5 Best Large-Caps To Buy According To This Billionaire

Billionaire John Griffin founded Blue Ridge Capital 20 years ago, after working as Julian Robertson’s number two for years. The “Tiger Cub” is a value-oriented investor who has proven quite successful over time. As per Insider Monkey’s data, Mr. Griffin’s long equity stakes returned an average of 0.76% per month between 1999 and 2012 – outperforming the S&P 500’s 0.32% average monthly rise. Moreover, the firm’s top-five large-cap stock positions – in companies with a market capitalization of $20 billion or more, generated a weighted average monthly return of 0.84% during this period. So, let’s take a closer look at the investor’s top large-cap stakes as of September 30, in order to find out which stocks he considers worthy of support.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively the most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs.

Canadian Pacific Railway Limited (USA) (NYSE:CP)

– Shares Held by Blue Ridge Capital (as of September 30): 1.69 Million

– Value of the Holding (as of September 30): $258.29 Million

Let’s start with Canadian Pacific Railway Limited (USA) (NYSE:CP), which saw Blue Ridge Capital acquire 400 shares over the third quarter, as the stock recuperated from its late-June lows. Also long the stock was Andreas Halvorsen’s Viking Global, which last disclosed ownership of 3.59 million shares, or more than half a billion dollars in stock, and another 30 funds among those we keep track of.

Shares of Canadian Pacific Railway Limited (USA) (NYSE:CP) are up 17.6% year-to-date. However, they are roughly flat quarter-to-date, as concerns about pricing power, carloads and revenue per carload continue to arise – although many analysts now believe a rebound in coal prices could help the company recuperate in these areas. Having said this, it should be noted that the stock trades at almost 20 times its earnings, at a premium to its industry. On the other hand, a dividend yield above 1% makes it an attractive option for dividend investors.

Allergan plc Ordinary Shares (NYSE:AGN)

– Shares Held by Blue Ridge Capital (as of September 30): 1.25 Million

– Value of the Holding (as of September 30): $290 Million

Next up is Allergan plc Ordinary Shares (NYSE:AGN), a stock to which Blue Ridge boosted its exposure by 80% over the third quarter. Also increasing its participation in the company between July and September, inclusive, was William Von Mueffling’s Cantillon Capital Management, which held 986,550 shares after a 35% surge in its stake.

Allergan plc Ordinary Shares (NYSE:AGN)’s stock has tumbled almost 39% since January, and 17.3% since the fourth quarter started. However, going into the fourth quarter, 115 hedge funds in our database seemed to be expecting a recuperation. Moreover, in a recent research note, analysts at Argus also said they believed the stock would rebound on the back of strong new product sales and a promising pipeline.

 

Amazon.com, Inc. (NASDAQ:AMZN)

– Shares Held by Blue Ridge Capital (as of September 30): 407,900

– Value of the Holding (as of September 30): $341.53 Million

Standing on the lower step of Griffin’s large-cap podium as of September 30 was Amazon.com, Inc. (NASDAQ:AMZN), which witnessed a 18% spike in the fund’s stake over the third quarter. Counting on the support of 150 funds in our database, this was one of the most popular stocks in the third quarter, backed by legendary investors like Ken Fisher’s Fisher Asset Management, which last declared holding 1.97 million shares, or about $1.65 billion in stock.

Amazon.com, Inc. (NASDAQ:AMZN) has had a great year, with its stock up 13.2% since January. However, the fourth quarter has not been as good, as the shares lost 7.7% percent, largely driven by the victory of Donald Trump in the U.S. presidential election and declining estimates for the company’s AWS segment. On Monday, sources told Dow Jones that the tech giant could open more than 2,000 grocery stores.

Facebook Inc (NASDAQ:FB)

– Shares Held by Blue Ridge Capital (as of September 30): 3.4 Million

– Value of the Holding (as of September 30): $436.4 Million

Number two in this list is Facebook Inc (NASDAQ:FB). Over the third quarter, Blue Ridge augmented its exposure by 14%; meanwhile, over the same period, Philippe Laffont’s Coatue Management boosted its stake by 49%, to 6.28 million shares. On top of these two funds, another 147 firms in our database were long the social media behemoth as of the end of the third quarter.

Facebook Inc (NASDAQ:FB) has been another strong performer in 2016, returning more than 11.4%. And, same as Amazon, the stock lost almost 9% in the fourth quarter, also driven by concerns about President-elect Donald Trump’s win. In a recent issue of CNBC’s Fast Money, Karen Finerman recommended Facebook’s stock, arguing that, while depressed right now, the shares offer substantial value to investors in the long term.

Charter Communications, Inc. (NASDAQ:CHTR)

– Shares Held by Blue Ridge Capital (as of September 30): 1.86 Million

– Value of the Holding (as of September 30): $503.19 Million

Finally, there’s Charter Communications, Inc. (NASDAQ:CHTR), one of Blue Ridge’s largest positions going into the fourth quarter. In fact, the stock was also very popular among the funds in our database, with 112 supporters holding more than $18.4 billion in equity as of September 30. Another notable investor was Warren Buffett’s Berkshire Hathaway, which last disclosed ownership of 9.44 million shares, valued at more than $2.5 billion by the end of the third quarter.

Unlike its peers above, Charter Communications, Inc. (NASDAQ:CHTR) is not only up 21% year-to-date, but has also gained 1.2% in the fourth quarter. A few days ago, Wunderlinch analyst Matthew Harrigan reiterated a Buy rating on the stock, raising his price target from $280 to $330. As per the report, the company has substantial leverage because of “increasing net video and broadband gains, especially off lowering churn and reducing concomitant transaction costs (…) We remain enthused on the cable technology roadmap, Spectrum brand marketing, and eventual further wireless benefits – even with the Q3 CC angst,” the note added.

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