In this article, we discuss the 10 blue-chip stocks to buy according to billionaire Richard Chilton.
Richard Chilton is an American billionaire investor who founded Chilton Investment Company in 1992. Serving as the fund’s chief executive officer, chairman, and chief investment officer, he manages an investment portfolio worth approximately $4.16 billion as of Q1 2022. Prior to forming Chilton Investment Company, he gained valuable trading experience at a number of major investment firms, including Merrill Lynch and Alliance Capital Management.
Focused primarily on equities, Chilton Investment Company employs a fundamental bottom-up approach to investing in order to generate attractive long-term returns with limited volatility that benefit from dividends and stable growth. A notable player in the world of hedge funds, Richard Chilton’s investment firm has generated solid returns throughout the years, gaining 18.57% in 2013 and 13.99% in 2015. Although it lost 13.66% in 2016, the fund made a comeback in 2017, delivering a 12.18% return to shareholders.
As of Q1 2022, Chilton Investment Company’s portfolio is concentrated with investments in the transports, materials, information technology, industrials, healthcare, finance, consumer staples, and consumer discretionary sectors. Having purchased 11 new stocks, and sold out of 20 positions, the fund’s most notable holdings in Q1 2022 include Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and Amazon.com, Inc. (NASDAQ:AMZN).
Richard Chilton of Chilton Investment Company
Our Methodology:
In this article, we discuss the best blue-chip stocks in Richard Chilton’s portfolio. For the data mentioned in this list, we used Chilton Investment Management’s 13F portfolio as of Q1 2022.
Blue-Chip Stocks to Buy According to Billionaire Richard Chilton
10. Merck & Co., (NYSE:MRK)
Chilton Investment Company’s Stake Value: $6.93 million
Percentage of Chilton Investment Company’s 13F Portfolio: 0.16%
Number of Hedge Fund Holders: 84
Merck & Co., Inc. (NYSE:MRK) is an American multinational pharmaceutical company that delivers innovative health solutions through its prescription medicines, vaccines, biologic therapies, and animal health products. In Q1 2022, Chilton Investment Company increased its stakes in Merck & Co., Inc. (NYSE:MRK) by 62%. As of March 31, Chilton Investment Company’s stakes in the company are valued at $6.93 million, making up 0.16% of Richard Chilton’s investment portfolio.
Earlier this April, Barclays analyst Carter Gould raised the price target on Merck & Co., Inc. (NYSE:MRK) to $97 from $94 and maintained an Overweight rating on the shares. According to the analyst, the pharmaceutical firm’s Q1 prints are “unlikely to disrupt the momentum of macro-driven rotation to larger cap biopharma.”
On April 28, Merck & Co., Inc. (NYSE:MRK) posted its earnings report for the first quarter of fiscal year 2022. The company registered earnings per share of $2.14, beating expectations by $0.31. Additionally, the company’s revenue for the quarter came in at $15.90 billion, an increase of 31.63% on a year-over-year basis, outperforming market consensus by $1.25 billion.
At the end of the first quarter of 2022, 84 hedge funds reported owning of stakes in Merck & Co., Inc. (NYSE:MRK). The total value of these stakes was estimated to be $5.86 billion, up from $3.78 billion in the preceding quarter with 80 positions.
In addition to Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and Amazon.com, Inc. (NASDAQ:AMZN), Merck & Co., Inc. (NYSE:MRK) is a notable blue-chip stock.
ClearBridge Investments, an investment management firm, mentioned Merck & Co., Inc. (NYSE:MRK) in its “Sustainability Leaders Strategy” fourth quarter 2021 investor letter. Here is what they said:
“Other pharma companies are providing solutions as well. Merck’s antiviral pill molnupiravir is less effective than Pfizer’s, but it will be a helpful alternative for patients who cannot take Pfizer’s due to drug-drug interactions. Merck is also helping to manufacture Johnson & Johnson’s COVID-19 vaccine, which has less stringent storage requirements than the mRNA vaccines do.”
