Charles Akre’s Akre Capital Management has filed its 13F for the fourth quarter of 2012, disclosing many of its long equity positions as of the end of December. We have been tracking 13F filings from hedge funds and other notable investors to build our database of filings, which can then be used to help find investments that are likely to beat the market based on historical trends. For example, the most popular small cap stocks among hedge funds tend to be good picks; our list of these stocks from our August newsletter produced an excess return of 18 percentage points between September and January (read more about our hedge fund strategies). Of course a more basic way to use 13Fs is to review a fund’s top stock picks and see if they are worthy of further research. Here are our thoughts on Akre’s five largest holdings going into 2013 (compare these top picks to those in previous filings):
The fund’s top pick was Mastercard Inc (NYSE:MA) with Akre reporting a position of about 340,000 shares. The credit card company reported a 10% increase in revenue last quarter compared to the fourth quarter of 2011, and earnings were up as well (though at a rate that is not likely to continue). Mastercard was one of the most popular services stocks among hedge funds in the third quarter of 2012 (see the top ten services stocks). However, the trailing earnings multiple is quite high at 24 and we think that other credit card stocks including Capital One Financial Corp. (NYSE:COF) and Discover Financial Services (NYSE:DFS) might be better value prospects.
Akre owned 1.7 million shares of American Tower Corp (NYSE:AMT) at the end of December. American Tower operates as a real estate investment trust, giving the company a favorable tax status as long as it distributes a large share of its income to shareholders. While this setup often results in high yields, American Tower’s dividend yield is not very high at just over 1%. Billionaire Ken Griffin’s Citadel Investment Group more than tripled the size of its position in the stock during the third quarter and closed September with 2.1 million shares in its portfolio (check out Griffin's stock picks).
See three more of Akre's favorite stocks, including a Warren Buffett stock pick: