Thousands of hedge funds file quarterly 13F holdings with the SEC, though some are inherently better for retail investors to track. Historically, it has been possible to outperform Mr. Market by mimicking the best funds, and our small-cap strategy has already beaten the S&P 500 index by 22.5 percentage points since we introduced it to the public last fall (capitalize on market-dominating strategy).
Google Inc (NASDAQ:GOOG) has been Joho Capital’s No. 1 holding since the second quarter of 2012, and in Q4, Karr was actually upping his stake in the tech giant by 6%. All in all, Google now accounts for a whopping 26.2% of Karr’s total 13F portfolio, indicating that he’ll remain heavily reliant on the company for the foreseeable future. Since the start of 2013, Google’s stock price has risen by almost 13%, and shares are currently trading just off an all-time high north of $800. Most analysts still expect Google to experience annual earnings growth in the mid-teens over the next half-decade, and a forward P/E of 14.9x indicates there’s still value here.
Mead Johnson Nutrition CO (NYSE:MJN) and Estee Lauder Companies Inc (NYSE:EL), meanwhile, are Karr’s No.’s 2 and 3 picks. Both companies operate in the consumer goods sector, and Mead Johnson focuses on pediatric nutrition while Estee Lauder has its fingers in the household products industry.
Now, what ties these picks together is their potential. Of the 60 S&P 500-listed consumer goods stocks, both Mead Johnson and Estee Lauder lie in the upper third in terms of earnings growth expectations this year. The sell-side is forecasting Mead to sport EPS growth of 19.3%, while Estee’s figure is a bit higher at 23.9%. Both stocks aren’t particularly expensive given these prospects, and Karr is joined by notable hedgies like Cliff Asness, Ken Griffin (see Ken Griffin and Citadel’s new buys) and GAMCO Investors’ Mario Gabelli, who are invested in this duo.
Yum! Brands, Inc. (NYSE:YUM) sits at 4th in Karr and Joho Capital’s portfolio, and it has turned in pretty uninspiring appreciation over the past year. Shares of the restaurant company are essentially flat over the past one-year and six-month time frames, and investors have actually lost close to 2% since the start of 2013.
How does Wall Street view this stock?
Wall Street’s average price target on Yum indicates that a 2-3% upside is still expected from current levels, but that’s still not much to hang your hat on. The key bullish thesis behind Yum is its above-average exposure to China; this could boost growth more than most pundits expect over the long, long term, and is likely something Karr is optimistic about.
SINA Corp (NYSE:SINA) is last on our list, and 19 of the hedge funds we track held positions in the Chinese online media company last quarter. When we rank this group of funds in terms of the percentage that each manager’s portfolio was allocated to Sina—in effect, gauging “commitment level,”— Karr and Joho Capital come out on top. With nearly 8% of their portfolio allocated to the stock, this trumps even the likes of Brian Kelly, who has a similarly bullish sentiment on certain Chinese equities. Up already 8.8% year-to-date, investors looking for a momentum play can consider Sina, as the Street expects EPS to grow by 23-24% a year through at least 2017.
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