The recent overhaul of the US tax law has stirred a lot of controversy, especially with regard to who stands to benefit the most. One thing is sure – it is a big win for Corporate America. Although a company’s tax rate can fluctuate wildly from quarter to quarter because of such events as asset write-downs or accounting adjustments, the reduction of the corporate tax rate to 20% will still have a major impact on companies that have been subject to a large income tax rate. Using the ranking compiled by MarketWatch, we have identified six high-tax-paying companies that billionaire fund managers like a lot.
#6 Coca-Cola – 21% tax rate in the past five reported quarters
First up is The Coca-Cola Co (NYSE:KO). According to our data, 11 billionaire fund managers had this stock in their equity portfolios at the end of the 2017 third quarter, up from 8 a quarter before. It is well known that Warren Buffett is a big fan of Coca-Cola and long-term shareholder. Buffett’s Berkshire Hathaway holds 400 million shares according to its latest 13F filing. Jim Simon’s Renaissance Technologies has more than doubled its bet on The Coca-Cola Co (NYSE:KO) during the third quarter, having amassed 4.75 million shares in the process.
The Coca-Cola Co (NYSE:KO) is one of the top dividend-paying stocks, having increased its dividend for 55 years in a row. The company currently pays an annual dividend of $1.46 per share, which represents a 3.06% yield. Although it is well established, has a great brand and market share, Coca-Cola has been struggling recently as consumer tastes changed towards healthier drinks and beverages. The company has invested heavily in diversification, but the soda products still account for 64% of its business.
#5 JPMorgan Chase – 28% tax rate in the past five reported quarters
Banking giant JPMorgan Chase & Co. (NYSE:JPM) is also a darling of elite fund managers. At the end of September 2017, 12 of the billionaires followed by Insider Monkey were invested in the stock, up from 9 registered a quarter earlier. In its latest 13F filing, Jim Simons’ Renaissance Technologies reported a fresh stake in JPMorgan Chase & Co. (NYSE:JPM) that amounted to 1.42 million shares. David E Shaw’s D E Shaw was not far behind, as it held 1.18 million shares at the end of the third quarter.
Jamie Dimon, JPMorgan Chase & Co. (NYSE:JPM) Chairman and CEO, has announced on Tuesday that he plans to stay for another 5 years at the helm of the company. Dimon has been running JPMorgan Chase, which is currently the largest US bank, since 2004. The company has also promoted Daniel Pinto and Gordon Smith as co-presidents and Dimon’s top deputies as part of its management succession plan.
#4 Home Depot – 36% tax rate in the past five reported quarters
Home Depot Inc (NYSE:HD) is also among high tax paying stocks and is well liked by billionaires. The stock could be fund in the portfolios of 12 billionaire fund managers at the end of the 2017 third quarter. Israel Englander’s Millennium Management more than doubled its stake in Home Depot Inc (NYSE:HD) and has reported ownership of 628,560 in its latest 13F filing. Richard Chilton and his fund, Chilton Investment Company, have slightly reduced their bet on Home Depot and held 877,561 at the end of the quarter.
Home Depot Inc (NYSE:HD) has had a stellar 2017, with the stock having surged by 41%, and has extended its bullish run into 2018. One of the reasons for such a great performance is “One Home Depot”, the company’s program designed to combine the physical and online sales into a single shopping experience. As a result, online sales have grown to represent approximately 6.5% of the company’s total sales and its e-commerce platform is the seventh largest in the US.
#3 Apple – 26% tax rate in the past five reported quarters
One of Wall Street’s darlings, Apple Inc. (NASDAQ:AAPL) holds a lot of cash overseas that is waiting to be repatriated now with the new tax system. Billionaires’ funds have been loading up on Apple shares, with the total number of billionaires holding the stock rising to 17 at the end of 2017 third quarter, from 14 registered a quarter earlier. Warren Buffet’s Berkshire Hathaway first reported its stake in Apple Inc. (NASDAQ:AAPL) at the end of the 2016 first quarter and since then has been buying more and more of the stock. It was also the case in the third quarter, as Berkshire’s holding reached a little over 134 million shares. Billionaire Larry Robbins is also keeping tabs on Apple, with his fund, Glenview Capital reportedly holding 2.5 million shares.
Apple Inc. (NASDAQ:AAPL) shareholders could be in for a surprise when the company issues its earnings report on Thursday, as unconfirmed reports state that Apple is looking to cut the production of iPhone X. Many consumers have been scared away by the smartphone’s prices and have decided to either settle for the cheaper iPhone 8 or iPhone 8 Plus, or wait another year before upgrading their smartphones.
#2 DowDuPont – 22% tax rate in the past five reported quarters
With the merger complete, shareholders of DowDuPont Inc (NYSE:DWDP) can look forward to reaping the benefits from the recent tax overhaul. Among them are 17 billionaire fund managers followed by Insider Monkey who held DowDuPont shares at the end of September. Among them, the largest position was held by Larry Robbins’ Glenview Capital, which reported ownership of 16.2 million shares in its latest quarterly filing. Billionaire Dan Loeb is also betting big on DowDuPont Inc (NYSE:DWDP) with his fund, Third Point, reportedly holding a little over 15 million shares.
DowDuPont Inc (NYSE:DWDP) is schedules to deliver its first quarterly report on Thursday, with analysts looking for $0.66 in earnings per share and revenues of $19.5 billion. They recommend the stock mainly as a Buy and have placed an average price target of $79.94, which represents an upside potential of 12%.
#1 Visa – 29% tax rate in the past five reported quarters
Number one in this top is Visa Inc (NYSE:V), with 19 billionaires tracked by Insider Monkey holding the stock in their equity portfolios. The most notable of them all is Warren Buffett. Berkshire Hathaway holds 10.5 million shares according to its latest 13F filing. Not far behind is Andreas Halvorsen’s Viking Global, which held 10.2 million shares, up 30% from the previous quarter. This position is also the third largest in the fund’s equity portfolio.
According to the Nilson Report, the volume of credit card transactions is expected to increase by 54% by 2020 and by 2025 the worldwide volume is projected to reach $55 trillion per year, with Visa Inc (NYSE:V) being one of the few companies that is very well positioned to profit from these developments.
Disclosure: none.
