Edgar Wachenheim‘s Greenhaven Associates is well known on the Street as a value-focused hedge fund with long-term investment horizon. The fund recently filed its 13F with the Securities and Exchange Commission (SEC) which revealed that, in-line with its investment philosophy, it made only minor changes in its equity portfolio in the second-quarter. Although being a long-term investor has its advantages for Greenhaven Associates like keeping the costs low, the fund’s holdings in companies with a market cap of over $1.0 billion returned 0.003% in the second-quarter and are up a meager 0.02% year-to-date.
The financial sector, followed by consumer discretionary, and transport were the top sectors, which amassed 30%, 23% and 23% of Greenhaven Associates’ $5.55 billion equity portfolio in the quarter ending June respectively. Following the first-quarter, FedEx Corporation (NYSE:FDX), Lowe’s Companies, Inc. (NYSE:LOW), and Goldman Sachs Group Inc (NYSE:GS) remained Greenhaven Associates top 3 picks in the second-quarter as well.
We pay attention to hedge funds’ moves because our research has shown that hedge funds are extremely talented at picking stocks on the long side of their portfolios. It is true that hedge fund investors have been underperforming the market in recent years. However, this was mainly because hedge funds’ short stock picks lost a ton of money during the bull market that started in March 2009. Hedge fund investors also paid an arm and a leg for the services that they received. We have been tracking the performance of hedge funds’ 15 most popular stock picks in real time since the end of August 2012. These stocks have returned 135% since then and outperformed the S&P 500 Index by around 80 percentage points (see the details). That’s why we believe it is important to pay attention to hedge fund sentiment; we also don’t like paying huge fees.
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On the first spot in Greenhaven’s equity portfolio is the position in FedEx Corporation (NYSE:FDX), in which the investor owns 4.50 million shares, valued at $766.46 million as of the end of June. Even though, the investor sold around 48,600 shares during the second quarter, the holding moved up one position. According to recent reports, FedEx Corporation (NYSE:FDX) is in talks with Boeing Co. (NYSE:BA) to increase its fleet of 767 cargo freighters by at least 25 more planes. Analysts have a consensus ‘Overweight’ rating on the stock, with an average price target of $196.35. Mason Hawkins’ Southeastern Asset Management held the largest stake of 5.4 million shares of the company among the hedge funds we track at the end of first-quarter.
On the other hand, the investor’s stake in Lowe’s Companies, Inc. (NYSE:LOW) was cut more significantly, by some 663,880 shares to 10.12 million shares, worth nearly $678 million. Meanwhile, the stock declined by around 10% during the April-June period on the back of disappointing financial results. The company posted revenue of $14.13 billion and EPS of $0.70 for the first quarter of 2015, slightly higher than $13.40 billion and $0.61 a year earlier. For the second quarter, analysts expect Lowe’s to deliver EPS of $1.25, versus $1.04 posted a year ago. During the first quarter, Stephen Mandel‘s Lone Pine Capital initiated a stake in Lowe’s Companies, Inc. (NYSE:LOW) by acquiring over 5.9 million shares.
Greenhaven Associates inched up its stake in its Goldman Sachs Group Inc (NYSE:GS) by a paltry 20,350 shares to almost 3.15 million shares valued at $657.5 million. Shares of the investment banking behemoth rose 11% during the April – June quarter. The firm recently declared its second-quarter earnings and owing to extremely high litigation costs declared an EPS of only $1.98, much lower than analysts’ estimates $3.89. The high legal fees being paid by Goldman Sachs Group Inc (NYSE:GS) have raised concerns among analysts some of whom fear whether the company is concealing something important from investors. Of the 28 major analysts and brokerage houses that cover the stock, 21 of them have a ‘Hold’ rating with an average price target of $212.52. Warren Buffett‘s Berkshire Hathaway held over 12.6 million shares of Goldman Sachs Group Inc (NYSE: GS) at the end of March.
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