We recently compiled a list of the 10 Safe Stocks to Buy According to Billionaire Chilton. In this article, we are going to take a look at where Microsoft Corporation (NASDAQ:MSFT) stands against the other safe stocks recommended by billionaire Richard Chilton.
Chilton Investment Company, founded by Richard L. Chilton, Jr. in 1992, aims to achieve appealing long-term returns while minimizing volatility. Since its establishment, the company has diligently adhered to a fundamental bottom-up investment approach, characterized by an ownership mindset. Its primary aim is to acquire fractional ownership in outstanding businesses rather than engaging in short-term stock trading.
Richard L. Chilton Jr. is the chairman, CEO, and chief investment officer of Chilton Investment Co. He has been a hedge fund manager for 18 years, which is a significant tenure in the challenging hedge fund industry. Chilton began his career in 1983 as an analyst with Alliance Capital Management, working alongside small-cap equity managers Frank Burr and Paul Jenkel. In 1990, he started a money management business for Allen & Co., a private bank, but left after two years to establish his own hedge fund company.
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Drawing on lessons in shorting stocks learned from Julian Robertson of Tiger Management Corp., Chilton set up his firm in a small, one-room office in New York, managing a classic long/short equity hedge fund. Chilton’s decision to start his own hedge fund was influenced by Art Samberg, a board member of the mutual fund Chilton co-managed. After expressing his desire to leave Allen & Co., where he had established a money management business, Samberg encouraged him to start his own fund, recognizing his talent. In January 1992, Chilton left Allen & Co., declined an offer from CEO Herbert Allen to buy a stake in his new venture, and instead accepted $1 million in investment from Allen, combining it with family money to launch his hedge fund with $5 million.
Starting his hedge fund in July 1992, Chilton aimed to create a classic long/short equity hedge fund, inspired by the first hedge fund model launched by Alfred Winslow Jones. His strategy was to always remain both long and short, without attempting to time the market. Chilton’s reputation grew through word of mouth, attracting prominent investors, endowments, and foundations. Pension funds later followed.
Chilton Investment’s appeal to institutional investors lies in its client-first approach and strong performance. The firm has been a leader in transparency and SEC registration. During the 2008 financial crisis, Chilton allowed clients to withdraw funds, which later returned. Chilton’s background in managing pension money at Alliance Capital gave him crucial experience in transparency and accountability, making his firm attractive for investors seeking long/short strategies. Chilton sees current opportunities in blue-chip companies with strong financials, solid dividend yields, and steady earnings growth. He expects these “dividend aristocrats” to outperform in a flat S&P environment, offering stability and consistent returns through growing dividends. Today, Chilton’s firm has grown significantly, with offices worldwide, a team of sector specialist analysts, and $7 billion under management across various strategies in global markets.
Richard L. Chilton Jr. graduated with a B.S. degree in Finance and Economics from Alfred University. Acknowledged for his business acumen, Forbes ranks Richard Chilton 773rd among the world’s wealthiest individuals, estimating his net worth at $1.3 billion. Chilton Investment Company caters to 9 clients, managing discretionary assets totaling $1,266,939,000, as per their Form ADV dated March 2024. Their 13F filing for Q1 2024 revealed managed 13F securities amounting to $3.6 billion.
Our Methodology
This article highlights the 10 safe stocks to buy according to billionaire Chilton, including analyst ratings and key details about each company, as well as the number of hedge funds invested in them.
Why focus on the stocks that hedge funds invest in? Our research shows that following the top picks of leading hedge funds can result in returns that beat the market. We use this strategy in our quarterly newsletter, where we choose 14 small-cap and large-cap stocks each quarter. Since May 2014, this approach has generated a 275% return, outperforming the benchmark by 150 percentage points. (see more details here)
A development team working together to create the next version of Windows.
Microsoft Corporation (NASDAQ:MSFT)
Chilton Investment Company’s Stake Value: $365,858,112
Number of Hedge Fund Holders: 293
Topping our list of safe stocks to buy according to billionaire Chilton is Microsoft Corporation (NASDAQ:MSFT). Microsoft Corporation (NASDAQ:MSFT) stands out as a compelling investment due to its dominant position in cloud computing through Azure, which continues to drive significant revenue growth. Microsoft Corporation (NASDAQ:MSFT)’s diverse portfolio, spanning software, gaming, and AI, offers multiple revenue streams and provides stability against market fluctuations.
From April to June 2024, Microsoft Corporation (NASDAQ:MSFT) reported total revenues of about $64.7 billion, marking a 15.2% increase compared to the same period in the previous year, when revenues were $56.2 billion. This figure slightly exceeded analysts’ expectations, which had forecasted $64.4 billion. According to Cavenagh Research, updated projections for Microsoft Corporation (NASDAQ:MSFT)’s earnings per share (EPS) are expected to reach approximately $11.3 in 2024, $12.9 in 2025, and $13.4 in 2026.
Microsoft Corporation (NASDAQ:MSFT) is one of the best-run legacy businesses with competitive advantages in office productivity software, cloud, and AI. Its Azure cloud business is consistently gaining market share and Microsoft can leverage its tech prowess to deliver improved user experience in its office productivity tools. Microsoft Copilot is now integrated into Microsoft 365, Dynamics 365, and GitHub, and the company is executing well on democratizing AI.
It’s one of the safest stocks to buy according to Richard Chilton. Over the past 10 years, Microsoft’s revenue has compounded at ~11% annually, and its net income has grown at a CAGR of ~15%. Chilton Investment Company owned 869,600 shares of Microsoft Corporation (NASDAQ:MSFT), valued at $365,858,112.
Overall MSFT ranks 1st on our list of the safe stocks to buy according to billionaire Chilton. While we acknowledge the potential of MSFT as an investment, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MSFT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
