In this article, we will be discussing the 10 Best Stocks to Buy in 2022 According to Billionaire Richard Chilton. You can skip our detailed analysis of Chilton’s history, his investment philosophy, and hedge fund performance, and go directly to 5 Best Stocks to Buy in 2022 According to Billionaire Richard Chilton.
Richard Lockwood Chilton Jr. is an American businessman and investor and currently serves as the founder, Chairman, Chief Executive Officer, and Chief Investment Officer of Chilton Investment Company, a global investment management firm founded by the billionaire in 1992.
Chilton Investment Company directs its primary focus on equities, occupying a fundamental bottom-up approach to its investments “with an ownership mentality”, all the while generating lucrative long-term revenues with incredibly limited volatility. The firm utilizes long/short and long-only investment strategies, and is renowned globally for taking long positions in underpriced stocks while selling short overpriced shares. Furthermore, the company also takes long positions in other stocks, actively searching for undervalued securities.
As of Q1 2022, Chilton Investment Company’s portfolio is heavily concentrated with large investments in the materials, information technology, healthcare, finance, consumer discretionary, consumer staples and transport sectors, with its 13F portfolio worth over $4.16 billion. This value was the result of a depreciation from the previous quarter where the portfolio was valued at around $4.7 billion. Over the past decade however, Chilton Investment Company has delivered remarkable returns, gaining 18.57% in 2013 and 13.99% in 2015. The hedge fund depreciated 13.66% back in 2016 but made a strong comeback in 2017, generating a 12.18% return to shareholders.
In Q1 2022, Chilton Investment Company made investments in 11 new stocks, relinquished its position in 20 companies, and reduced its holdings overall in 64 stocks. Some popular holdings in Chilton Investment Company’s 13F portfolio include Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Alphabet Inc. (NASDAQ:GOOG).
Richard Chilton of Chilton Investment Company
Our Methodology
Stocks from Richard Chilton’s 13F portfolio for the first quarter of 2022 have been included in this list. Some of these stocks are new picks of Richard Chilton. In other stocks, he has increased his stakes as compared to the previous quarter.
10. Danaher Corp. (NYSE:DHR)
Chilton Investment Company’s Stake Value: $157M
Percentage of Chilton Investment Company’s 13F Portfolio: 3.78%
Number of Hedge Fund Holdings: 83
Based in Washington D.C., Danaher Corporation (NASDAQ:DHR) is a globally diversified American conglomerate company and it designs, manufactures and markets medical, industrial, professional and commercial products and services. The company is diversified into 3 primary platforms: Life Sciences, Diagnostics and Environmental and Applied Solutions.
Richard Chilton’s Chilton Investment Company owns 536,618 shares with an estimated stake value of $157 million in Danaher Corporation (NASDAQ:DHR), in the first quarter of 2022.
In their Q1 2022 investor letter, Cooper Investors Global Equities Fund mentioned Danaher Corporation (NASDAQ:DHR). This is what they had to say:
“This combination of attributes was not in favor during a quarter where the market rotated into larger, more traditional index heavyweights that, while growing more slowly and generating lower returns on capital, typically trade on lower headline multiples. In Healthcare for example, we saw portfolio holdings Danaher (NASDAQ:DHR) fall 10-15% in the quarter. Given the relative business quality and growth prospects for a life sciences capital allocator champion like Danaher (NASDAQ:DHR) versus a large diversified pharma company, we think this period of underperformance is likely more a blip than a trend.”
Hence, like Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Alphabet Inc. (NASDAQ:GOOG), Danaher Corporation (NASDAQ:DHR) is one of the most prominent stocks in Chilton’s portfolio.
9. Automatic Data Processing Inc. (NASDAQ:ADP)
Chilton Investment Company’s Stake Value: $2.5M
Percentage of Chilton Investment Company’s 13F Portfolio: 0.06%
Number of Hedge Fund Holdings: 47
Headquartered in Paterson, New Jersey, Automatic Data Processing Inc. (NASDAQ:ADP) is an American company which specializes in the provision of HR management software and services.
Chilton Investment Company owns 11,007 shares in the human resource giant, with total stakes valued at $2.5 million. This is a result of Chilton solidifying his hold over the stock by 25% in Q1 as compared to Q4 2021, with Automatic Data Processing Inc. (NASDAQ:ADP) contributing 0.06% to Chilton’s 13F investment portfolio for the first quarter of 2022.
8. Pool Corp. (NASDAQ:POOL)
Chilton Investment Company’s Stake Value: $106M
Percentage of Chilton Investment Company’s 13F Portfolio: 2.56%
Number of Hedge Fund Holdings: 42
Headquartered in Covington, Louisiana, Pool Corporation (NASDAQ:POOL) is an American conglomerate which specializes in the provision of swimming pool equipment, and agricultural and construction products and services. Electrical components, tiles, hardscapes, safety equipment, and commercial pumps and filters are examples of some of their products.
As of the first quarter of 2022, Robert Caruso’s Select Equity Group owns a total of 966,232 shares of the company which are valued at around $408 million, making the hedge fund the largest shareholder of the company.
In their Q4 2021 investor letter, Wasatch Global Investors, an investment management firm, mentioned Pool Corporation (NASDAQ:POOL) in their investor letter, a copy of which can be obtained here. This is what they had to say:
“An example of a company with what we consider a superior long-term business model is Pool Corp. (NASDAQ:POOL), a wholesale distributor of swimming pools and related supplies. The company’s customers include more than 120,000 contractors and retailers. Pool (NASDAQ:POOL) offers approximately 200,000 national-brand and private-label products from more than 2,000 suppliers. In an industry characterized by fragmented suppliers and fragmented customers, the company has become the premier consolidator of product distribution. We’ve owned Pool (NASDAQ:POOL) for over 20 years (Sam was involved in our initial research of the company), and over this time, the stock has had several periods in which it was down more than 20%. In hindsight, each of these down periods was simply a great buying opportunity. While investors have fretted from time to time over how inflation, interest rates, economic cycles and home-construction statistics would affect backyard recreation, Pool Corp. (NASDAQ:POOL) has remained focused on service improvements. And these improvements have turned out to be much more important than periodic macro trends.
