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Southeastern Asset Management’s Top Stock Picks

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In its most recent 13F, Mason Hawkins Southeastern Asset Management has disclosed an equity portfolio valued at around $11.8 billion for the third quarter. Tennessee-based Southeastern is a global investment management firm founded in 1975 by Mason Hawkins, whose investment style resembles the one of Warren Buffett. The firm focuses on a long-term horizon, and takes on a value-oriented approach to investing and focuses on a long-term time spectrum. Currently, Southeastern oversees more than $26 billion in assets under management. In this article, we are going to take a look at Southeastern’s top stock picks for the third quarter.

01 Mason Hawkins

Top investors spend considerable time and money conducting due diligence on each company they invest in, which makes them the perfect investors to emulate. However, we also know that the returns of hedge funds on the whole have not been good for several years, underperforming the market. We analyzed the historical stock picks of these investors and our research revealed that the small-cap picks of these funds performed far better than their large-cap picks, which is where most of their money is invested and why their performances as a whole have been poor. Why pay fees to invest in both the best and worst ideas of a particular hedge fund when you can simply mimic the best ideas of the best fund managers on your own? A portfolio consisting of the 15 most popular small-cap stock picks among the funds we track has returned 102% and beaten the market by more than 53 percentage points since the end of August 2012 (see more details).

Mason Hawkins
Mason Hawkins
Southeastern Asset Management

#5 Alphabet Inc (NASDAQ:GOOG)

Shares held (as of September 30): 1.27 million

Total Value (as of September 30): $774.93 million

Percent of Portfolio (as of September 30): 6.54%

Alphabet Inc (NASDAQ:GOOG) represents Southeastern’s fifth-largest holding and the investor trimmed its stake by about 5% during the quarter. The financial position of Alphabet Inc (NASDAQ:GOOG) looks solid, as the company’s revenue for the third quarter rose to $18.7 billion, compared to $16.5 billion for the same quarter last year. The company generated income of about nearly $4 billion, compared to $2.7 billion in the year-ago period. Alphabet Inc (NASDAQ:GOOG)’s stock has been performing well, increasing by 36.21% year-to-date. Another investor betting big on the company is William Von Mueffling’s Cantillon Capital Management, which was holding 888,378 shares at the end of the third quarter.

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#4 Aon plc (NYSE:AON)

Shares held (as of September 30): 9.24 million

Total Value (as of September 30): $818.71 million

Percent of Portfolio (as of September 30): 6.91%

Southeastern reduced its position in Aon plc (NYSE:AON) by about 16% during the third quarter. London-based Aon plc (NYSE:AON) is a global provider of risk management, insurance brokerage and reinsurance brokerage, and human resources solutions and outsourcing services. The company reported a decline in third-quarter income attributable to shareholders to $295 million, or $1.04 per share, compared to $309 million, or $1.04 per share, in last year’s quarter. Its revenue also dropped by 5% to $2.7 billion, compared to the prior year quarter. Aon plc (NYSE:AON)’s shares have lost 1.82% year-to-date. Another investor that loves Aon plc is Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, which holds 385,017 shares of the company as of the end of September.

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On the next page, we will talk about McDonald’s Corporation (NYSE:MCD) and two other top stocks.

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