Greenhaven Associates’ Top Value Picks for Q2 and Beyond

Value investor Edgar Wachenheim purchased Greenhaven Associates from the Gottesman family in 1998. Based on the fund’s latest 13F filing with the SEC, the value of its public equity portfolio stood at $5.23 billion at the end of March. Greenhaven’s equity portfolio was highly concentrated, with the firm’s top-10 holdings representing about 86% of its value. Also typical of long-term-oriented value investors like Mr. Wachenheim was the fact that his fund’s turnover ratio for the quarter was very low, at just 16.7%. Retail investors seeking to beat the market with a long-term horizon in mind should certainly consider the firm’s top investment ideas, which we’ll analyze in this article.

At Insider Monkey, we track nearly 800 hedge funds and other institutional investors as part of our small-cap strategy, which can help a retail investor beat Mr. Market by nearly one percentage point per month (see the details). Additionally, we can use the data we collate to see how hedge funds have positioned themselves towards different companies in a given period and how their collective sentiment has shifted towards them.

#5 AIRBUS GROUP SE UNSPON ADR EA REPR 0.25 ORD (OTCMKTS:EADSY)

 – Shares Owned by Greenhaven Associates (as of March 31): 31.68 Million

 – Value of Holding (as of March 31): $524.33 Million

Greenhaven inched up its stake in the $48 billion European aerospace company by 2% during the first trimester. AIRBUS GROUP SE UNSPON ADR EA REPR 0.25 ORD (OTCMKTS:EADSY)’s shares are down by nearly 6.4% this year, though they have enjoyed an uptick since the release of the company’s first quarter financial results on April 28. While earnings fell below expectations for the quarter, owing to charges incurred as a result of the weak air cargo market, investor confidence rose due to the company’s management expressing confidence that it will meet its full-year revenue and profit forecasts and predicting that profits from its other segments will pick up the slack in the air cargo segment. Airbus logged a total of 82 new orders in April alone, while that number stood at just ten during the March quarter.

#4 JPMorgan Chase & Co. (NYSE:JPM)

 – Shares Owned by Greenhaven Associates (as of March 31): 9.05 Million

 – Value of Holding (as of March 31): $536 Million

The finance sector represented about 28% of Greenhaven’s portfolio on March 31 and JPMorgan Chase & Co. (NYSE:JPM) was a big reason why, with the holding representing about 10.3% of the portfolio’s value after the position was trimmed by 15,000 shares during the first quarter. Following the first quarter decline in the finance sector, JPMorgan’s shares are down by a little over 6% this year, despite the New York-based financial holding company coming out ahead of analysts’ consensus estimates on both the top and bottom-lines with its financial results for the March quarter. Ken Fisher‘s Fisher Asset Management increased its ownership of JPMorgan Chase & Co. (NYSE:JPM) by 1% during the March quarter to over 14 million shares.

Greenhaven’s top-3 value picks are studied on the second page of this article.

#3 Goldman Sachs Group Inc (NYSE:GS)

 – Shares Owned by Greenhaven Associates (as of March 31): 3.54 Million

 – Value of Holding (as of March 31): $555.76 Million

Moving on to Greenhaven’s other big bet in the financial sector, Goldman Sachs Group Inc (NYSE:GS), the holding received a 5% boost during the first three months of this year, to 3.54 million shares. Another fund bullish on the company during the same period was Richard S. Pzena‘s Pzena Investment Management, which hiked its stake in the investment bank by 20% to 1.84 million shares. Shares of Goldman Sachs have depreciated by 10.4% so far this year amid the challenging conditions in the financial sector. Goldman Sachs Group Inc (NYSE:GS) had just three trading days with more than $100 million in revenue during the first quarter, a far cry from what has typically resulted on more than half of all trading days. Those results led to a recent 10% reduction in Goldman Sachs’ fixed-income trading workforce.

#2 Lowe’s Companies, Inc. (NYSE:LOW)

 – Shares Owned by Greenhaven Associates (as of March 31): 8.85 Million

 – Value of Holding (as of March 31): $670.15 Million

The $69 billion home improvement retailer dropped to the second spot in Greenhaven’s equity portfolio after the fund cut its stake in the company by 6% during the March quarter, with the holding representing about 12.8% of its portfolio’s value. Lowe’s Companies, Inc. (NYSE:LOW)’s stock price is up by a modest 1.2% so far this year, but the company has been taking measures to spur growth, including its acquisition of Canadian hardware chain Rona and its recently launched e-commerce platform for contractors. Iridian Asset Management, which is led by David Cohen and Harold Levy is upbeat about Lowe’s Companies, Inc. (NYSE:LOW)’s future prospects, having increased its ownership by 2% during the first quarter to 7.25 million shares.

#1 FedEx Corporation (NYSE:FDX)

 – Shares Owned by Greenhaven Associates (as of March 31): 4.91 Million

 – Value of Holding (as of March 31): $799.75 Million

Following an 8% boost to its holding during the first three months of the 2016, Greenhaven’s position in FedEx Corporation (NYSE:FDX) accounted for about 1.83% of the company’s float. Barclays recently upgraded the company to ‘Overweight’ from ‘Equalweight’ and hiked its price target on it by 17% to $205, which suggests upside potential of more than 25%. China’s Ministry of Commerce recently approved FedEx’s $4.8 billion acquisition of Holland-based TNT Express, which was the last regulatory hurdle standing in the way of the merger. Columbus Circle Investors, which is managed by Clifford G. Fox, initiated a stake in FedEx Corporation (NYSE:FDX) during the first quarter consisting of about 346,800 shares.

Disclosure: None