Billionaire Richard Chilton’s Latest Stock Picks

Richard Chilton, the founder and manager of Chilton Investment Company, has a net worth of about $1.3 billion. We track 13F filings by billionaire hedge fund managers and other notable investors because these filings provide the most complete public picture as to what these market players are thinking (though they are limited, notably in the sense that they do not include short positions). Chilton recently filed its 13F for the third quarter of the year, ending in September 2012. Read on for some moves that we’ve identified in Chilton’s investment activity and review the fund’s previous filings.

CHILTON INVESTMENT COMPANY

Taking some profits on construction. Two of Chilton’s three top picks at the end of June had a strong relationship to construction- The Home Depot, Inc. (NYSE:HD) and paint and finish manufacturer Sherwin-Williams Company (NYSE:SHW)- and while those stocks remained near the top of the fund’s portfolio it sold shares in each during the third quarter. Home Depot’s stock price has risen 62% in the last 52 weeks, so it’s perhaps understandable that the fund would want to lock in some of those profits. Interestingly, earnings have shown little response to improvement in the homebuilding and construction industries and Home Depot now trades at 22 times trailing earnings and 18 times forward earnings estimates. Phil Gross and Robert Atchinson’s Adage Capital Management had owned a large position in Home Depot during the second quarter. We think that we’d avoid the stock at least until we start seeing better business performance. Sherwin-Williams, like Home Depot, is up over 60% in the last year. Earnings have been rising as well- up 31% last quarter compared to the third quarter of 2011- though revenue growth has been much lighter. At a trailing P/E multiples of 28, we wouldn’t buy that stock either and it may even be overvalued.

W.R. Grace. Chilton initiated a position of 1.4 million shares in $4.7 billion market cap specialty chemicals company W.R. Grace & Co. (NYSE:GRA), which is perhaps best known for providing catalysts that are used to convert oil products into fuels such as gasoline. The stock is up 55% in the last year, but the trailing P/E multiple is only 17 as the business has kept pace; we’d note, however, that many other specialty chemicals companies carry significantly cheaper multiples. We’d have to look at the company’s growth more closely to see if it deserves a premium relative to its peers.

Selling some Vivus. Vivus, Inc. (NASDAQ:VVUS), a pharmaceutical company which is being watched closely for its potential to bring an effective (though risky) weight loss drug to market, saw Chilton reduce its stake from 3.4 million shares to 2.9 million. Vivus- as a development stage pharmaceutical company- has been unprofitable thus far though the weight loss market is huge and Vivus has the potential to make a good deal of money as long as its drug is not outcompeted by emerging competitors such as that being developed by Arena Pharmaceuticals. Read our most recent analysis of Vivus.

Dollar General. Chilton slightly increased the size of its position in Dollar General Corp. (NYSE:DG) and closed September with 1.7 million shares in its portfolio. As might be expected of a dollar store, Dollar General has very little exposure to the broader economy with a beta of 0.1. It’s also been doing quite well during a period of fairly low growth in the U.S. as earnings in its most recent quarter came in 47% higher than in the same period a year earlier. At a market capitalization of $16 billion, it now has earnings multiples in the teens on both a trailing and a forward basis. While we’d expect its growth rate to slow to some degree, even moderate growth would make it a buy at these levels and so we’d be interested in examining Dollar General.

Home Depot and Sherwin-Williams don’t look like buys at these valuations, and so we can understand Chilton selling shares there. W.R. Grace and Dollar General could potentially be good buys, even though they’re not notably cheap and investors should review the companies before making any investment decisions.

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 Most Wanted Drug Lords

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

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!