Gardner Russo & Gardner recently filed its 13F with the U.S. Securities and Exchange Commission for the reporting period of June 30, disclosing a public equity portfolio valued at $11.38 billion. Gardner Russo & Gardner is managed by Tom Russo, who likes to invest in companies with strong global brands that have huge growth potential in emerging markets. He managed to beat the S&P 500 index by 4.7 percentage points annually between 1984 and 2011. Gardner Russo’s 13F equity portfolio contains a total of 109 positions. Over 50% of the fund’s portfolio is represented by Consumer Staples stocks, while Finance stocks represent over 20% of the portfolio. Gardner Russo seems to be a fan of Mastercard Inc (NYSE:MA), Philip Morris International Inc. (NYSE:PM), and Wells Fargo & Co (NYSE:WFC), which certainly qualify in terms of the aforementioned brand power and global growth potential metrics. We’ll discuss these stocks in this article.
Bornfree / Shutterstock.com
We track hedge funds to learn about their investment strategies. According to our research, hedge funds’ large-cap stock picks historically delivered a monthly alpha of six basis points, though these stocks underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. These stocks were able to generate alpha because of their lower risk profile. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month. These stocks were slightly riskier, so their monthly alpha was 80 basis points (read the details here). Since the official launch of our small-cap strategy in August 2012 it has performed just as predicted, returning over 123% and beating the market by more than 65 percentage points.
Follow Thomas Russo's Gardner Russo & Gardner
First, we’ll talk about Mastercard Inc (NYSE:MA), in which Gardner Russo slightly increased its position to 10.03 million shares during the second quarter. The reported value of the stake is around $937.8 million. MasterCard (NYSE:MA) is a technology company in the global payments market, with a market cap of $110.01 billion. The stock has gained 11.08% year-to-date (YTD), compared to the industry’s more muted returns of 3.88%. For the second quarter, Mastercard Inc (NYSE:MA) posted net income of $921 million, down from $931 million in the same quarter last year. The company was able to increase its quarterly revenue by 1% to $2.4 billion versus the same period in 2014 however, while its worldwide purchase volume increased by 12% year-over-year on a local currency basis, to $841 billion. Among the largest shareholders of MasterCard (NYSE: MA) is John Armitage‘s Egerton Capital, holding 4.36 million shares as of June 30.
Next up is Philip Morris International Inc. (NYSE:PM), in which Gardner Russo disclosed ownership of 10.43 million shares, valued at $836.04 million. The stake represents a 3% increase over the quarter. Philip Morris International Inc. (NYSE:PM) is an international tobacco company, which has a market cap of $133.03 billion. Shares of the company have increased by 3.6% year-to-date. Philip Morris International Inc. (NYSE:PM) reported second quarter revenues of $6.9 billion, down by 12.0% compared to the same year-ago quarter. EPS for the quarter was $1.21, up by 3.4% versus $1.17 in the same quarter of last year. Among the investors we track is Harris Associates, which holds 3.89 million shares of Philip Morris as of the end of the first half of 2015.
Lastly is Wells Fargo & Co (NYSE:WFC), a diversified, community-based financial services company with $1.7 trillion in assets. Gardner Russo trimmed its stake in Wells Fargo & Co (NYSE:WFC) by 6,539 shares to 14.68 million shares, with a reported value of $825.33 million. With a market cap of $297.48 billion, Wells Fargo & Co (NYSE:WFC) is engaged in providing banking, insurance, investments, mortgage, and consumer and commercial finance services. The company’s stock has gained 3.23% YTD. Yesterday, Reuters reported that Wells Fargo & Co (NYSE:WFC) is planning to sell its crop insurance business. The company is reportedly going through strategic options for its Rural Community Insurance Services subsidiary, including a sale option. Wells Fargo & Co (NYSE:WFC) is also a favorite stock of Ken Fisher, whose firm Fisher Asset Management holds 18.70 million shares of the company as of June 30.
Disclosure: none
