Edgar Wachenheim‘s Greenhaven Associates has two distinct features: a concentrated portfolio and an emphasis on long-term investing. Thus it is no surprise that no drastic changes are seen in its equity portfolio as disclosed through its latest 13F filing with the SEC. However, the fund’s exposure to the finance sector was increased, with it now representing 25% of its portfolio value. The top finance-related picks which had increases to their positions were Goldman Sachs Group Inc (NYSE:GS) and JPMorgan Chase & Co. (NYSE:JPM). Among other top holdings, Lowe’s Companies, Inc. (NYSE:LOW) and Whirlpool Corporation (NYSE:WHR) represented the consumer discretionary sector, which also comprised 25% of the fund’s portfolio value, and FedEx Corporation (NYSE:FDX), which was one of Wachenheim’s bets in the industrials sector, which formed another 17% of his portfolio’s value.
Greenhaven has about $5.72 billion in assets under management and the market value of its equity portfolio stood at $5.55 billion at the end of March. The top ten holdings constituted more than 88% of the fund’s equity portfolio, while the turnover ratio for the quarter remained relatively low at 24%. Wachenheim purchased the fund in 1998 from the Gottesman family and has successfully passed on his investment prowess to quite a few of his employees, who later set up their own shops; Chieftain Capital and Brave Warrior Capital being two such examples.
Through our research at Insider Monkey we discovered that a portfolio of the 15 most popular small cap picks of hedge funds beat the S&P 500 Total Return Index by nearly a percentage point per month between 1999 and 2012. On the other hand the most popular large-cap picks of hedge funds underperformed the same index by 7 basis point per month during the same period. In forward tests from August 2012 through March 2015 these top 15 small-cap stocks continued to crush the market, by over 80 percentage points (read the details here).
Even after slicing its stake by 4% in Lowe’s Companies, Inc. (NYSE:LOW) to 10.79 million shares valued at $802.50 million, the company was Greenhaven’s largest holding. The $67.3 billion home improvement retailer was upgraded to an ‘Overweight’ rating by Piper Jaffray recently with a price target of $88, which represents an upside of 23%, on account of promising housing turnover trends. However, Lowe’s Companies, Inc. (NYSE:LOW) has recently pulled the plug on its sale of Chinese flooring. There are concerns that the company’s flooring might contain illegal levels of formaldehyde, the same concerns that sent Lumber Liquidators Holdings Inc (NYSE:LL)’s stock in a tailspin this year. Both companies have the same Chinese supplier for flooring, Tecsun. In an attempt to pacify both customers and investors, Lowe’s Companies, Inc. (NYSE:LOW) said that it would conduct independent testing of its flooring products. Ken Griffin‘s Citadel Investment Group is another major stockholder of the company as it held some 3.75 million shares at the end of the fourth quarter.
With about 4.55 million shares valued at $752.24 million, FedEx Corporation (NYSE:FDX) was Greenhaven’s second-largest holding and represented 13.55% of the fund’s portfolio value. The stock has depreciated by about 1.56% year-to-date, which is still less than the 6.5% decline of the Air Freight & Logistics industry in the same period. In order to capitalize on the growing e-commerce business in Europe, FedEx Corporation (NYSE:FDX) agreed to buy the Dutch package-delivery company TNT Express for $4.8 billion in early April. The deal will provide FedEx with an extensive ground delivery network. Mason Hawkins‘ Southeastern Asset Management and the Bill & Melinda Gates Foundation Trust managed by Bill Larson are two other shareholders of the company.
The fund’s Goldman Sachs Group Inc (NYSE:GS) holding received a boost of 10% over the quarter to 3.13 million shares valued at $588.11 million. The stake constituted 10.59% of the portfolio’s value. The investment bank is currently trading at a twelve month trailing earnings multiple of 10.45, which compares very favorably to the industry’s average of 31.59. Goldman Sachs Group Inc (NYSE:GS) has had a rough experience in the commodities business lately, highlighted by its sale of power plants and an aluminum-storage business. The company is now in talks to sell its coal mines in Colombia, which have been plagued by the declining price of coal, labor protests, and environmental regulations. The stock is up by 2.94% year-to-date nonetheless. Boykin Curry‘s Eagle Capital Management held about 2.87 million shares of Goldman Sachs Group Inc (NYSE:GS), according to its latest filing.
The fund’s stake in JPMorgan Chase & Co. (NYSE:JPM) was given an even larger bump of 18%, with it now accounting for 9.63% of Greenhaven’s portfolio’s value. The fund held a total of 8.83 million shares valued at $534.74 million. Despite the global banking industry sliding by 1.52% year-to-date, JPMorgan Chase & Co. (NYSE:JPM)’s stock has risen by 3.95% in the same period amid solid financial results for the first quarter, which involved an EPS of $1.58 coming in $0.18 higher than estimates. Revenues of $24.8 billion were also $300 million ahead of expectations. Ken Fisher’s Fisher Asset Management and Paul Ruddock and Steve Heinz’s Lansdowne Partners also hold JPMorgan Chase & Co. (NYSE:JPM) in their portfolios.
Lastly, Greenhaven held some 2.47 million shares of Whirlpool Corporation (NYSE:WHR) valued at $500.65 million. The strong U.S dollar led to the company posting disappointing financial results for the first quarter that missed estimates. Whirlpool Corporation (NYSE:WHR) also had to lower its guidance and the stock is down by about 6.8% year-to-date. However, some analysts are more optimistic about the company’s future prospects since they believe that the company has yet to benefit from the synergies of its past acquisitions. David Tepper’s Appaloosa Management LP is another shareholder of Whirlpool Corporation (NYSE:WHR).
Disclosure: None
