What to Learn From Columbus Circle Investors’ Big Buys? Express Scripts Holding Company (ESRX), Whirlpool Corporation (WHR)

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Columbus Circle Investors is an equity investment manager based in Stamford, Connecticut. It implements a bottom-up philosophy in its investments, with special focus on companies with sound fundamentals that are able to exceed expectations.  Based on annualized performance of its products within the ten years through the end of September 2012, its small cap, technology, and SMID products have outperformed the benchmarks by as high as 5.6 points (net of fees).

Express Scripts Holding CompanyAs of the end of 2012, CCI had a total of $12.291 billion worth of assets under management according to data compiled by whalewisdom.com.  Its portfolio is largely composed of services, technology, and healthcare investments with an aggregate share of around 60 percent of the firm’s portfolio. The biggest buys of CCI are The Procter & Gamble Company (NYSE:PG), Facebook Inc (NASDAQ:FB)Hertz Global Holdings, Inc. (NYSE:HTZ)Express Scripts Holding Company (NASDAQ:ESRX), and Whirlpool Corporation (NYSE:WHR).. Let’s check how these stocks fare.

Sources: finviz.com and whalewisdom.com; as of February 1, 2013

The Procter & Gamble Company (NYSE:PG)

CCI has gone with the flow by purchasing a new stake in Procter & Gamble worth about $138.8 million. The company has performed well in the past couple of quarters. It has a growing margin and its EPS is expected to grow by 8.44% annually in the next 5 years. P&G’s strong market share and growing overseas reach show that indeed there is more to expect from the company. In fact, about 60 percent of its revenues come from outside the US and the latest report shows that its  sales in emerging markets and the BRIC area grew by 7 and 11 percent, respectively. As a result, P&G is enjoying robust stock performance. The price has gone very high, enough for analysts to notice that the stock is becoming quite expensive. However, given the trends in the global market, wherein P&G enjoys a substantial exposure, I believe that the company is poised to deliver more surprises in the future.

Facebook Inc (NASDAQ:FB)

The growth expectation for Facebook is high; its EPS growth for next year is at 26.92 percent while the long-term estimate is even higher at 29.48 percent. This must have driven CCI to initiate a position composed of over 4.5 million shares, roughly amounting to $120 million according to the compilation of whalewisdom.com. Facebook is doing surprisingly well in terms of revenue growth. As the chart below shows, the quarterly revenues have grown year-on-year by an average rate of 50.88% within the last 7 quarters where growth data can be calculated. Though the trend is going down, the rate of increase is at a high magnitude.

Recently, Facebook sued Profile Technology Ltd., an application developer, after the latter continued to display users’s information on a social-networking site despite having an agreement with Facebook to delete the data it had accessed and displayed earlier. Facebook is taking a competitive stance by boosting its privacy policy. Whether this is good or bad will have to depend on Facebook’s ability to turn all these data on its hand to create a situation that can lure investors to its side. In the meantime, investors must take advantage of the juicy growth prospects that the company currently enjoys.

Hertz Global Holdings, Inc. (NYSE:HTZ)

Hertz Global Holdings is vying to be number 1 in market share for car rental at U.S. airports with its successful buyout of Dollar Thrifty Automotive Group in November last year. This now allows Hertz to compete not only in the premium market where it has already established a name but also in the budget category. Indeed, the EPS growth for next year is placed at 35.34% and the long-term growth estimate is at 38.5%. The company has been surpassing consensus EPS estimates for the last several quarters already. And with a forward P/E of 10.38 and a PEG of 0.67, I can see why CCI initiated a stake of 6.607 million shares in the fourth quarter. The stock is attractive, indeed.

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