Our general view regarding such trends is that if they’re truly important, they’ll show up in our company-specific fundamental analysis. So while other investors ponder index performance and trends like “growth” versus “value” cycles, we’ll stay focused on business-model quality—which tends to influence the long-term power of sales, earnings and cash flows.”
It is for these reasons that Pool Corp. (NASDAQ:POOL) has been able to cement its place in Chilton’s 13F portfolio alongside well-known stocks like Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Alphabet Inc. (NASDAQ:GOOG).
7. Blackstone Inc. (NYSE:BX)
Chilton Investment Company’s Stake Value: $68.1M
Percentage of Chilton Investment Company’s 13F Portfolio: 1.63%
Number of Hedge Fund Holdings: 61
Founded in 1985 as a mergers and acquisition firm by Peter G. Peterson and Stephen A. Schwarzman, Blackstone Inc. (NYSE:BX) is an alternative investment management company based in New York City. It was converted from a publicly traded company to a C-type corporation in 2019 and Blackstone’s (NYSE:BX) private equity business has cemented itself as one of the biggest investors in leveraged buyouts in the last thirty years. Moreover, Blackstone’s (NYSE:BX) real estate business has captured the real estate market in unprecedented ways. As of Q4 2021, the company had $880 billion worth of assets under management.
As the first quarter of the fiscal 2022 drew to a close, 61 hedge funds were reported to be long Blackstone Inc. (NYSE:BX), with total stakes valued at $2.84 billion. In the first quarter of 2022, D.E. Shaw has emerged as the largest shareholder in the stock, owning more than 2.9 million shares worth around $371 million.
Chilton Investment Company owns 536,904 shares which are valued at more than $68.1 million. Chilton’s confidence in Blackstone Inc. (NYSE:BX) is evident as the billionaire investor increased his hold over the stock by a staggering 176% in Q1. The stock now makes up for 1.56% of Chilton’s 13F portfolio.
Aristotle Capital Management, an independent, employee-owned investment management organization, mentioned Blackstone Inc. (NYSE:BX) in their Q1 2022 investor letter. This is what they had to say:
“Founded by its current CEO Stephen Schwarzman and Pete Peterson in 1985, Blackstone (NYSE:BX) is one of the largest alternative asset managers in the world, with more than $880 billion of assets under management (AUM). The firm creates and manages investment vehicles that span asset classes globally and serve both institutional clients as well as high-net-worth individuals. Its core business segments include Real Estate (34% of fee-earning AUM), Credit and Insurance (31%), Private Equity (24%), and Hedge Fund Solutions (11%).
Blackstone (NYSE:BX) has leveraged its broad product portfolio and enviable investment performance to not only raise substantial amounts of capital but also maintain its reputation as a one-stop shop for investors looking to gain exposure to alternative assets. In contrast to traditional asset managers that rely on investor inaction to keep redemption rates low, the products offered by alternative asset managers typically have lockup periods that prevent redemptions for a substantial amount of time (often 10+ years).
High-Quality Business
Some of the quality characteristics we have identified for Blackstone (NYSE:BX) include:
-Reputable management team that has produced an admirable track record of investment performance and demonstrated its ability to raise capital (the firm is now 9x larger since its 2007 IPO);
-Stable client base and sticky asset base with 73% of its capital locked up for over 10 years; and
-Significant scale and strong brand that provides a myriad of advantages, including for distribution and new product launches.
Attractive Valuation
Based on our estimates of normalized earnings, we believe shares of Blackstone (NYSE:BX) are offered at a discount relative to our estimate of intrinsic value. It is our view that current valuation does not appropriately reflect our estimated future levels of fee-based revenue.
Compelling Catalysts
Catalysts we have identified for Blackstone (NYSE:BX), which we believe will cause its stock price to appreciate over our three- to five- year investment horizon, include:
-Increased fee-based revenue as dry powder committed capital that has yet to be invested is deployed. As of the fourth quarter of 2021, there was a total of $136 billion in dry powder across the firm;
-Given its scale and sustained investment prowess, Blackstone is uniquely positioned to benefit from the secular shift in investor allocation away from traditional managers and toward less liquid and higher expected return strategies in the alternative asset management sector; and
-Further penetration in the retail and private wealth channel, a segment of investors that has historically been excluded from participating in alternative assets. Blackstone (NYSE:BX) has a first-mover advantage in providing institutional-quality products across its expanding distribution teams that focus on financial advisors.”
6. First of Long Island Corp. (NASDAQ:FLIC)
Chilton Investment Company’s Stake Value: $3.4M
Percentage of Chilton Investment Company’s 13F Portfolio: 0.08%
Number of Hedge Fund Holdings: 9
Founded in 1927, The First of Long Island Corp. (NASDAQ:FLIC) operates as a holding company for The First National Bank of Long Island, and is based out of Glen Head, New York. The company provides financial services to small and medium sized businesses, professionals, consumers, municipalities and other organizations. In addition to that, The First of Long Island Corp. (NASDAQ:FLIC) offers business and small business checking, personal and non-personal money market, savings, time deposit, holiday club, and individual retirement accounts.
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