We All Know Sprott Loves Materials Stocks; Now See What Else It Likes

Sprott Inc. is a Toronto-based alternative asset manager founded by billionaire Eric Sprott back in 1981. The firm manages approximately $7.4 billion in assets and hold a U.S. public equity portfolio valued at $2.82 billion as of September 30. While Mr. Sprott is no longer involved in his firm’s day-to-day portfolio management operations, his team continues to be bullish on the long-term prospects of precious metals, although to a lesser extent. Materials stocks made up 17% of the fund’s portfolio, more than double any other sector when we discount the fund’s large options positions in the SPY (which are classified as finance sector positions).

Nonetheless, six of the fund’s seven most valuable equity positions were in stocks from other sectors. Given that, we’ll take a look at those holdings, as disclosed in Sprott’s latest 13F filing for the third quarter of 2016.

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Eric Sprott of Sprott Asset Management

CVS Health Corp (NYSE:CVS)

Shares Held by Sprott Inc. (as of September 30): 418,500

Value of Sprott Inc.’s Position (as of September 30): $37.24 million

Let’s start with CVS Health Corp (NYSE:CVS), a position that Sprott opened in the fourth quarter of 2014, and in which the fund increased its position very slightly during the third quarter of 2016. In addition to the 418,500 shares which Sprott was long, the firm also held put options underlying 180,400 shares. Harris Associates held 5.08 million shares of the stock on June 30, while Jim Simons’ Renaissance Technologies owned 3.84 million shares.

CVS Health Corp (NYSE:CVS) has not done great since the third quarter ended, losing almost 6.9% of its value in October. Last week, shares hit a 52-week-low of $82.55, ahead of the release of its third-quarter earnings report next week. The Street is modeling consensus EPS of $1.57, up from $1.29 posted in the same quarter of last year, on revenue of $45.31 billion, versus $38.64 billion in sales recorded a year earlier.

Medtronic PLC (NYSE:MDT)

Shares Held by Sprott Inc. (as of September 30): 444,100

Value of Sprott Inc.’s Position (as of September 30): $38.37 million

Next up is Medtronic PLC (NYSE:MDT), in which Sprott sold 2,900 shares over the third quarter, lowering its holding to 444,100 shares, in addition to put options underlying 202,600 shares. Another fund that is bullish on the company is Charles Paquelet’s Skylands Capital, which owned 35,245 shares, or about $3 million in stock, as of September 30.

Similar to its peer above, shares of Medtronic PLC (NYSE:MDT) have lost almost 6.2% since the end of the third quarter, largely on the back of lithium cluster concerns. On Tuesday, the company announced that the FDA had approved an IDE study initiation, after the release of positive results from Medtronic’s first-of-its-kind early feasibility study for the Harmony(TM) Transcatheter Pulmonary Valve (TPV).

We’ll check out three more non-materials stocks that Sprott loves on the next page.

Intercontinental Exchange Inc (NYSE:ICE)

Shares Held by Sprott Inc. (as of September 30): 151,100

Value of Sprott Inc.’s Position (as of September 30): $40.7 million

Sprott’s long position in Intercontinental Exchange Inc (NYSE:ICE) remained unchanged over the third quarter. However, the fund did add put options underlying 30,500 shares to its portfolio, as it hedges against its larger long position. As of the end of June 30, the regulated exchanges, clearing houses and listings venues operator was also owned by Andreas Halvorsen’s Viking Global, which held 1.13 million shares, and William Von Mueffling’s Cantillon Capital Management, with 1.03 million shares.

Intercontinental Exchange Inc (NYSE:ICE) gained 6.57% over the third quarter, but has dipped slightly in the fourth quarter. On Tuesday, the company reported third-quarter EPS of $3.21, missing the Street’s consensus by $0.01 (basically in-line, to be fair). And although revenue of $1.08 billion was up by 32.4% year-over-year, it was also only in-line with expectations. In addition, the company’s management declared a quarterly dividend of $0.85 per share, unchanged from the previous payout.

Fiserv Inc (NASDAQ:FISV)

Shares Held by Sprott Inc. (as of September 30): 432,000

Value of Sprott Inc.’s Position (as of September 30): $42.97 million

One of Sprott’s most bullish moves in the third quarter was in regards to its holding in Fiserv Inc (NASDAQ:FISV). Over the period, the fund increased its long position by 160%, to 432,000 shares, while trimming its put options stake by 50%, to an underlying 166,000 shares. Another fund in our database long the stock on September 30 was Louis Navellier’s Navellier & Associates, which owned 79,635 shares or $7.9 million in stock.

Shares of Fiserv Inc (NASDAQ:FISV) are almost flat in the fourth quarter. Last week, the company reported its third-quarter financial results, which were headlined by EPS of $1.14, $0.01 above the Street’s consensus, and revenue of $1.38 billion, $20 million below expectations. Shares tumbled on the day that followed the announcement, but then rebounded almost to pre-earnings levels.

Discover Financial Services (NYSE:DFS)

Shares Held by Sprott Inc. (as of September 30): 783,960

Value of Sprott Inc.’s Position (as of September 30): $44.33 million

Leaving two large options positions in the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) aside, Discover Financial Services (NYSE:DFS) represented the firm’s largest equity stake as of September 30. In addition to its long position, Sprott held put options underlying 181,200 shares at the end of the third quarter. Also bullish on the company was Ray Carroll’s Breton Hill Capital, which disclosed ownership of 17,395 shares as of September 30.

Same as its peer above, shares of Discover Financial Services (NYSE:DFS) are almost flat this quarter, even though the company recently posted top- and bottom-line beat with its third-quarter results. EPS of $1.56 beat expectations by $0.09, while revenue of $2.3 billion came in $30 million ahead of estimates.

Disclosure: Javier Hasse holds no interest in any of the securities or entities mentioned in this article.