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
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

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

Top 10 Highest Paying Jobs in the World

Most Expensive Day-Care in New York City

The 10 Cheapest Places to Retire Abroad

Top 10 Most Expensive Luxury Cars in the World – 2014

Killer Small Business Ideas

The 50 Best Personal Finance Blogs

Most Expensive Apartments in New York City

Bloodiest UFC Fights Ever Fought

Most Expensive Rum Brands 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!