In this article, we will take a look at the top five stock picks in billionaire Richard Chilton’s latest portfolio. To find out more about the hedge fund, its founder, and other stocks, take a look at Billionaire Richard Chilton’s Latest Portfolio: Top 10 Stock Picks.
5. The Home Depot, Inc. (NYSE:HD)
Chilton Investment Company’s stake value: $206 million
Percentage of Chilton Investment Company’s Portfolio: 5.76%
Number of Hedge Fund Holders: 80
The Home Depot, Inc. (NYSE:HD) is an American home improvement retailer that is headquartered in Atlanta, Georgia. The firm has thousands of stores all over the United States, and it provides a host of products covering building materials, flooring, cabinets, furnaces, and air conditioning systems.
Chilton Investment Company owned a $206 million stake in The Home Depot, Inc. (NYSE:HD) as part of its Q2 2022 holdings. This came through the firm holding 753,813 shares of the company. During the same time period, 80 of the 895 hedge funds polled by Insider Monkey had also invested in the company.
The Home Depot, Inc. (NYSE:HD) is one of two major home improvement retailers in the U.S., which provides it with a unique advantage as it enjoys cost and scale advantages over other companies that might want to enter the market. The firm has grown its free cash flow at a compounded annual growth rate (CAGR) of 11.4% since 2004, and during the same time period, its share based payments have grown by 7.1% – indicating that the company is keeping up with FCF growth when it comes to returning capital. The Home Depot, Inc. (NYSE:HD) pays a $1.9 dividend for a 2.75% yield.
The Home Depot, Inc. (NYSE:HD) largest investor is Ken Fisher’s Fisher Asset Management which owns 8.3 million shares that are worth $2.2 billion.
4. Canadian Pacific Railway Limited (NYSE:CP)
Chilton Investment Company’s stake value: $227 million
Percentage of Chilton Investment Company’s Portfolio: 6.34%
Number of Hedge Fund Holders: 42
Canadian Pacific Railway Limited (NYSE:CP) is a Canadian company headquartered in Calgary that operates a freight railway system in Canada and the United States. The company transports a host of products such as coal, fertilizers, grain, minerals, and forest products.
Canadian Pacific Railway Limited (NYSE:CP) posted revenue growth of 7% during its second fiscal quarter as it was helped by fuel surcharges and foreign exchange fluctuations despite a small drop in volumes shipped. The company is also on track to develop the only direct Canada to Mexico railroad route, and it is using a strong price environment to lock in prices as much as 6% higher over current rates for future contracts.
Mr. Chilton’s investment firm owned 3.2 million Canadian Pacific Railway Limited (NYSE:CP) shares as part of its investments for the second quarter of this year, allowing it to hold a $227 million stake in the company. Insider Monkey’s 895 hedge fund survey for this year’s June quarter saw 42 having invested in the company.
Chris Hohn’s TCI Fund Management is Canadian Pacific Railway Limited (NYSE:CP)’s largest investor in our database. It owns 55 million shares that are worth $3.9 billion.
Pershing Square Holdings mentioned the company in its Q2 2022 investor letter. Here is what the fund said:
The demand outlook for CP continues to improve, especially given the current geopolitical environment. Russia’s invasion of Ukraine and the resulting supply disruptions have boosted demand for Canadian exports such as grain and potash. Deglobalization has also increased the likelihood of major North American onshoring and energy production, which will accelerate CP’s volume growth in the future. Total volumes declined by 2% in the second quarter due to the smaller than average Canadian grain harvest, while volumes excluding grain increased by 5%. The grain headwind will flip to a tailwind in the fall as CP anticipates a normal grain crop, which supports management’s double-digit volume and revenue growth outlook for the second half of 2022. …” (Click here to read the full text)
3. Ball Corporation (NYSE:BALL)
Chilton Investment Company’s stake value: $246 million
Percentage of Chilton Investment Company’s Portfolio: 6.87%
Number of Hedge Fund Holders: 24
Ball Corporation (NYSE:BALL) is an aluminum can maker that is one of the oldest companies of its kind as it was set up in 1880 and is headquartered in Westminster, Colorado, the United States. The company sells aluminum beverage cans all over the globe.
As the second quarter of this year came to an end, Chilton Investment Company held a $246 million stake in Ball Corporation (NYSE:BALL) which came in the form of 3.5 million shares and represented 6.87% of the firm’s holdings. Insider Monkey’s Q2 2022 study of 895 hedge fund portfolios saw 24 investors in the can maker.
