This article discusses the top 10 stock picks of Levin Easterly Partners at the end of the second quarter of 2022.
Levin Easterly Partners traces its origin back to Levin Capital Strategies LP, an investment management firm founded by John A. Levin in 2006. Before starting Levin Capital Strategies, Mr. Levin had founded John A. Levin & Co. in 1982, which Baker, Fentress & Company acquired in 1997. Mr. Levin also served as a partner at legendary hedge fund manager Michael Steinhardt’s hedge fund Steinhardt Partners between 1976 and 1982. In 2019, asset management holding company, Easterly, bought the institutional investment business of Levin Capital Strategies, thus creating Levin Easterly Partners.
Last year in April, Levin Easterly Partners announced through a press release that it would be changing its name to Easterly Investment Partners. At the time of the firm’s name change, Jack Murphy, Chief Investment Officer (CIO) and lead portfolio manager at Easterly Investment Partners, said:
“Our name has changed, but our people, our strategies and our investment philosophy remain the same. This renaming enables us to strengthen our story, and to more clearly communicate how we deliver solutions to investors.”
Mr. Murphy holds a bachelor of science degree from Bryant College and an MBA from Northeastern University. He has also served as the CIO at Levin Capital Strategies. Easterly Investment Partners’ primary objective is to invest in companies that satisfy the three primary criteria of its investment philosophy: contrarian, value and catalyst.
Levin Easterly Partners’ Portfolio
As of March 28, 2022, Easterly Investment Partners managed assets worth over $1.5 billion for 390 clients. According to the fund’s last filed 13F filing for the quarter ending June 30, its portfolio had a high concentration of stocks from the financial sector, which accounted for around 29% of the aggregate value of its $1.12 billion portfolio. During the second quarter, Easterly Investment Partners sold its entire stake in 23 companies and initiated a new stake in the same number of companies. The top 10 holdings of the fund, which include Unilever PLC (NYSE:UL), Pfizer Inc. (NYSE:PFE), and Dominion Energy Inc. (NYSE:D), accounted for 22.39% of the aggregate value of the fund’s 13F portfolio at the end of Q2.
Image by Sergei Tokmakov, Esq. from Pixabay
Our Methodology
For the stocks discussed in this article, we have relied on the 13F filing submitted by Easterly Investment Partners with the SEC for the quarter ending June 30. At Insider Monkey, we track the portfolios of over 900 hedge funds as our research shows that the consensus stock picks of the top hedge funds beat the broader market by a wide margin in the long run.
Levin Easterly Partners’ Latest Portfolio: Top 10 Stock Picks
10. Centene Corporation (NYSE:CNC)
Levin Easterly Partners’ Stake Value: $19,985,000
Percentage of Levin Easterly Partners’ 13F Portfolio: 1.78%
Number of Hedge Fund Holders(Q1): 60
At the end of March, 60 funds tracked by us held a stake in Centene Corporation, up from 53 at the end of 2021. Many of those funds would likely have benefitted from investing in stock this year as shares of Centene Corporation are up close to 14% year-to-date, beating the broader market by more than 26%.
The company reported its second-quarter numbers last month. Though Centene Corporation reported a loss of $172 million on revenue of $35.9 billion for the period, it was an improvement from the $535 million loss on $31 billion of revenue it had reported for the same quarter in the previous year. Along with its earning release, Centene Corporation’s management also increased its full-year EPS guidance by $0.20 and now expects FY 2022 EPS to be between $5.60 and $5.75.
9. Pioneer Natural Resources Company (NYSE:PXD)
Levin Easterly Partners’ Stake Value: $22,848,000
Percentage of Levin Easterly Partners’ 13F Portfolio: 2.03%
Number of Hedge Fund Holders(Q1): 54
Levin Easterly Partners reported a stake in Pioneer Natural Resources Company in its 13F filing for the second quarter of 2021. Since then, Pioneer Natural Resources Company’s stock has appreciated more than 40%. At the end of March, Gavin M. Abrams’ Abrams Bison Investments was the largest shareholder of Pioneer Natural Resources Company among the funds tracked by us, holding 598,000 shares valued at close to $150 million.
