Locust Wood Capital Management’s Top Stock Picks for 2016

#3 Allergan plc Ordinary Shares (NYSE:AGN)

Shares Owned by Locust Wood Capital Advisers (as of December 31): 142,337

Value of Holding (as of December 31): $44.48 Million

Locust Wood Capital Advisers reduced its stake in Allergan plc Ordinary Shares (NYSE:AGN) by 1% in a quarter that saw pharma giant Pfizer Inc. (NYSE:PFE) make a $160 billion bid for the company. Shares of Allergan plc Ordinary Shares (NYSE:AGN) saw a major rally shortly afterwards in anticipation of this deal, but have given most of the gains back this year as they trade down by 15% year-to-date. On February 8, RBC Capital Markets analyst Randall Stanicky released a note in which he reiterated his ‘Outperform’ rating and $354 price target on Allergan’s stock. In his note, Stanicky mentioned that he expects the Allergan-Pfizer merger to be completed in the second-half of 2016 and that it is unlikely that the deal will fail. Phill Gross and Robert Atchinson‘s Adage Capital Management reduced its stake in Allergan by 70,300 shares during the fourth quarter, to just under 570,000 shares.

#2 McDonald’s Corporation (NYSE:MCD)

Shares Owned by Locust Wood Capital Advisers (as of December 31): 412,916

Value of Holding (as of December 31): $48.78 Million

It seems the more than 20% rally that McDonald’s Corporation (NYSE:MCD)’s stock witnessed during the fourth quarter enticed Locust Wood to take some profits off the table, as the fund reduced its stake in the company by 11% during that period. Unlike most other large-cap stocks, McDonald’s Corporation (NYSE:MCD)’s shares saw a decent rise in January of this year, after the company reported its best quarterly numbers in four years. Even though they have given up most of those gains this month, shares are still trading nearly flat for the year, greatly outperforming the market. For the fourth quarter, the company reported EPS of $1.31 on revenue of $6.34 billion both of which topped analysts’ expectations of EPS of $1.23 on revenue of $6.22 billion. The all-day breakfast service that the company recently launched was cited as one of the key drivers for its growth in the quarter, which led to a 5.7% jump in U.S comparable-store sales.

#1 Liberty Ventures (NASDAQ:LVNTA)

Shares Owned by Locust Wood Capital Advisers (as of December 31): 2.14 million

Value of Holding (as of December 31): $96.7 Million

Locust Wood hiked its stake in Liberty Ventures (NASDAQ:LVNTA) by 3% during the fourth quarter, which, coupled with the greater than 10% rise in the company’s stock during that period, cemented Liberty Ventures (NASDAQ:LVNTA)’s place at the top of the fund’s equity portfolio. However, it remains to be seen if the company can hold on to that spot during this quarter, as shares of Liberty Ventures have been on a gradual decline since the start of the year and are currently trading down by nearly 27% year-to-date. Last November, Liberty Interactive Group announced that it would be spinning off CommerceHub and Expedia Holdings to holders of Liberty Ventures Group’s stock. The completion of each of the spinoffs is expected to occur within the first-half of this year. Following these spinoffs, Liberty Ventures will be comprised of all of Liberty Interactive’s businesses and assets, other than those attributed to the QVC Group.

Disclosure: None