$28 Billion Hedge Fund Winton Capital’s Top Stock Picks for 2013: Consolidated Edison, Inc. (ED), Verizon Communications Inc. (VZ), Eli Lilly & Co. (LLY)

Page 1 of 2

Winton Capital was founded by David Harding in 1997. Primarily a quantitative fund, it had over $25 billion in assets under management roughly a year ago. Winton recently filed its 13F for the end of December 2012, disclosing many of its long equity positions going into this year. We use 13F filings to develop investment strategies (read about why you should buy the most popular small cap stocks among hedge funds) and also to provide a quick overview of a manager’s top picks so that investors can do more research if the stock sounds appealing. Read on for our thoughts on Winton’s five largest positions and compare them to previous filings.

David Harding

The fund’s top pick was Consolidated Edison, Inc. (NYSE:ED) with about 780,000 shares in its portfolio at the beginning of 2013. The $17 billion market cap company shares a couple attributes with many other utilities: it has a low beta (0.1) and a relatively high dividend yield (a little over 4% at recent dividend levels and current prices). This makes it a good prospect for income or defensive investors. Consolidated Edison, Inc. (NYSE:ED) also trades at 15 times earnings, on either a trailing or a forward basis, and while that might not be quite low enough for a value investor those who do like it for its dividends should be satisfied that it is not overvalued enough to pose much of a risk to their principal.

Harding and his team liked Verizon Communications Inc. (NYSE:VZ), upping their stake to about 960,000 shares from about 840,000 three months earlier. Verizon also has little exposure to the broader economy, as demonstrated by its beta of 0.4, and also offers a high dividend yield (we would place the yield at about 4.5%). Revenue was up slightly last quarter compared to the fourth quarter of 2011. Analyst consensus for 2014 implies a forward earnings multiple of 14. We don’t find Verizon Communications Inc. (NYSE:VZ) particularly appealing but could see comparing it to other telecoms including Vodafone, which has a substantial stake in Verizon Wireless.

Eli Lilly & Co. (NYSE:LLY) was another of Winton’s largest holdings. The $60 billion market cap drug manufacturer is yet another stock aimed at more conservative investors as the beta is 0.4 and the dividend yield is 3.6% going by recent dividend payments. Sales dipped slightly in the fourth quarter of 2012 versus a year earlier, causing a 4% decline in net income. Wall Street analysts expect a decline in earnings to continue and so the forward P/E comes out to 19. We would avoid the stock.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!