During the company’s latest earnings call, Natural Resources Company’s CEO, Scott Sheffield, opined that due to extremely tight supply and rising demand, he expects crude oil prices to average around $100 per barrel for the next five years, saying:
“I’m still very optimistic that the oil price is going to continue to march forward, with probably more upside than downside.”
8. Johnson & Johnson (NYSE:JNJ)
Levin Easterly Partners’ Stake Value: $23,882,000
Percentage of Levin Easterly Partners’ 13F Portfolio: 2.12%
Number of Hedge Fund Holders(Q1): 83
Levin Easterly Partners more than doubled its stake in the healthcare and pharma major Johnson & Johnson by 121% to 134,536 shares during the second quarter. Other hedge funds that increased their stake in Johnson & Johnson during that period included Jeffrey Talpins’ Element Capital Management, which raised it by 50% to 21,744 shares, and Ken Fisher’s Fisher Asset Management, which increased it by a whopping 798% to 5.73 million shares.
On August 11, Johnson & Johnson announced that it would stop selling its globally recognized and bestselling talc-based baby powder in 2023. The company has faced several lawsuits and complaints in the past few years alleging that the talc-based baby powder it sells has caused cancer due to its contamination with asbestos. Johnson & Johnson has not sold this product in the US and Canada since 2020. On July 21, following the company’s second-quarter earnings release, UBS analyst Kevin Caliendo lowered his price target on the stock to $180 from $185 while maintaining his ‘Neutral’ rating.
7. Cisco Systems, Inc. (NASDAQ:CSCO)
Levin Easterly Partners’ Stake Value: $24,095,000
Percentage of Levin Easterly Partners’ 13F Portfolio: 2.14%
Number of Hedge Fund Holders(Q1): 66
From Levin Easterly Partners’ top stock pick at the end of March, Cisco Systems, Inc. fell six spots during the second quarter and became the fund’s seventh stock pick at the end of June. Cisco Systems, Inc.’s stock fell by more than 23% during Q2, which could be one of the reasons behind Levin Easterly Partners reducing its stake in the networking equipment giant by 27% to 565,084 shares in that period.
On August 10, Cisco Systems, Inc. revealed through a blog post that it faced a cyberattack which it recognized on May 24, and the company has been investigating it since then. According to the company:
“Since that point, Cisco Security Incident Response (CSIRT) and Cisco Talos have been working to remediate.
During the investigation, it was determined that a Cisco employee’s credentials were compromised after an attacker gained control of a personal Google account where credentials saved in the victim’s browser were being synchronized.
CSIRT and Talos are responding to the event and we have not identified any evidence suggesting that the attacker gained access to critical internal systems, such as those related to product development, code signing, etc.
We assess with moderate to high confidence that this attack was conducted by an adversary that has been previously identified as an initial access broker (IAB) with ties to the UNC2447 cybercrime gang, Lapsus$ threat actor group, and Yanluowang ransomware operators.”
6. Bio-Rad Laboratories, Inc. (NYSE:BIO)
Levin Easterly Partners’ Stake Value: $24,481,000
Percentage of Levin Easterly Partners’ 13F Portfolio: 2.18%
Number of Hedge Fund Holders(Q1): 45
Hercules, California-based Bio-Rad Laboratories, Inc. is a manufacturer and distributor of life science research and clinical diagnostic products that are sold worldwide. The company’s Life Science segment manufactures a range of reagents, apparatus, and laboratory instruments, while its Clinical Diagnostics segment manufactures informatics systems, test kits, specialized quality controls, and supports test systems for clinical laboratories. Bio-Rad Laboratories, Inc.’s stock made its lifetime high of $832.7 last year but has fallen considerably since then and is currently trading down by 26% year-to-date.
On August 5, Bio-Rad Laboratories, Inc. revealed that it will acquire Curiosity Diagnostics, Sp. Z. o. o. from Poland-based Scope Fluidics, S.A. for up to $170 million. The terms of the deal are pretty interesting where Bio-Rad Laboratories, Inc. will pay approximately $100 million to Scope Fluidics upfront in cash, and $70 million will be paid based on future milestones. According to the press release, Curiosity Diagnostics is a late-stage, pre-commercial platform company developing a sample-to-answer, rapid diagnostics PCR system for the molecular diagnostics market.
5. Dominion Energy Inc. (NYSE:D)
Levin Easterly Partners’ Stake Value: $24,650,000
Percentage of Levin Easterly Partners’ 13F Portfolio: 2.19%
Number of Hedge Fund Holders(Q1): 34
Dominion Energy Inc.’s popularity among hedge funds tracked by us peaked at the end of June 2019, when 50 funds reported holding a stake in the company. In contrast, only 38 hedge funds tracked by Insider Monkey disclosed a stake in Dominion Energy Inc. at the end of March 2021. Dominion Energy Inc. is a multi-utility company operating in both regulated electricity and gas distribution segments. With an annual dividend of $2.67 per share, Dominion Energy Inc.’s currently boasts of an attractive annual dividend yield of 3.27%.
For the third quarter of its fiscal year 2023, Dominion Energy Inc. reported a net loss of $453 million on revenue of $3.6 billion compared to earnings of $285 million on revenue of $3 billion for the same quarter last year. A large part of the FY2022 third quarter loss declared by Dominion Energy Inc. can be attributed to the increase in its operating expenses, which rose to $3.9 billion from $2.7 billion in the third quarter of the fiscal year 2021.
4. Pfizer Inc. (NYSE:PFE)
Levin Easterly Partners’ Stake Value: $25,641,000
Percentage of Levin Easterly Partners’ 13F Portfolio: 2.28%
Number of Hedge Fund Holders(Q1): 79
Having more than doubled its stake in pharmaceutical giant Pfizer Inc. during the first quarter, Levin Easterly Partners proceeded to cut its stake in the company by 25% to 489,047 shares during the second quarter. Cathie Wood’s ARK Investment Management also lowered its stake in Pfizer Inc. marginally by 4% to 734,165 shares during that time. Pfizer Inc. currently trades at a low forward price-to-earnings multiple of only 7.45 and recently made it to Insider Monkey’s list of 5 Undervalued Blue Chip Stocks to Buy Now.
On August 12, the company revealed that its 20-valent pneumococcal conjugate vaccine candidate called 20vPnC had met the co-primary endpoints in a Phase 3 trial performed on children. Pfizer Inc. already produces a Prevnar 13 vaccine that protects against 13 serotypes that lead to invasive pneumococcal disease. The 20vPnC promises protection against 7 new serotypes.
3. Truist Financial Corporation (NYSE:TFC)
Levin Easterly Partners’ Stake Value: $26,440,000
Percentage of Levin Easterly Partners’ 13F Portfolio: 2.35%
Number of Hedge Fund Holders(Q1): 36
Since disclosing its stake for the first time during the third quarter of 2021, Levin Easterly Partners has been increasing its holdings in Truist Financial Corporation every quarter. This consistent buying made the Charlotte, North Carolina-based bank with 150 years of history, Levin Easterly Partners’ third most loved stock at the end of June.
Unlike several other banking stocks, Truist Financial Corporation’s shares have recovered substantially since the global financial crisis and have returned 60% to shareholders through price appreciation alone in the last ten years. Truist Financial Corporation has a decades-long history of consistently paying dividends to its shareholders. As of August 2022, the bank pays an annual dividend of $2.08 per share, which translates to an annual dividend yield of 4.08% based on its current stock price.
