$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

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
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 World’s Most Famous Circuses

Best Hair Stylists

Most Popular NASCAR Drivers

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

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 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!