffett said it: don’t bet against the United States. He’s probably right about that,” the Wall Street veteran told the Sohn Hearts & Minds investment conference in Adelaide.
The remarks followed Trump’s big win against Democrat rival Kamala Harris, which ended up sparking a surge in stocks. Initially, US equities rallied to record highs as investors reacted to a potential slash in interest rates and taxes and an easing of regulatory pressure.
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Fast forward, equities have pulled back significantly amid growing concerns about valuations. Worries that the Federal Reserve might not cut interest rates aggressively due to a potential spike in inflation on Trump tariffs have also left the markets on edge.
In mid-last year, the founder of Oaktree Capital Management raised concerns over high debt loads in private equity and real estate. Marks reiterated that the sectors would remain under pressure should interest rates stay higher for longer.
“The leverage, the use of debt to amplify your returns, has been the lifeblood of these two asset classes,” Marks said in an interview with Bloomberg. Amid growing concerns about the long-term impact of the high interest rate environment, Marks has moved to strengthen Oaktree Capital Management’s exposure in the energy sector. Energy holdings account for the most significant share of the hedge fund portfolio, having carried out significant changes in the third quarter of last year.
Increased focus on energy holdings does not come as a surprise. Marks is looking to take advantage of the growing demand for energy amid the artificial intelligence revolution. One of his energy holdings is already pushing for a deal with a tech giant that needs clean nuclear energy to power its data centres.
In addition to focusing on energy holdings, the founder of Oaktree Capital Management remains bullish about investment opportunities in China. Despite China’s slow recovery from the COVID-19 pandemic causing it to lose favor among investors, Marks sees numerous attractive investment opportunities still available.
“Clearly, China is on the pile of things that people feel ill about, and it’s on that pile that you find the bargains,” he said. “That doesn’t mean that you should buy everything on the pile, but that’s where you look for the castoffs and the bargains.”
The focus on Chinese equities does not come as a surprise, as Marks believes US equities are “high priced.” Therefore, bargains in China are more appealing. Consequently, the billionaire investor expects Chinese growth to exceed other countries in the near future, including the US.
Howard Marks of Oaktree Capital
Our Methodology
We scanned Oaktree Capital Management’s portfolio to make the list of billionaire Howard Marks’ top 10 stock picks. We then settled on the hedge fund’s biggest holdings and examined why they stand out as the top stock picks. Finally, we ranked the stocks in ascending order based on the hedge fund’s stake value.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Billionaire Howard Marks’ Top 10 Stock Picks
10. Freeport-McMoRan Inc. (NYSE:FCX)
Oaktree Capital Management’s Stake Value: $121.07 million
Number of Hedge Fund Holders: 74
Freeport-McMoRan Inc. (NYSE:FCX) is a basic materials company that mines mineral properties. It primarily explores copper, gold, molybdenum, silver, and other metals. The company is strategically positioned to capitalize on growing copper demand as the world shifts towards renewable energy and electrification.
The International Energy Agency predicts that by 2050, global copper demand will have increased by at least 60%. The red metal’s prices are expected to increase by over 40% over the next two years, according to analysts at Jefferies (JEF.N), which opens a new opportunity for growth. Freeport-McMoRan Inc. (NYSE:FCX) has long concentrated on copper production, accounting for 9% of global supplies and more than any other company. Now, it is in the unique position of being able to focus on growing the mines it already owns without being distracted by a buyout.
The company has been making notable progress, especially in Indonesia, where it explores copper, gold and silver properties. In line with earlier projections, the company recently started commissioning its new Indonesian smelter, indicating its dedication to value-added production and vertical integration. The company’s processing capacity is anticipated to increase as a result of the milestone, which might also strengthen its position in the local market. Strong commodity prices and operational efficiencies seem to be the main drivers of Freeport-McMoRan Inc.’s (NYSE:FCX) promising financial future. The business made $25.64 billion in sales over the previous 12 months, with a remarkable 41.28% gross profit margin. According to analysts, if spot prices stay high, the company could produce about $4.8 billion in free cash flow (FCF) in 2025.
