Billionaire David Harding’s Most Promising Stock Picks

Page 1 of 2

The most popular small cap picks among hedge funds have an average alpha of 120 basis points per month, according to our analysis, and between September and December a portfolio of hedge funds’ favorite small cap stocks- which we had identified as such in our August newsletter- returned 14% (read more about our hedge fund small cap strategy). Why do small caps do so well, even as hedge funds struggle in general? We think that it is because these stocks receive less coverage from the media and less attention from large institutional investors, and so it is easier for research teams to identify mispricings. As a result we think that small cap stocks can be a particularly interesting area to look at a hedge fund’s publicly disclosed positions and think of them as recommendations for further review (it’s of course unwise to blindly follow anybody). Here are five stocks which billionaire David Harding’s Winton Capital Management owned as of its most recent 13F filing and which had market capitalizations between $1 billion and $5 billion at the time (see more stocks Harding liked):

Winton’s top pick in this valuation range was Molex Incorporated (NASDAQ:MOLX), a $4.8 billion market cap electronics components manufacturer; the fund owned about 900,000 shares of Molex. The second quarter of the company’s fiscal year ended in December, with Molex reporting revenue and earnings growth of about 10% versus a year earlier. The trailing earnings multiple is 17, which seems about in line for that growth rate. Value investor Edgar Wachenheim’s Greenhaven Associates was another fund reporting a position in Molex at the end of the third quarter of 2012 (find Greenhaven’s favorite stocks).

David HardingHarding and his team also liked TECO Energy, Inc. (NYSE:TE), increasing the size of its position by 39% to a total of 1.3 million shares. TECO is an electric utility primarily operating in Florida; as with many utilities, it pays a high dividend yield- about 5%. It also has little exposure to movements in the broader market; from a statistical point of view, the stock’s beta is 0.6. We think that it could be well worth comparing to larger utilities such as The Southern Company (NYSE:SO) and Duke Energy Corp (NYSE:DUK) for an income investor.

Three more of Harding’s picks, including a newspaper publisher:

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
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

On the Move: The 10 Fastest Growing Businesses in 2015

Fast Money: The 10 Highest Paying Fast Food Restaurants

Mixing It Up: The 14 Best Music Mashups of 2014

Rito Pls Buff: The 10 Least Played Champions in LoL Season 4

10 Covers of Popular Songs that are Better than the Originals

Must See TV: The 9 Most Anticipated Shows of 2015

The 15 Biggest Box Office Bombs of All Time

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

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!