Locust Wood Boosts Exposure to These Companies

Locust Wood Capital Advisers is a New York-based hedge fund that was founded in 2002 by Stephen J. Errico with a capital of $29 million. Since then the fund has grown sharply and crossed the $1 billion mark. The fund’s philosophy is to primarily look for companies that are undergoing significant corporate transformations and determine if these corporate changes are being properly priced. Their key competency centers on paying the right price for these opportunities. Locust Wood Capital Advisers has an equity portfolio worth $886 million as of the end of December, with top 10 holdings amassing over half of this value, according to its latest 13F filing. The filing also showed that the fund initiated six new positions and sold out nine holdings.

In this article, we are going to take a closer look at five companies in which Locust Wood significantly increased its stakes during the last three months of 2016. The companies in question are Alphabet Inc. (NASDAQ:GOOGL), Abbott Laboratories (NYSE:ABT), Visa Inc. (NYSE:V), Johnson Controls International plc (NYSE:JCI), and Danaher Corporation (NYSE:DHR).

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Locust Wood Capital Advisers bought 38,739 Class A shares of Alphabet Inc. (NASDAQ:GOOGL) during the December quarter taking its total holding to 73,739 shares valued at $58.4 million. The stock has been on a roll and is trading near its 52-week high of $826. Alphabet Inc. (NASDAQ:GOOGL) recently overtook Apple Inc. (NASDAQ:AAPL) to become not only the world’s largest company in terms of market capitalization but Google has also topped it to become the most valuable brand. Analysts are extremely bullish on the stock with 40 out of 46 analysts rating the stock as a ‘Buy’ with a mean price target of $988. The company reported adjusted earnings of $9.36 per share for the fourth quarter, narrowly missing consensus estimate of $9.64. However revenue of $26.06 billion was higher than the expected $25.26 billion. Alphabet’s class A stock was the fourth most popular among the hedge funds tracked by Insider Monkey with 137 hedge funds holding shares at the end of the third quarter as compared to 135 a quarter earlier. The total value of their holdings also increased by almost 30% to $148 billion.

Locust Wood Capital Advisers nearly doubled its position in Abbott Laboratories (NYSE:ABT) by having acquired 458,070 shares and holding 946,410 shares worth $36 million at the end of 2016. Despite the healthcare sector facing pressures over drug pricing, Abbott Laboratories (NYSE:ABT)’s stock has shown as increase of nearly 13% over the last year. The stock of the $73 billion healthcare giant has a dividend yield of 2.48%. Abbott Laboratories (NYSE:ABT) is a dividend aristocrat which makes it attractive for fixed income investors. For the fourth quarter, Abbott reported EPS excluding special items of $0.65, in line with estimates. Sales of $5.33 billion beat analyst estimates of $5.41 billion. The number of funds tracked by us long the stock increased to 52 from 47 during the third quarter, while the total value of their holdings advanced by 14% to $18.1 billion.

Locust Wood Capital Advisers increased its stake in Visa Inc. (NYSE:V) by 30% over the quarter to 401,780 shares worth $31 million as of the end of December. The payment processing giant with a market value of $209 billion has performed extremely well since its IPO. Visa Inc. (NYSE:V) is valued highly by investors given the duopoly in payments that it enjoys along with Mastercard. The stock is trading close to its all-time high of $806 and has a relatively high P/E of 40 and a dividend yield of 0.77%. Visa Inc (NYSE:V) last reported quarterly revenue of $4.5 billion and EPS of $0.86 beating analyst expectations of $4.3 billion and $0.78, respectively. A total of 115 funds from our database held shares of Visa at the end of September, versus 118 funds at the end of June, although the value of their holdings appreciated to $102 billion from $93 billion quarter over quarter.

In Johnson Controls International plc (NYSE:JCI), Locust Wood Capital Advisers bought 458,070 shares, having increased its holding to 727,060 shares worth $30 million at the end of the last quarter. Johnson Controls International plc (NYSE:JCI) merged with Tyco International last year and moved its new headquarters to Ireland to lower its overall tax payments. The company reported revenue of $7.09 billion for the last quarter and EPS of $0.53, versus analyst estimates of $7.15 billion and $0.52, respectively. Johnson Controls International plc (NYSE:JCI)’s stock has advanced by 18% over the last 12 months. At the end of September, 55 funds from our database amassed long positions in the company, significantly higher compared to 32 funds three months earlier, while the value of their positions surged to $2.8 billion from $1.1 billion.

Locust Wood Capital Advisers added 99,090 shares of Danaher Corporation (NYSE:DHR) to its 13F portfolio during the October-December period and reported ownership of 368,113 shares worth $28.6 million. Danaher Corporation (NYSE:DHR)’s stock has inched down by 3.5% over the last 52 weeks. The company reported earnings of $1.05 per share for the December quarter, beating the consensus estimate of $1.03, while its revenue of $4.6 billion was higher than estimates of $4.54 billion. There were 54 funds tracked by us that amassed $1.99 billion worth of Danaher Corporation (NYSE:DHR)’s shares at the end of September, compared to 54 funds with stakes long $2.36 billion in aggregate a quarter earlier.

Disclosure: None