9. Talen Energy Corporation (NASDAQ:TLN)
Oaktree Capital Management’s Stake Value: $124.18 million
Number of Hedge Fund Holders: 68
Talen Energy Corporation (NASDAQ:TLN) is an independent power producer and infrastructure company that produces and sells electricity, capacity, and ancillary services into wholesale power markets. It was the best-performing stock in billionaire Howard Marks’ portfolio, going by its 261% gain in 2024. The gain came from the company emerging as one of the biggest beneficiaries of the growing demand for energy to power the artificial intelligence revolution.
Talen Energy Corporation (NASDAQ:TLN) is well-positioned for significant long-term growth due to its established dominance in the corporate Power Purchase Agreement (PPA) market. Talen Energy’s knowledge of renewable energy is becoming more and more valuable as more businesses pledge to renewable energy goals and look to guarantee a steady supply of electricity at fixed costs.
Being in a position of leadership is seen as a strategic advantage that could help the business secure long-term financial visibility and grow its contracting portfolio. Nevertheless, Talen Energy Corporation (NASDAQ:TLN) suffered a massive setback late last year as the Federal Energy Regulatory Commission rejected its interconnection agreement for an Amazon data center in Pennsylvania. The company had a data center connected to its nuclear plant and planned to increase its capacity to 480 megawatts from 300 megawatts. Talen has already appealed FERC’s rejection.
ClearBridge Value Strategy stated the following regarding Talen Energy Corporation (NASDAQ:TLN) in its Q4 2024 investor letter:
“We added several new positions during the quarter and updated our utilities and energy exposure. In utilities, we bought Talen Energy Corporation (NASDAQ:TLN), an independent power producer which sells electricity, capacity, and ancillary services into wholesale power markets, which we funded by exiting our position in Constellation Energy. Although both companies are merchant power producers that stand to benefit from higher power prices as AI data centers are brought online, we believe that Talen’s stock price has milder embedded expectations than does the more optimistic Constellation. As a result, we believe that Talen represents a much more attractive risk/reward tradeoff that still capitalizes on the strong, long-term trend toward higher power prices.”
8. Liberty Global Ltd. (NASDAQ:LBTYA)
Oaktree Capital Management’s Stake Value: $126.09 million
Number of Hedge Fund Holders: 38
Liberty Global Ltd. (NASDAQ:LBTYA) is a communication services company that provides broadband internet, video, fixed-line telephony, and mobile communications services to residential and business customers. The company navigated a challenging economic landscape characterized by high interest rates to finish 2024 on a high after a 17% gain.
The impressive run in the market was backed by revenue growth of 3.53% over 12 months and a 4.35% gain in the third quarter. Furthermore, Liberty Global Ltd.’s (NASDAQ:LBTYA) remarkable gross profit margin of 67.46% demonstrates effective cost control. Additionally, Liberty Global Ltd. (NASDAQ:LBTYA) intends to rebrand its Ventures division to Liberty Growth, highlighting its emphasis on investments in digital infrastructure and scalable technology. At the moment, this segment has a $3 billion portfolio. After the Sunrise spin-off, the company plans to implement strategic transactions and operational synergies while maintaining a healthy cash balance of $3.5 billion.
Liberty Global Ltd.’s (NASDAQ:LBTYA) investments in Virgin Media O2, Telenet, VodafoneZiggo, and a $3 billion venture capital portfolio are critical to its long-term success. Despite the pressures of competition, the UK’s communication services company is looking to expand through its wholesale operations and broadband footprint.
7. SunOpta Inc. (NASDAQ:STKL)
Oaktree Capital Management’s Stake Value: $132.17 million
Number of Hedge Fund Holders: 18
SunOpta Inc. (NASDAQ:STKL) engages in the manufacture and sale of plant-based and fruit-based food and beverage products. The company provides plant-based beverages utilizing oats, almonds, hemp, and other bases under the Dream and West Life brands. It was one of the best-performing stocks in the Oaktree Capital Management portfolio, rallying 24% in 2024. The rally came as the company capitalized on the rising demand for health-conscious and sustainable food options.
With revenue up 16% to $176 million in the third quarter of fiscal 2024, SunOpta Inc. (NASDAQ:STKL) reported an impressive quarter. The 16.96% revenue growth demonstrates SunOpta’s capacity to take advantage of the growing sustainable and health-conscious food options market. A 21% increase in volume was the main driver of this growth, with the fruit snacks segment exhibiting an astounding 42% growth. Management is still committed to lowering net leverage through customer expansion and operational improvements.
