Billionaire Israel Englander’s Top Stock Picks for Q4

The third quarter broader market sell-off had a significant impact on the fortunes of most hedge funds and other money managers. Even so, there are some investors who successfully navigated the summer stock market turmoil and have delivered strong results in 2015. Israel Englander’s Millennium Management is one of the multi-billion dollar hedge fund firms that recorded solid gains through the end of August. According to an article published by the New York Times in September, Millennium Management was up by 9.6% for the year as of that point in time. In fact, Englander’s pooled multi-manager portfolios have registered only one down year since Millennium’s inception back in 1989. It is also worth mentioning that Englander’s hedge fund has generated a net annualized return of more than 14% since its launch. Although Millennium Management employs a wide range of trading strategies, some of which are more short-term focused, it will be worthwhile to take a look at its top five stock picks at the end of the third quarter, which is what we’ll do below.

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#5 Noble Energy Inc. (NYSE:NBL)

 – Shares Owned by Millennium Management (as of September 30): 12.29 Million

 – Value of Holding (as of September 30): $370.86 Million

Millennium Management upped its position in Noble Energy Inc. (NYSE:NBL) by 3.56 million shares during the September quarter, which denotes a lift of roughly 40% quarter-over-quarter. The independent energy company has seen its shares decline by 23% in 2015, which is not surprising considering the low natural gas and crude oil prices. However, the company seems to be well-positioned to tackle the current commodity price volatility, considering its cost reduction efforts and strong balance sheet. In a recent public filing with the SEC, Noble Energy outlined that the company is well hedged for the rest of this year, and partially hedged for 2016. The company has a debt-to-book capital of 39% as of September 30. However, Noble Energy’s capital expenditures exceeded its cash flows from operating activities in the nine-month period that ended September 30, despite undertaking a 36% reduction in capital spending year-over-year. Boykin Curry’s Eagle Capital Management reported owning 15.75 million shares of Noble Energy Inc. (NYSE:NBL) via its 13F filing for the third quarter.

#4 PPL Corp (NYSE:PPL)

 – Shares Owned by Millennium Management (as of September 30): 11.32 Million

 – Value of Holding (as of September 30): $372.47 Million

Israel Englander’s hedge fund lifted its stake in PPL Corp (NYSE:PPL) by 436,766 shares during the three-month period that ended September 30. The shares of the utility holding company are 8% in the red year-to-date and are currently trading at an attractive price-to-earnings ratio of 12.83, which is substantially below the ratio of 22.70 for the S&P 500 Index. Just recently, Deutsche Bank upgraded the stock to ‘Buy’ from ‘Hold’ and raised its price target on it to $36.00 from $34.50, after the company reported stronger-than-expected earnings and increased its earnings guidance. PPL recently asserted that it anticipates compound annual earnings growth of 6% through 2017, up from the previously-anticipated range of 4%-to-6%. First Eagle Investment Management, founded by Jean-Marie Eveillard, cut its position in PPL Corp (NYSE:PPL) by 1.14 million shares during the recent quarter, remaining with 2.88 million shares.

 – Shares Owned by Millennium Management (as of September 30): 817,356

 – Value of Holding (as of September 30): $418.40 Million

Amazon.com Inc. (NASDAQ:AMZN) has seen its shares skyrocket by more than 107% since the beginning of the year, and some analysts believe that there is more room to run for the stock. Millennium Management increased its exposure to Amazon.com during the September quarter, lifting its position in the company by 263,200 shares. Getting back to the stock’s upside potential, Mark Lehmann of JMP Securities has an ‘Outperform’ rating and price target of $740 on the e-commerce retailer’s stock, which currently yields an upside of 15%. According to the analyst, the company’s Amazon Web Services, which has been growing and is anticipated to keep growing at a very solid pace, represents the main reason to own the stock. However, some believe that Amazon.com is too well diversified, and lacks focus and strategy. Tiger Global Management, founded by Chase Coleman, increased its position in Amazon.com Inc. (NASDAQ:AMZN) by 2.45 million shares during the latest quarter, to 3.19 million shares.

#2 Comcast Corporation (NASDAQ:CMCSA)

 – Shares Owned by Millennium Management (as of September 30): 7.73 million

 – Value of Holding (as of September 30): $439.59 Million

Comcast Corporation (NASDAQ:CMCSA) represents a new addition to Englander’s top five stock picks. The multi-billion dollar hedge fund lifted its position in the media and technology company by a whopping 7.56 million shares during the September quarter. Comcast’s stock has advanced by 5% since the beginning of the year and is currently trading at a trailing P/E ratio of 19.16, which is slightly below the aforementioned mean of 22.70 for the S&P 500. The company reported third quarter revenue of $18.67 billion, which was up by 11% year-over-year and above analysts’ expectations of $18 billion. Its adjusted earnings per share grew by 9.6% year-over-year to $0.80. Ken Fisher’s Fisher Asset Management reported owning 12.24 million Comcast Corporation (NASDAQ:CMCSA) shares through the latest round of 13Fs.

#1 Dow Chemical Co (NYSE:DOW)

 – Shares Owned by Millennium Management (as of September 30): 36.69 Million

 – Value of Holding (as of September 30): $1.56 Billion

Dow Chemical Co (NYSE:DOW) is the largest equity holding of Israel Englander as of the end of the third quarter, a position that accounts for 3.01% of Millennium’s portfolio value on September 30. The hedge fund firm increased its long position in the integrated science and technology company by 33.92 million shares during the third quarter. It is also worth pointing out that Millennium Management acquired a position of put options underlying 31 million Dow Chemical shares during the three-month period, so it might be the case that Englander and his team anticipate a short-term headwind for Dow Chemical that they are hedging against. The shares of Dow Chemical are up by 14% for the year and are trading at an alluring trailing P/E ratio of 14.11. The company also distributes an annualized dividend of $1.68, offering a current dividend yield of 3.25%. Dow Chemical Co (NYSE:DOW) was the fourth-largest equity holding of Dan Loeb’s Third Point on September 30 (read more details).

Disclosure: None