Irving Kahn, the oldest active investor on Wall Street, died this week at age 109. The successful manager is succeeded by his sons, who he co-founded Kahn Brothers Group with in 1978, and where he still worked three times a week into late 2014. The fund recently disclosed its top picks for the past quarter, and we’ll take a look at them now in memory of the inspirational investor. According to the 13F Form the fund recently filed with the U.S. Securities and Exchange Commission, the hedge fund’s largest position was in Citigroup Inc (NYSE:C). The hedge fund’s top five picks also contained Merck & Co., Inc. (NYSE:MRK), Pfizer Inc. (NYSE:PFE), and New York Times Co (NYSE:NYT).
Kahn Brothers Group was founded in 1978 by Irving Kahn and his two sons, Alan and Thomas. Prior to launching his own firm, Mr. Kahn worked at Abraham & Company and Lehman Brothers. Furthermore, the former hedge fund manager followed in the footsteps of his partner Benjamin Graham, becoming an advocate of “contrarian” value investing. At the time of Irving Kahn’s death, his privately owned investment firm had around $1 billion in assets under management. Furthermore, in its last 13F filing, Kahn Brothers Group disclosed an equity portfolio with a market value of $580 million, down from $614 million at the end of the third quarter. While its holdings are quite diversified, stocks from the financial sector account for more than 35% of the hedge fund’s equity portfolio.
The largest holding in Kahn Brothers Group’s equity portfolio last quarter was represented by Citigroup Inc (NYSE:C), where the fund held a stake of 1.19 million shares. Although Kahn Brothers trimmed its stake in the company by 3% during the fourth quarter, it continues to bet big on Citigroup, as the equity accounts for more than 11% of the fund’s total holdings. Despite the hedge fund’s bullish stance, the stock only gained 3.5% throughout 2014, while shares have dropped more than 2% year-to-date. Nevertheless, as a long-term investment, Citigroup Inc (NYSE:C) has been quite profitable, delivering returns of 55% over the past five years. Furthermore, the company has the backing of other major institutional investors, such as Ken Fisher’s Fisher Asset Management, which holds a large stake of 11.64 million shares.
Kahn Brothers Group was also betting big on Merck & Co., Inc. (NYSE:MRK), with a stake of 1.05 million shares. The stock gained approximately 14% during 2014, after growing by 22.5% the year before, and is a favorite amongst institutional investors and billionaire hedge fund managers. In addition to Kahn Brothers Group, Merck & Co., Inc. (NYSE:MRK) also had the backing of Fisher Asset Management, which owned 6.64 million shares. Phillip Gross and Robert Atchinson were also betting on the stock, as was the hedge fund D E Shaw. In December of 2014, the pharmaceutical company announced the acquisition of Cubist Pharmaceuticals Inc. (NASDAQ:CBST) – which would see it absorb a net debt of $1.1 billion – and which had a negative impact on shares. Nevertheless, the stock regained its upwards trajectory on the back of the shared optimism displayed by investors.
It comes as no surprise to see Pfizer Inc. (NYSE:PFE) amongst Kahn Brothers Group’s top picks for the past quarter, with ownership of 1.88 million shares. After all, it is one of the most popular health care stocks amongst the hedge funds we track, with an 11.7% fund ownership rate. So far, the company’s bulls were proven right, as the stock has already gained around 11% year-to-date. Although Pfizer Inc. (NYSE:PFE)’s latest earnings results did not outperform estimates, numerous institutional investors remain optimistic regarding future performance. Last quarter, the stock was held by Ken Fisher, Cliff Asness, and Ric Dillon, to name just some of the company’s largest investors.
With a stake of 4.13 million shares, New York Times Co (NYSE:NYT) ranks as one of Kahn Brothers Group’s top picks for the fourth quarter. Although the hedge fund trimmed its holding by a mere 6% last quarter, its bullish stance towards the company seems unaltered. After all, the fund has held a significant amount of shares for several years and has certainly not regretted the decision. From 2010 to the end of 2014, the stock gained 71% and year-to-date, the stock has already climbed approximately 6%. New York Times Co (NYSE:NYT) is backed by James H. Litinsky’s JHL Capital Group, which owned 9.6 million shares and is thus one of the company’s largest institutional investors at the end of 2014. Billionaire hedge fund managers such as Jim Simons and Ken Griffin also boast the stock amongst their equity holdings.
Disclosure: None