9. Target Corporation (NYSE:TGT)
Chilton Investment Company’s Stake Value: $7.6 million
Percentage of Chilton Investment Company’s 13F Portfolio: 0.18%
Number of Hedge Fund Holders: 50
Target Corporation (NYSE:TGT) is an American big box department store chain headquartered in Minneapolis, Minnesota. The eighth largest retailer in the United States, it offers food assortments, dry grocery, apparel, accessories, home decor products, electronics, and toys to consumers. In Q1 2022, billionaire Richard Chilton removed a significant portion of Target Corporation (NYSE:TGT) shares from his hedge fund’s portfolio. By the end of the quarter, he reported holding stakes worth $7.6 million in the retail giant.
On June 8, DA Davidson analyst Michael Baker lowered his price target on Target Corporation (NYSE:TGT) to $171 from $205 but kept a Buy rating on the shares of the company. Although the retail firm lowered its outlook again ahead of its board meeting and after it had already reduced guidance with its Q1 earnings last month, the analyst believes that the company’s efforts will set it up for a better second half with cleaner inventories.
Target Corporation (NYSE:TGT) reported its Q1 results on May 18, posting earnings per share of $2.19, missing consensus estimates by $0.87. On the other hand, the company’s revenue of $25.17 billion outperformed analysts’ predictions by $688.71 million.
According to Insider Monkey’s Q1 data, 50 hedge funds were bullish on Target Corporation (NYSE:TGT), up from 49 funds in the earlier quarter. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital held the biggest position in the company, comprising 2.50 million shares worth $530.5 million.
8. Visa Inc. (NYSE:V)
Chilton Investment Company’s Stake Value: $7.88 million
Percentage of Chilton Investment Company’s 13F Portfolio: 0.18%
Number of Hedge Fund Holders: 159
Visa Inc. (NYSE:V) is an American multinational financial services corporation that facilitates electronic funds transfers throughout the world, most commonly through Visa-branded credit cards, debit cards and prepaid cards. One of the best blue-chip stocks to buy according to billionaire Richard Chilton, his hedge fund holds 35,540 shares of the financial services company as of Q1 2022, amounting to a stake of $7.88 million.
Earlier this May, Goldman Sachs analyst Will Nance initiated coverage of Visa, Inc. (NYSE:V) with a Buy rating and $282 price target, implying an upside of 43%. The analyst also added the shares to his America’s Conviction List, citing Visa Inc. (NYSE:V) as the global leader in payments with “attractive leverage to the long-term secular growth driver from payment electronification.”
As of the first quarter of 2022, 159 hedge funds hold equity in Visa Inc. (NYSE:V), totaling $28 billion in value. The largest shareholder in the company is TCI Fund Management which owns shares worth $4 billion.
Polen Capital recently published its “Polen Global Growth Fund” first-quarter 2022 investor letter and mentioned Visa Inc. (NYSE:V) in it. Here is what the firm said:
“We added to both Visa and Mastercard during the final quarters of 2021, based on the belief that both businesses were trading at attractive prices and poised to deliver, double-digit returns over the next three to five years. Cross-border transactions–a highly profitable business segment for both companies–represent roughly 10% of Visa and Mastercard’s volumes and 25% of their gross revenues, so lockdowns have severely impacted this segment due to stifled travel. While it was impossible to know when people would begin traveling again, we accepted this reality with the belief that travel would eventually return. Both companies have commented that as soon as a country or geography reopens, cross-border volumes reignite, amplifying each business’s growth and profitability. We think these near- term headwinds have created an attractive long-term investment opportunity.”
7. Apple Inc. (NASDAQ:AAPL)
Chilton Investment Company’s Stake Value: $7.98 million
Percentage of Chilton Investment Company’s 13F Portfolio: 0.18%
Number of Hedge Fund Holders: 131
Known as the most valuable brand in the world among consumers, Apple Inc. (NASDAQ:AAPL) is the largest technology firm with a market capitalization of $2.13 trillion. Another blue-chip stock in Richard Chilton’s investment portfolio, the billionaire investor reported holding 45,724 shares of the tech giant as of March 31, with a total stake value of $7.98 million, covering 0.18% of his hedge fund’s portfolio.