Ball Corporation (NYSE:BALL)’s business nature leaves it relatively insulated to larger macroeconomic shocks, making it a perfect investment for the currently tumultuous environment. Despite the global economy going into multiple shocks over the past three years, Ball Corporation (NYSE:BALL) has managed to consistently grow its return over invested capital (ROIC). However, Barclays reduced the company’s share price target to $55 from $80 in September 2022 following its second quarter results.
Ball Corporation (NYSE:BALL)’s largest investor after Chilton Investment Company is Greg Poole’s Echo Street Capital Management which owns 1.3 million shares that are worth $95 million.
NZS Capital mentioned the company in its Q2 022 investor letter. Here is what the fund said:
“We believe the stock valuations of these companies, and their sectors as a whole, reflect an overly pessimistic view of their long-term growth potential and an underestimation of the deflationary forces they bring to the economy, and we therefore added to many existing positions. Aluminum can maker and aerospace company Ball detracted from performance over fears consumers would curtail their large, pandemic-era grocery store beverage purchases.”
2. Microsoft Corporation (NASDAQ:MSFT)
Chilton Investment Company’s stake value: $264 million
Percentage of Chilton Investment Company’s Portfolio: 7.38%
Number of Hedge Fund Holders: 258
Microsoft Corporation (NASDAQ:MSFT) is one of the largest technology companies in the world. It originally gained fame through its Windows operating system, and over the years, the firm has diversified its business to include consumer electronics and cloud computing.
Despite the poor recent quarterly performance, Microsoft Corporation (NASDAQ:MSFT) continues to be a Wall Street darling as the average price target for the company among 29 analysts is $327 per share – a significant upside over the current share price of $244. An example of a share price target that is above the current share price is from Guggenheim, which set a $292 price target for the company in August 2022, sharing that the company’s office and cloud computing platforms serve to grow its cash flows by the mid teens in the coming future.
Chilton Investment Company owned one million Microsoft Corporation (NASDAQ:MSFT) shares as part of its Q2 2022 portfolio, allowing it to hold a $264 million stake in the company. During the same time period, 258 out of the 895 hedge funds polled by Insider Monkey had also held a stake in the company.
Out of these, Ken Fisher’s Fisher Asset Management is Microsoft Corporation (NASDAQ:MSFT)’s largest investor as it owns 28 million shares that are worth $7 billion.
1. The Sherwin-Williams Company (NYSE:SHW)
Chilton Investment Company’s stake value: $282 million
Percentage of Chilton Investment Company’s Portfolio: 7.86%
Number of Hedge Fund Holders: 52
The Sherwin-Williams Company (NYSE:SHW) is an American company that sells a wide variety of painting and coating products to retail, commercial, professional, and industrial customers. These products include automotive performance finishes, architectural paints, wood finishing, and corrosion inhibitors.
As of the end of June, Mr. Chilton’s investment firm owned 1.2 million The Sherwin-Williams Company (NYSE:SHW) shares. These allowed it to hold a $282 million stake in the company and constituted 7.86% of its investment portfolio. Insider Monkey’s study of 895 hedge funds for the same time period revealed that 52 had also bought the company’s shares.
The Sherwin-Williams Company (NYSE:SHW) is the leading paint provider in the U.S., with its architectural, stain, aerosol, wood sealer, and auto specialty paint brands being the top brands in the country. The firm also has a wide economic profit spread, which is the difference between its return on invested capital and cost of capital. This spread stands at 31.3%, indicating that the company is vastly more profitable and generates higher returns when compared to investor return requirements. The Sherwin-Williams Company (NYSE:SHW) also pays a 60 cent dividend for a 1.08% yield.
The Sherwin-Williams Company (NYSE:SHW)’s second largest investor in our database is Thomas Steyer’s Farallon Capital which owns one million shares that are worth $237 million.
ClearBridge Investments mentioned the company in its Q2 2022 investor letter. Here is what the fund said:
“Rounding out our risk-focused stance, we believe the addition of Sherwin-Williams (NYSE:SHW), a manufacturer of paints and coatings for professional, industrial and retail customers, adds further resilience in the current inflationary environment. Paint is a relatively small part of total project input costs which can be passed through with price during inflation, and the company has a track record of successfully managing through periods of increased commodity costs. We are attracted to the company’s durability of growth by operating a strong franchise with both organic growth and consolidation amassing a strong portfolio of brands. We like Sherwin-Williams over competitors in the paint industry due to higher volumes, a domestically focused revenue base and strong relationships with the home builder and pro community. We believe the company will be able to keep pricing and expand margins as commodity pressures ease.”
Disclosure: None. You can also take a look at 10 Blue Chip Stocks To Buy Now According To Billionaire Andreas Halvorsen and 10 Best-Performing S&P 500 Stocks in the Last 10 Years.
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