Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

L-3 Communications Holdings Inc. (LLL), Northrop Grumman Corporation (NOC), Torchmark Corporation (TMK): David Harding’s Top Picks

In an interview on CNBC, David Harding, founder and president of Winton Capital Management said that the S&P 500 is nothing else, but a trading system, and “by the way, it is not a really good one.” Consequently, he presented a different system that could help investors outperform the index: choosing stocks at random and weighting them equally. In fact, Mr. Harding assures that “if you choose stocks at random and combine them, you always beat the S&P 500 -or in 99.99% of cases; and that is consistent with my understanding of investment mathematics.”

Let’s thus take a look at Winton’s equity portfolio in order to find out if any of its top picks deserve further research and could be considered as long-term investment options, like Mr. Harding does.

David Harding

According to Winton’s latest 13F filing, its largest equity position is that at L-3 Communications Holdings, Inc. (NYSE:LLL), a $10.4 billion market cap system contractor in aircraft modernization & maintenance, Command, Control, Communications, Intelligence, Surveillance and Reconnaissance systems, and government services. The fund last disclosed ownership of 1.36 million shares of the company, worth more than $165 million at current stock prices. The stake at L-3 Communications Holdings, Inc. (NYSE:LLL) accounts for more than 1% of the fund’s total equity portfolio.

Sean Cullinan’s Point State Capital is also betting on L-3 Communications Holdings, Inc. (NYSE:LLL). Over the first quarter of 2014, the fund started a stake in the company, with 1.58 million shares.

Other big bets were placed on Northrop Grumman Corporation (NYSE:NOC), Torchmark Corporation (NYSE:TMK) and Medtronic, Inc. (NYSE:MDT). The fund upped its stake in all three of these companies over the last reported quarter.

Northrop Grumman Corporation (NYSE:NOC) is a $26.68 billion market cap security company in which Winton holds 1.13 million shares. This position has a value of more than $144 million at current stock prices. The stock trades at almost 14 times the company’s earrings, at a considerable discount to the 18x P/E industry average.

Another fund that also boosted its exposure to Northrop Grumman Corporation (NYSE:NOC) over the first quarter of 2014 is Cliff Asness’ Aqr Capital Management, which disclosed ownership of 1.72 million shares, after having added 6% to its holdings.

Torchmark Corporation (NYSE:TMK) is an insurance holding company with a market cap barely above $7 billion. Winton last declared holding 1.54 million shares. However, a stock split of 19:100 shares on April 1 turned them into 8.13 million shares, which would be worth $435 million at the current stock price. This means that, since the end of the first quarter, when the fund’s position was worth $121.66 million, the stock has more than tripled in price.

Another famed investor betting on Torchmark Corporation (NYSE:TMK) is the one-and-only Warren Buffett, who owns about 22.29 million shares, following the split.

Medtronic, Inc. (NYSE:MDT) is a $62.66 billion market cap medical technology provider, of which Winton owns 1.95 million shares, worth almost $125 million at current stock prices.

Another fund that has been capitalizing on Medtronic, Inc. (NYSE:MDT)’s 9.6% return, year-to-date, is Harris Associates, which last disclosed ownership of 13.4 million shares of the company.

Watch the full video with Mr. Harding’s interview below:

Disclosure: Javier Hasse holds no position in any stocks or funds mentioned.

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...
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 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!