Top 5 Finance Stock Picks of Cantillon Capital

Columbia University graduate William Von Mueffling had quite an investment record at Lazard Asset Management, delivering over 30% average annual returns between 1998 and 2003 before he set up Cantillon Capital Management. According to the fund’s latest 13F filing for the March quarter, the value of its U.S equity portfolio stood at over $5.71 billion on March 31. The finance sector represented about 18% of the value of that portfolio and in this article we’ll dig deeper into the firm’s top bets in the sector, which is down by about 4.2% year-to-date.

We believe that imitating hedge funds and other large institutional investors can be helpful in identifying stocks capable of outperforming the broader market. Through extensive research that covered portfolios of several hundred large investors between 1999 and 2012, we determined that following the small-cap stocks that large money managers are collectively bullish on, can generate monthly returns nearly 1.0 percentage points above the market (see more details here).

#5 CME Group Inc (NASDAQ:CME)

 – Shares Owned by Cantillon Capital (as of March 31): 2.46 Million

 – Value of Holding (as of March 31): $236.65 Million

Cantillon trimmed its stake in the $31 billion financial and commodity market operator by 3% during the first trimester. CME Group Inc (NASDAQ:CME)’s revenue of $934 million for the first quarter was a record for the company, helped by a 12.4% increase in clearing and transaction fees coupled with a 4.5% increase in market data and information services revenue, though the record quarter still fell short of the Street’s expectations by $8.43 million. The record volumes seen in energy, electronic options and overall options were slightly hindered by a lower average rate per contract. The company’s EPS of $1.15 was in-line with estimates however, so quarterly performance was solid and the stock is up by 3% year-to-date. Barry Dragan‘s Intermede Investment Partners was bullish on CME Group Inc (NASDAQ:CME) during the first quarter, as it raised its holding in the stock by 42% to 355,700 shares.

#4 Intercontinental Exchange Inc (NYSE:ICE)

 – Shares Owned by Cantillon Capital (as of March 31): 1.02 Million

 – Value of Holding (as of March 31): $239.24 Million

Following a 4% slashing to its position during the January-to-March period, Cantillon’s Intercontinental Exchange Inc (NYSE:ICE) holding represented 4.19% of the value of the fund’s equity portfolio. In early March the company entered into a definitive agreement to acquire two units from McGraw Hill Financial (now S&P Global Inc.), those being its Standard & Poors Securities Evaluations division and its Credit Market Analysis division. The move is aimed at fulfilling the rising demand for independent data in the global fixed income and credit markets, according to Intercontinental Exchange Inc (NYSE:ICE)’s CEO Jeffrey C. Sprecher. Intercontinental’s stock price is down by over 6% this year. Eric Sprott‘s namesake fund Sprott Asset Management initiated a position in the Atlanta-based global operator of regulated exchanges during the first quarter consisting of 81,000 shares.

We follow the money to Cantillon Capital’s top three finance stock picks on the next page.