Locust Wood Capital Advisers is a New York-based hedge fund that was founded in 2002 by Stephen J. Errico with a capital of $29 million. Since then the fund has grown sharply and crossed the $1 billion mark. The fund’s philosophy is to primarily look for companies that are undergoing significant corporate transformations and determine if these corporate changes are being properly priced. Their key competency centers on paying the right price for these opportunities. Locust Wood Capital Advisers has an equity portfolio worth $886 million as of the end of December, with top 10 holdings amassing over half of this value, according to its latest 13F filing. The filing also showed that the fund initiated six new positions and sold out nine holdings.
In this article, we are going to take a closer look at five companies in which Locust Wood significantly increased its stakes during the last three months of 2016. The companies in question are Alphabet Inc. (NASDAQ:GOOGL), Abbott Laboratories (NYSE:ABT), Visa Inc. (NYSE:V), Johnson Controls International plc (NYSE:JCI), and Danaher Corporation (NYSE:DHR).
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Locust Wood Capital Advisers bought 38,739 Class A shares of Alphabet Inc. (NASDAQ:GOOGL) during the December quarter taking its total holding to 73,739 shares valued at $58.4 million. The stock has been on a roll and is trading near its 52-week high of $826. Alphabet Inc. (NASDAQ:GOOGL) recently overtook Apple Inc. (NASDAQ:AAPL) to become not only the world’s largest company in terms of market capitalization but Google has also topped it to become the most valuable brand. Analysts are extremely bullish on the stock with 40 out of 46 analysts rating the stock as a ‘Buy’ with a mean price target of $988. The company reported adjusted earnings of $9.36 per share for the fourth quarter, narrowly missing consensus estimate of $9.64. However revenue of $26.06 billion was higher than the expected $25.26 billion. Alphabet’s class A stock was the fourth most popular among the hedge funds tracked by Insider Monkey with 137 hedge funds holding shares at the end of the third quarter as compared to 135 a quarter earlier. The total value of their holdings also increased by almost 30% to $148 billion.
Locust Wood Capital Advisers nearly doubled its position in Abbott Laboratories (NYSE:ABT) by having acquired 458,070 shares and holding 946,410 shares worth $36 million at the end of 2016. Despite the healthcare sector facing pressures over drug pricing, Abbott Laboratories (NYSE:ABT)’s stock has shown as increase of nearly 13% over the last year. The stock of the $73 billion healthcare giant has a dividend yield of 2.48%. Abbott Laboratories (NYSE:ABT) is a dividend aristocrat which makes it attractive for fixed income investors. For the fourth quarter, Abbott reported EPS excluding special items of $0.65, in line with estimates. Sales of $5.33 billion beat analyst estimates of $5.41 billion. The number of funds tracked by us long the stock increased to 52 from 47 during the third quarter, while the total value of their holdings advanced by 14% to $18.1 billion.