Patrick Gideon Wolff’s Grandmaster Capital recently disclosed its top picks as of the end of the fourth quarter. According to the 13F Form filed with the U.S. Securities and Exchange Commission, the investment firm’s three largest holdings at the end of 2014 were: Microsoft Corporation (NASDAQ:MSFT), Wells Fargo & Co (NYSE:WFC), and American Express Company (NYSE:AXP).
Grandmaster Capital is a San Francisco-based hedge fund that was founded by Patrick Gideon Wolff in 2011. Mr Wolff made a name for himself as a professional chess player, earning the title of Grandmaster and being crowned U.S. champion twice between 1989 and 1995. Prior to launching his own investment firm, Mr. Wolff served as Clarium Capital Management’s managing director for six years years. All this experience is reflected in Grandmaster Capital’s investment philosophy, which consists of applying fundamental analysis and seeking out value stocks with growth potential. According to Mr. Wolff, “you want a business that you can understand”, while picking stocks that are worth more than their current asking price is always crucial. The long/short fund’s equity portfolio is currently valued at around $220 million and consists mainly of stocks from the information technology, consumer discretionary, and finance sectors.
Grandmaster Capital’s top pick for the fourth quarter was Microsoft Corporation (NASDAQ:MSFT), with a position of 500,000 shares of common stock. Although the hedge fund reduced its holding in the company by 18% relative to the third quarter, it remains bullish regarding the technology giant. Furthermore, this position has been part of its equity portfolio since the beginning of 2013, gaining around 40% until its latest 13F filing. In addition to Grandmaster Capital, Microsoft Corporation (NASDAQ:MSFT) has the backing of numerous institutional investors. Jeffrey Ubben’s ValueAct Capital is the largest shareholder amongst the funds we track, with a position of 67.9 million shares. The investment firm is not only optimistic regarding the stock’s future upwards momentum, but has also been attributed with contributing to the company’s performance through its activist stake.
With a stake of 380,000 shares of common stock, Wells Fargo & Co (NYSE:WFC) is the second-largest position in Grandmaster Capital’s equity portfolio. Much like Microsoft, this holding has also suffered a reduction vis-à-vis the third quarter, despite the fact that the stock gained 20.4% during 2014. Nevertheless, the investment firm’s stake in the company continues to account for 9.45% of its equity portfolio and remains one of its top picks for the fourth quarter. This is not surprising, considering top managers across the board seem to agree that this stock is a good bet, thanks to solid margins and a good earnings outlook for 2016.
In 2014, Wells Fargo & Co (NYSE:WFC) achieved pre tax margins of 38.4% and while the street anticipates earnings to rise by a mere 1% this year, 2016 is expected to deliver an earnings growth rate of 10%. In fact, the stock is not only performing well, but is also backed strongly by Warren Buffett’s Berkshire Hathaway, which holds a position of 463 million shares, representing more than 20% of its equity portfolio. As everyone knows, Mr. Buffett’s moves enjoy the respect and following of countless investors on Wall Street and thus it is more than understandable to see Wells Fargo amongst Grandmaster Capital’s top picks for the end of the fourth quarter.
According to its latest 13F filing, Mr. Wolff’s firm was also betting on American Express Company (NYSE:AXP) at the end of 2014, boasting a stake of 197,400 shares. The hedge fund disclosed entering a new position in the company at the end of the first quarter of 2013 and since then, the stock has gained around 37%. Although the stock experienced volatile growth last year, with share prices taking a dive in October, the company seems to be on the right track. Furthermore, it is another one of the major stakes held by Berkshire Hathaway. Mr. Buffett’s firm is American Express Company (NYSE:AXP)’s largest institutional, with a position amounting to 151 million shares. In addition to the bullish stance taken on by this well-respected investment firm, the consensus earnings estimate for the next quarter is $1.35 per share, compared to $1.25 per share for the same period last year. Annual revenue for 2014 on the other hand is estimated to reach $33.8 billion, up from $33 billion in 2013 and $31.6 billion in 2012.
Disclosure: none.