In addition, SunOpta Inc. (NASDAQ:STKL) has moved to strengthen and diversify its revenue base with the launch of SOWN® Oat Cold Foaming Cream on Amazon and at Sprouts Farmers Market stores nationwide. The launch of SOWN® Oat Cold Foaming Cream on major retail platforms represents a strategic move into the rapidly growing plant-based coffee creamer market. The timing aligns with the surge in cold foam popularity at national coffee chains, indicating strong market potential.
6. Star Bulk Carriers Corp. (NASDAQ:SBLK)
Oaktree Capital Management’s Stake Value: $135.32 million
Number of Hedge Fund Holders: 24
Star Bulk Carriers Corp. (NASDAQ:SBLK) is a shipping company that engages in the ocean transportation of dry bulk cargoes worldwide. Its vessels transport iron ores, minerals and grains, bauxite, fertilizers, and steel products. The stock was under pressure, going down by 30% in 2024 as the company faced a challenging market environment, including volatile shipping rates and industry headwinds.
Star Bulk Carriers Corp. (NASDAQ:SBLK) delivered solid third-quarter results despite the challenging business environment. It logged earnings per share of $0.71 against $0.68 expected. The better than expected earnings were supported by higher-than-expected revenue of $344.3 million. The company reported $81 million in net income, $83 million in adjusted net income, and $433 million in strong liquidity.
Star Bulk Carriers Corp. (NASDAQ:SBLK) remains in a solid market position, having secured over 76% of its available vessel days at an average Time Charter Equivalent (TCE) rate of $17,010 per day. Additionally, Star Bulk increased its dividend offering by 75% as it continues to reward shareholders. Likewise, it remains a firm favorite for income-focused investors, as shown by its 13.98% dividend yield.
5. AngloGold Ashanti plc (NYSE:AU)
Oaktree Capital Management’s Stake Value: $150.66 million
Number of Hedge Fund Holders: 21
AngloGold Ashanti plc (NYSE:AU) is a gold mining company that explores gold and produces silver and sulphuric acid as by-products. It was one of the best-performing stocks in the Oaktree Capital Management portfolio, rallying 30% in 2024. The rally came as the company benefited from a spike in gold prices that found support above the $2600 an ounce level.
AngloGold Ashanti plc (NYSE:AU) had an impressive third quarter as its managed operations produced the most gold in 2024 and a notable 339% increase in adjusted EBITDA over the previous year. The increase was due to improved production from managed operations, effective cost control, and higher gold prices, which rose 28% year over year to $2,449/oz. Managed operations produced about 1.56% more gold year over year.
The company has sought to strengthen its position in the gold mining business with the acquisition of Egypt-focused smaller rival Centamin in a $2.5 billion stock and cash deal. Centamin’s main asset is the Sukari gold mine, Egypt’s largest and one of the largest producing mines in the world. Following the acquisition, AngloGold Ashanti plc (NYSE:AU) is on course to become the fourth largest gold producer in the world by volume, as Sukari has the potential to produce up to 450,000 gold ounces per year.
4. Sitio Royalties Corp. (NYSE:STR)
Oaktree Capital Management’s Stake Value: $269.57 million
Number of Hedge Fund Holders: 17
Sitio Royalties Corp. (NYSE:STR) is an energy company that acquires, owns, and manages mineral and royalty interests across premium basins in the United States. The company’s portfolio comprises mineral and royalty interests in the Permian basin located in West Texas. Since 2016, it has completed over 200 acquisitions of cash flow-generating acreage.
Thanks to the massive acreage, Sitio generates a percentage of revenues from companies that carry out oil and gas sales from the properties. It is only liable for its fair share of production and taxes as a mineral and royalty owner and sometimes for the expenses of collecting, processing, and shipping oil and gas. The royalty business model allows Sitio Royalties Corp. (NYSE:STR) to enjoy high margins of up to 90% in EBITDA.
