Giverny Capital Reveals Favorite Long-Term Consumer Stocks

Giverny Capital Inc. was founded by Francois Rochon in December 1998 in order to offer investment management services based on his investment philosophy of owning outstanding companies for the long-term. Mr. Rochon’s investment philosophy has some similarities to the philosophies of Warren Buffett, Benjamin Graham, John Templeton, Philip Fisher, and Peter Lynch. He successfully managed a family portfolio based on an investment approach synthesized from the aforementioned well-known money managers for several years, after which he decided to open his own investment management firm for outside investors.

Montreal-based Giverny Capital, named after a small town in France where famous painter Claude Monet lived from 1883 until 1926, predominantly focuses on the long-term ownership of outstanding businesses through common stocks purchased at attractive valuations. The firm’s Global Rochon portfolio has generated a compounded annual return of 16.3% since its inception in July of 1993. The fund gained an impressive 20.2% in 2015, after posting gains of 28.1%, 50.2% and 21.2% in 2014, 2013 and 2012, respectively. Meanwhile, Giverny Capital’s Rochon US Portfolio has returned 2,294%, or 15.2% on an annualized basis, since its inception in 1993 versus the 606%, or 9.1% on an annualized basis, returns delivered by the S&P 500 Index over the same period. Needless to say, its performance has been quite impressive. With that in mind, the following article will list a set of consumer stocks favored by Giverny Capital, which it doubtless believes in the glowing long-term potential of.

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#5. Fortune Brands Home & Security Inc. (NYSE:FBHS)

– Shares Owned by Giverny Capital (as of June 30): 286,788

– Value of Giverny Capital’s Holding (as of June 30): $16.63 Million

Giverny Capital boosted its position in Fortune Brands Home & Security Inc. (NYSE:FBHS) by 55% during the second quarter of 2016, to 286,788 shares. The upped position was worth $16.63 million on June 30 and accounted for 3.2% of the value of the hedge fund’s portfolio. The shares of the home and security products company are trading near their 52-week high, after having gained 15% year-to-date. In May, the designer and manufacturer of kitchen and bath cabinetry, plumbing and accessories, entry door systems, and security products acquired an unnamed plumbing company that specializes in bath and shower fittings for $88.4 million in cash. In early-July, analysts at Jefferies started coverage on Fortune Brands with a ‘Buy’ rating and a price target of $67, saying that FBHS could see a further $7-to-$14 upside to their price target as a result of the company’s “proven track record in deploying capital.” Connecticut-based Columbus Circle Investors owns 656,088 shares of Fortune Brands Home & Security Inc. (NYSE:FBHS) as of the end of the second quarter.

#4. Mohawk Industries Inc. (NYSE:MHK)

– Shares Owned by Giverny Capital (as of June 30): 95,267

– Value of Giverny Capital’s Holding (as of June 30): $18.08 Million

The Montreal-based asset manager owned 95,267 shares of Mohawk Industries Inc. (NYSE:MHK) at the end of the second quarter, 2,491 shares more than it did at the end of the first quarter. The slightly-increased stake was valued at $18.08 million at the end of June. The flooring manufacturing company reported net sales of $2.31 billion for the three-month period ended July 2, an increase of 13.2% year-over-year. The company posted the highest sales for any quarter in its history, while its earnings per share set an all-time record for the company as well. Mohawk Industries posted second quarter net earnings of $255 million and diluted earnings per share of $3.42, up by 35% year-over-year. The company’s top-line growth was mainly attributable to higher sales volume from acquisitions, as well as higher legacy sales. Mohawk shares are 11% in the green year-to-date. John Armitage’s Egerton Capital Limited reported owning 1.41 million shares of Mohawk Industries Inc. (NYSE:MHK) through the current round of 13F filings.

The second page of the article will reveal three other consumer stocks favored by Giverny Capital.