Below are the top 5 picks of Joel Greenblatt’s portfolio. For a comprehensive list please see Joel Greenblatt’s Portfolio and Recent Buys.
5. Facebook, Inc. (NASDAQ: FB)
After a stunning rally in 2020, shares of Facebook (NASDAQ: FB) are struggling to trade in the green this year. The legendary value investor sold 5% of his position during the fourth quarter to capitalize on robust share price appreciation in the pandemic year. Facebook ranks 5th on the list of Joel Greenblatt’s top picks.
Kinsman Oak Capital Partners Inc., an independent Toronto-based boutique investment firm, highlighted a few stocks including Facebook in an investor letter. Here’s what Kinsman Oak Capital Partners stated:
“Our view on Facebook (FB) may be somewhat controversial. The bear case for FB boils down to antitrust risk and valuation. Facebook, although to a lesser degree, is a relative value bargain as well. We believe the company possesses an element of platform risk that Alphabet does not but, compared to the rest of the market, the stock still seems undervalued. We compared Facebook to the Russell 2000, an index full of cyclical businesses that are considered no-brainers at the beginning of a recovery and popular re-opening stocks that are poised to go higher after the vaccine is distributed (Appendix E). Facebook is significantly cheaper, growing faster, has a larger economic moat, superior margin profile, and requires less capex. In short, we believe the obfuscated earnings power makes Facebook appear more expensive than it really is.”
4. Alphabet Inc (NASDAQ: GOOGL)
Google parent Alphabet (NASDAQ: GOOGL) is the permanent member of Joel Greenblatt’s portfolio over the past couple of years. His hedge fund held 26,910 shares of Alphabet at the end of the latest quarter, down 5% from the previous quarter. Alphabet stock price jumped 19% year to date, extending the twelve-month gains to 73%.
Bretton Fund, which returned 11.52% for the fourth quarter, highlighted a few stocks including Alphabet in the fourth quarter investor letter. Here is what Bretton Fund stated:
“Google (aka Alphabet) was one of our best performing stocks last year, returning 30.9%, while its earnings per share increased 19%. As lockdowns first went into place in the spring, many advertisers hit pause on their campaigns, waiting—like a lot of us—to see what the world would look like. And then—like a lot of us—advertisers adjusted. Travel companies cut back their campaigns, while ads for other goods, like athleisure wear and video games, picked up the slack. Google had a rough second quarter, but was back in the swing of things by the next quarter.”
3. Microsoft Corporation (NASDAQ: MSFT)
The technology giant Microsoft Corporation (NASDAQ: MSFT) has generated robust returns for shareholders in 2020 in the form of dividends and share price appreciation. It is the third-largest stock holding of Joel Greenblatt’s portfolio. Moreover, shares of MSFT accelerated the upside momentum into 2021, thanks to expectations for double-digit revenue growth trends. MSFT is up 74% over the last 12 months.
Bretton Fund, which returned 11.52% for the fourth quarter, highlighted a few stocks including Microsoft in an investor letter. Here is what Bretton Fund stated:
“Microsoft’s stock also had a great year, returning 42.4% on increased earnings per share of 30%. The main driver of their growth in recent years is their cloud computing business, and while it did see a bump in demand as office workers went remote, most of the growth is from the continued shift of corporate computing systems to “the cloud.” We think this shift is still in its early stages.”
2. Amazon.com (NASDAQ: AMZN)
Amazon.com (NASDAQ: AMZN) is the second-largest stock holding of Joel Greenblatt, as of the end of the fourth quarter. The firm held 17,381 shares of Amazon, down 8% from the previous quarter. Amazon stock price is also trading in the red this year despite strong growth in the pandemic year.
Mairs & Power, which returned 13.88% for the fourth quarter of 2020, highlighted a few stocks including Amazon in the Q4 investor letter. Here is what Mairs & Power said:
“We did acquire AMZN in the fourth quarter. But not owning it till then cost the Fund in performance relative to the S&P 500 TR Index. We had held off taking a position in Amazon largely due to concerns about the company’s slim margins. But in 2020, we saw its core margins nearly double as more consumers shopped online, which in turn led to greater utilization and route density within Amazon’s delivery network. In addition, Amazon’s advertising business, which represents a small portion of its overall sales, has been growing quickly. Advertising could become a third leg of growth for the company along with e-commerce and Amazon Web Services. In short, Amazon checks all of our boxes — it has a strong management team, great growth prospects, and a strong competitive advantage. And last year, we initiated our position at an intriguing valuation.”
1. Apple Inc (NASDAQ: AAPL)
The world’s largest tech giant Apple Inc (NASDAQ: AAPL) stock price plunged 8% so far in 2021 amid investors’ shift towards value stocks that are benefitting from the economic recovery and strong growth in yields. It is the top stock pick of Joel Greenblatt’s Portfolio, according to the latest filings.
In a Q4 investor letter, Saturna Capital Corporation, an investment management firm, presented a bullish outlook for Apple. Here is what Saturna Capital Corporation stated:
“Leading the pack, Apple claimed the top spot among Fund contributors. More than once we have read Apple obituaries, but we believe the company’s combination of hardware and services will continue to drive the business for years to come, and we look forward to improved availability for the iPhone 12.”
You can also take a peek at Billionaire Steve Cohen’s Top 10 Stock Picks and Billionaire Jim Simons’ Top 10 Stock Picks.