2. Unilever PLC (NYSE:UL)
Levin Easterly Partners’ Stake Value: $29,443,000
Percentage of Levin Easterly Partners’ 13F Portfolio: 2.62%
Number of Hedge Fund Holders(Q1): 23
From just 13 funds tracked by Insider Monkey reporting a stake in Unilever PLC at the end of March 2020, the popularity of the company among smart money investors grew substantially in the next two years as 25 funds tracked by us disclosed a stake in Unilever PLC at the end of March 2022. Earlier this year, Unilever PLC’s stock closed below the low it made in March 2020 and has been trading in the $45 to $50 range since then.
Unlike Levin Easterly Partners, many analysts and other asset management firms are currently not bullish on Unilever PLC. On July 27, analysts at DZ Bank downgraded the stock to ‘Hold’ from ‘Buy’. In the same month, Diamond Hill Capital, published its first-quarter 2022 investor letter for Diamond Hill International Fund, in which it had this to say about Unilever PLC:
“Unilever’s recent results have been hampered by inflation, and the company guided to further margin pressure in 2022. In addition, the market was disappointed by Unilever’s failed attempt to acquire GSK’s consumer health business. The company announced a large reorganization which will reduce management overhead. While we expect Unilever to be able to successfully manage this inflationary environment, near-term results for the business will be challenging.”
1. The Goldman Sachs Group, Inc. (NYSE:GS)
Levin Easterly Partners’ Stake Value: $29,886,000
Percentage of Levin Easterly Partners’ 13F Portfolio: 2.66%
Number of Hedge Fund Holders(Q1): 71
Investment banking juggernaut The Goldman Sachs Group, Inc. was Levin Easterly Partners’ top stock pick at the end of June despite the stock of the bank falling by more than 10% during that period. Other funds covered by us that were bullish on The Goldman Sachs Group, Inc. at the end of June included John W. Rogers’ Ariel Investments and Thomas E. Claugus’ GMT Capital, with both of these funds raising their stake in the bank by 12% and 63%, respectively, during Q2.
Of the 13 analysts who cover The Goldman Sachs Group, Inc., 8 currently have a ‘Buy’ rating on the stock and the consensus price target on the stock among those 13 analysts is $413.92, which represents a potential upside of over 17% from where the stock is trading at present. The Goldman Sachs Group, Inc. Chairman & CEO, David Solomon, spoke with Jim Cramer on CNBC’s “Mad Money” show on July 16 and had this to say about the firm’s trading business and its leadership group:
“The trading, the trading business has always been core to the firm and it will always be core to the firm. What I’m, what I’m really excited about and and, you know, feel really great about is the leadership group and that division has really invested over the last four years and our client relationships. They’ve had a very, very targeted program of looking at the 100 most important clients in that business and making sure that our market share, our wallet share and the feedback we get from those clients is on a positive trajectory and improving and we’ve had real strides in the context of our wallet share with those top 100 clients, which really are the most significant institutions that we deal with in our market business. Sure there are lots of others but that top 100 is very important. So we’ve been committed to this business. I think it’s one of the great things that that Lloyd did. He was always steadfast in his commitment to this business. I’m steadfast in my commitment to this business. It served our clients well. We’ve got a great global footprint and we’re going to continue to make sure we’re in a position to serve our clients across all markets.”
You can also look at 10 Best Technology Stocks to Buy According to Ian Simm’s Impax Management and 10 Best Stocks to Buy According to Thomas Bailard’s Hedge Fund
Follow Insider Monkey on Twitter
Suggested articles:
10 Best Tech Stocks to Buy Now According to Lee Munder’s Hedge Fund
10 Best Stocks to Buy According to Thomas Bailard’s Hedge Fund
10 Best Technology Stocks to Buy According to Ian Simm’s Impax Management
This article is originally published at Insider Monkey.
