Murray Stahl founded Horizon Asset Management- which has since grown into the larger investment organization Horizon Kinetics- in 1994. Stahl, as with many other investment managers, believed that the broader stock market was too focused on short-term results, deciding (not entirely inaccurately) that as professional investors they would need to deliver attractive returns each year, quarter, and even month. Stahl in turn thought that an investor could capture a good deal of value merely by following a longer time horizon. Even though pure value investing has become more challenging, in the sense that it is easier for investors to compare valuation to financial metrics such as book value (and therefore reduced the number of companies trading at discounts to book), Horizon Kinetics believes that it can continue to realize good returns merely by looking out further.
When we look at Horizon’s most recent 13F filing, we see an emphasis on financial and services stocks, as has been the case for the last several quarters of reports. We also see- unsurprisingly, given Stahl’s emphasis on long term investing- that the sizes of many of the fund’s largest positions showed very little change from three months earlier. As a result, even though we are working with stock picks from the end of September we think that we can assume most of these stocks are still among Horizon’s top holdings. Read on for a quick look at five of the fund’s top picks or see the full list of stocks Horizon reported owning.
The fund owned 3.1 million shares of real estate developer Howard Hughes Corp (NYSE:HHC). As a real estate related company, Howard Hughes tends to be dependent on the broader economy- the stock’s beta is 2.2- and has risen strongly over the last year (up 51%) as the markets have seen an improvement in the real estate markets. Billionaire Bill Ackman’s Pershing Square owned 3.6 million shares in its own portfolio at the end of the third quarter (check out Ackman's stock picks).
AutoNation and three other stock picks from Horizon's 13F: