Billionaire David Harding’s Top Stock Picks Pay High Yields

Winton Capital was founded by David Harding in 1997 and by the end of 2011 had grown to $28 billion under management. The fund has had an impressive performance over the last several years, with positive returns in 2008 and only slightly negative returns in 2009 before gains in the next two years. Winton’s 13F filing for the end of September discloses many of the long equity positions that it owned at that time, and investors can go through what the fund owned as a source of potential stock ideas. Read on for our quick thoughts on the fund’s largest holdings or see the full portfolio.

David Harding

Harding and his team’s top pick was Eli Lilly & Co. (NYSE:LLY), with Winton owning 1.1 million shares at the end of September. The large pharmaceutical company trades at 13 times earnings, on both a trailing and a forward basis. It’s also an excellent defensive stock with a beta of 0.4 and a dividend yield above 4% at current prices. While revenue was down last quarter compared to a year earlier, earnings were up. We’re interested in what we see here and think that we might take a closer look at the company. Andreas Halvorsen’s Viking Global also liked the stock during the third quarter, reporting a position of 4.9 million shares (find more stocks that Viking Global owns).

Philip Morris International Inc. (NYSE:PM) was another of the fund’s favorite stocks as it increased its stake 42% to about 540,000 shares. The company sells Philip Morris brands of cigarettes such as Marlboro in international markets. It’s another intriguing income stock at a 4% dividend yield, though its financials are slipping (likely due to poor demand in Europe). Its trailing P/E is 17. Billionaire Ken Fisher’s Fisher Asset Management more than doubled the size of its own position in Philip Morris last quarter (see more of Ken Fisher’s stock picks). We think that other cigarette companies also offer good yields and might make better values.

Another of the fund’s top picks was Consolidated Edison, Inc. (NYSE:ED), which at current prices pays a 4.4% yield. The $16 billion market cap electric utility trades at 14 times trailing earnings, and as might be expected for a utility marries its high dividend yield to a low beta (0.1). As a result it looks like a very good defensive stock or income generator. We might also consider Con Ed against other utilities on a value basis, given the low multiple. Winton reported owning about 800,000 shares at the end of September.

Winton also bought shares of Verizon Communications Inc. (NYSE:VZ), another high yield stock (the dividend yield is about 5% here). The fund owned about 840,000 shares of the telecom. At a market capitalization of just over $120 billion, it carries trailing and forward P/Es of 40 and 15, respectively, as sell-side analysts promise strong earnings growth in 2013. Net income in the third quarter was 16% higher than in the same period in 2011, but the gap in the earnings multiples is still high enough that we think we’d avoid the stock.

Continuing the streak of companies with generous payout policies was Public Service Enterprise Group Inc. (NYSE:PEG). The company is a diversified utility providing electricity and natural gas in the northeastern and mid-Atlantic U.S. As with Con Ed, it’s unsurprising to see a low beta (0.3) and a high dividend yield (4.8%) at a utility. It trades at 11 times trailing earnings, a discount to Con Ed, though Wall Street analysts actually expect a small decrease in earnings in 2013. Again, we’d be interested in comparing it to other utilities to see if it might be a good buy.

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 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

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

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!