Likewise, the company is able to generate significant free cash flow to reward investors with a 5.11% dividend yield. With a goal of returning at least 65% of its discretionary cash flow to shareholders, Sitio Royalties Corp. (NYSE:STR) has underlined its dedication to continue acquiring premium assets and upholding a sound balance sheet. The business is hopeful about utilizing its competitive edge into 2025, despite worries about infrastructure and shifting gas prices in the Permian.
3. Garrett Motion Inc. (NASDAQ:GTX)
Oaktree Capital Management’s Stake Value: $360.60 million
Number of Hedge Fund Holders: 34
Garrett Motion Inc. (NASDAQ:GTX) is an auto parts company that designs, manufactures, and sells turbocharging, air and fluid compression, and high-speed electric motor technologies for original equipment manufacturers. The company has made advances in its electrified solutions and turbocharger portfolio. It has already secured new contracts for its largest turbocharger, which is specifically made for marine and auxiliary power applications.
Its long-term prospects look increasingly positive on landing the first series production contract. The contract highlights Garrett Motion Inc.’s (NASDAQ:GTX) expanding presence in zero-emission technology and is targeted at the Commercial Vehicle and Industrial segments. Given that the company’s fuel cell compressors are extensive and well-established, the company remains in a solid position to benefit from growth in this new market. Similarly, it has received multiple pre-development awards for commercial vehicle high-speed motor technology advancements.
Garrett Motion Inc. (NASDAQ:GTX) outlined its plan to return to shareholders at least 75% of its adjusted free cash flow through share repurchases and quarterly cash dividends. The board has approved a dividend policy that will start in 2025 and distribute about $50 million in dividends quarterly over the year.
2. Expand Energy Corporation (NASDAQ:EXE)
Oaktree Capital Management’s Stake Value: $565.13 million
Number of Hedge Fund Holders: N/A
Expand Energy Corporation (NASDAQ:EXE) is an independent exploration and production company. It acquires, explores, and develops properties to produce oil, natural gas, and natural gas liquids. While the stock was up by more than 41% in 2024, it remains one of billionaire Howard Marks’ top stock picks in the energy sector.
As one of the largest natural gas producers in the US, analysts at TD Cowen expect the company to be one of the biggest beneficiaries of gas pricing exceeding the measure of incentive economics. Likewise, Expand Energy Corporation (NASDAQ:EXE) is well poised to benefit from substantial exposure to the growing demand for natural gas, which is being driven by advancements in LNG, electrification, and AI/data centres. Expand Energy’s competitive edge in the sector stems from its strategic location in the Haynesville and Appalachia basins.
Because of its close proximity to the expanding Gulf Coast LNG export capacity, Expand Energy Corporation’s (NASDAQ:EXE) growth and long-term prospects remain solid amid growing energy needs in the US. In addition, the company has affirmed its commitment to returning value to shareholders by offering substantial returns through share buyback programs. While offering an annual dividend of $2.44 per share, the stock also yields 2.16%.
1. TORM plc (NASDAQ:TRMD)
Oaktree Capital Management’s Stake Value: $1.38 Billion
Number of Hedge Fund Holders: 25
TORM plc (NASDAQ:TRMD) is a shipping company that owns and operates a fleet of product tankers. It transports refined oil products, such as gasoline, jet fuel, kerosene, and naphtha. It also develops and produces advanced and green marine equipment. The stock was under immense pressure in 2024, dropping by about 42%.
The selloff came as the company struggled amidst complex dynamics in the global shipping industry characterized by fluctuating shipping demand and geopolitical tensions. However, as the year came to a close, TORM plc’s (NASDAQ:TRMD) fundamentals showed signs of improvement. TORM delivered strong financial results for its third quarter. Time charter equivalent earnings rose to $263 million from $190 million the previous year.
Likewise, its time charter equivalent earnings for the first nine months of the year soared to $920.1 million compared to $817.4 million for the same period the previous year. Ton-mile demand related to clean petroleum products also showed signs of improvement, growing by 12% year-on-year. TORM also strengthened its competitive edge in the industry by acquiring eight second-hand 2014-15 built MR vessels. TORM plc (NASDAQ:TRMD) also continued its tradition of returning value to shareholders by declaring a $1.20 dividend. Likewise, it remains one of the top stocks for passive income, going by a 28.7% dividend yield.
While we acknowledge the potential of TORM plc (NASDAQ:TRMD) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TRMD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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