We recently compiled a list of the 10 Safe Stocks to Buy According to Billionaire Chilton. In this article, we are going to take a look at where Arthur J. Gallagher & Co. (NYSE:AJG) stands against the other safe stocks recommended by billionaire Richard Chilton.
Chilton Investment Company, founded by Richard L. Chilton, Jr. in 1992, aims to achieve appealing long-term returns while minimizing volatility. Since its establishment, the company has diligently adhered to a fundamental bottom-up investment approach, characterized by an ownership mindset. Its primary aim is to acquire fractional ownership in outstanding businesses rather than engaging in short-term stock trading.
Richard L. Chilton Jr. is the chairman, CEO, and chief investment officer of Chilton Investment Co. He has been a hedge fund manager for 18 years, which is a significant tenure in the challenging hedge fund industry. Chilton began his career in 1983 as an analyst with Alliance Capital Management, working alongside small-cap equity managers Frank Burr and Paul Jenkel. In 1990, he started a money management business for Allen & Co., a private bank, but left after two years to establish his own hedge fund company.
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Drawing on lessons in shorting stocks learned from Julian Robertson of Tiger Management Corp., Chilton set up his firm in a small, one-room office in New York, managing a classic long/short equity hedge fund. Chilton’s decision to start his own hedge fund was influenced by Art Samberg, a board member of the mutual fund Chilton co-managed. After expressing his desire to leave Allen & Co., where he had established a money management business, Samberg encouraged him to start his own fund, recognizing his talent. In January 1992, Chilton left Allen & Co., declined an offer from CEO Herbert Allen to buy a stake in his new venture, and instead accepted $1 million in investment from Allen, combining it with family money to launch his hedge fund with $5 million.
Starting his hedge fund in July 1992, Chilton aimed to create a classic long/short equity hedge fund, inspired by the first hedge fund model launched by Alfred Winslow Jones. His strategy was to always remain both long and short, without attempting to time the market. Chilton’s reputation grew through word of mouth, attracting prominent investors, endowments, and foundations. Pension funds later followed.
Chilton Investment’s appeal to institutional investors lies in its client-first approach and strong performance. The firm has been a leader in transparency and SEC registration. During the 2008 financial crisis, Chilton allowed clients to withdraw funds, which later returned. Chilton’s background in managing pension money at Alliance Capital gave him crucial experience in transparency and accountability, making his firm attractive for investors seeking long/short strategies. Chilton sees current opportunities in blue-chip companies with strong financials, solid dividend yields, and steady earnings growth. He expects these “dividend aristocrats” to outperform in a flat S&P environment, offering stability and consistent returns through growing dividends. Today, Chilton’s firm has grown significantly, with offices worldwide, a team of sector specialist analysts, and $7 billion under management across various strategies in global markets.
Richard L. Chilton Jr. graduated with a B.S. degree in Finance and Economics from Alfred University. Acknowledged for his business acumen, Forbes ranks Richard Chilton 773rd among the world’s wealthiest individuals, estimating his net worth at $1.3 billion. Chilton Investment Company caters to 9 clients, managing discretionary assets totaling $1,266,939,000, as per their Form ADV dated March 2024. Their 13F filing for Q1 2024 revealed managed 13F securities amounting to $3.6 billion.
Our Methodology
This article highlights the 10 safe stocks to buy according to billionaire Chilton, including analyst ratings and key details about each company, as well as the number of hedge funds invested in them.
Why focus on the stocks that hedge funds invest in? Our research shows that following the top picks of leading hedge funds can result in returns that beat the market. We use this strategy in our quarterly newsletter, where we choose 14 small-cap and large-cap stocks each quarter. Since May 2014, this approach has generated a 275% return, outperforming the benchmark by 150 percentage points. (see more details here)
An insurance broker talking to a client, demonstrating the trust of their services.
Arthur J. Gallagher & Co. (NYSE:AJG)
Chilton Investment Company’s Stake Value: $138,135,098
Number of Hedge Fund Holders: 39
Arthur J. Gallagher & Co. (NYSE:AJG) is one of the safe stocks to buy according to billionaire Chilton. Arthur J. Gallagher & Co. (NYSE:AJG) is a global insurance brokerage, risk management, and consulting firm headquartered in Rolling Meadows, Illinois, founded in 1927. Arthur J. Gallagher & Co. (NYSE:AJG) operates in more than 150 countries, and has grown to become one of the largest insurance brokers in the world. Arthur J. Gallagher & Co. (NYSE:AJG) recently expanded its benefits consulting services by acquiring Cleary Benefits Group Inc., a firm specializing in advisory services for mid-size to large businesses. This acquisition enhances Arthur J. Gallagher & Co. (NYSE:AJG)’s expertise in health and welfare benefits and boosts its presence in the northeast region.
Arthur J. Gallagher & Co. (NYSE:AJG)’s growth strategy is driven by a robust mergers and acquisitions (M&A) pipeline. In the first quarter of 2024 alone, Arthur J. Gallagher & Co. (NYSE:AJG) completed 12 acquisitions, adding $69.2 million in annualized revenues. Arthur J. Gallagher & Co. (NYSE:AJG) posted a 13.37% increase in quarterly revenue, reaching $2.64 billion in Q2 2024, which contributed to a 17.58% year-over-year rise, bringing the total revenue for the past twelve months to $10.39 billion. Revenue is expected to keep climbing, potentially hitting $12.86 billion by 2025.
Analysts are optimistic about Arthur J. Gallagher & Co. (NYSE:AJG)’s future, with many issuing a “Buy” rating, with an average price target of $269, and a high estimate of $310, suggesting a possible 10% increase from current levels. Additionally, Arthur J. Gallagher & Co. (NYSE:AJG)’s earnings per share (EPS) are projected to grow by nearly 12% in 2025.
Arthur J. Gallagher & Co. (NYSE:AJG) ranked 9th on our list of safe stocks to buy according to billionaire Chilton. As of the end of the first quarter of 2024, Chilton Investment Company held 552,452 shares of AJG, valued at $138,135,098. This investment made up 3.78% of Chilton Investment Company’s total portfolio, based on regulatory filings.
Overall AJG ranks 9th on our list of the safe stocks to buy according to billionaire Chilton. While we acknowledge the potential of AJG as an investment, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AJG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