On June 17, Wells Fargo analyst Aaron Rakers reiterated an Overweight rating on Apple Inc. (NASDAQ:AAPL) with a $205 price target on its shares. Commenting on the company’s portfolio of payment services, the analyst doesn’t expect the expansion of its payments ecosystem to drive material revenue/earnings for the company over the near- to medium-term, but believes the initiatives can be additive to customer loyalty, and expanding utility of being an Apple user.
On April 28, Apple Inc. (NASDAQ:AAPL) delivered strong financial results for the fiscal second quarter of 2022. The company registered an EPS of $1.52 and beat estimates by $0.09. Apple Inc. (NASDAQ:AAPL) also reported a revenue of $97.28 billion, surpassing expectations by $3.29 billion.
A total of 131 hedge funds from the Q1 database of Insider Monkey owned stakes in Apple Inc. (NASDAQ:AAPL), with an aggregate value of $182 billion. Warren Buffett was its largest shareholder, with his Berkshire Hathaway holding a $155 billion stake.
ClearBridge Investments mentioned Apple Inc. (NASDAQ:AAPL) in its fourth-quarter 2021 investor letter. Here is what the firm said:
“Despite these mixed emerging growth results, the ClearBridge Global Growth Strategy outperformed the benchmark due to resilience among our secular and structural growth holdings. The bulk of these contributions came from U.S. mega-cap growth stocks Apple and Microsoft which continued to uniquely act both offensively and defensively as they have through most of the pandemic.”
6. McDonald’s Corporation (NYSE:MCD)
Chilton Investment Company’s Stake Value: $8.19 million
Percentage of Chilton Investment Company’s 13F Portfolio: 0.19%
Number of Hedge Fund Holders: 58
McDonald’s Corporation (NYSE:MCD) is an America-based multinational fast food chain, founded in 1940 as a restaurant by Richard and Maurice McDonald. With a 45 year history of consistent dividend increases, the firm stands as a solid blue-chip dividend stock. Billionaire investor Richard Chilton holds 33,126 shares of McDonald’s Corporation (NYSE:MCD) as of the first quarter of 2022, valued at $8.19 million.
UBS analyst Dennis Geiger maintained a Buy rating alongside a $290 price target on the shares of McDonald’s Corporation (NYSE:MCD) on June 7, stating that the company is well positioned as a “high quality, defensive compounder” in the event of a recession. He adds that the company’s strong value proposition and track record of outperformance during recessions supports his confidence in relative gains.
On May 26, McDonald’s Corporation (NYSE:MCD) declared a $1.38 per share quarterly dividend, in line with previous. The dividend will be distributed to shareholders on June 20. The company’s dividend yield on June 17 stood at 2.36%.
Earlier this April, McDonald’s Corporation (NYSE:MCD) released its earnings report for the first fiscal quarter of 2022. The company announced an EPS of $2.28, beating estimates by $0.11. Revenue for the year grew 10.56% on a year-over-year basis to $5.67 billion, topping market consensus by $94.35 million.
According to Insider Monkey’s Q1 data, 58 hedge funds were long McDonald’s Corporation (NYSE:MCD), with collective stakes valued at $2.73 billion. Jim Simons’ Renaissance Technologies is the biggest shareholder of the company, with 2.53 million shares worth $625.96 million.
Similar to Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and Amazon.com, Inc. (NASDAQ:AMZN), McDonald’s Corporation (NYSE:MCD) is a favored blue-chip stock among hedge funds.
5. Alphabet Inc. (NASDAQ:GOOG)
Chilton Investment Company’s Stake Value: $91 million
Percentage of Chilton Investment Company’s 13F Portfolio: 2.18%
Number of Hedge Fund Holders: 160
The parent company of the prominent and widely used search engine, Google, Alphabet Inc. (NASDAQ:GOOG) is a California-based tech conglomerate. One of the largest tech companies in the world based on revenue, it is a part of the Big Five tech firms. As of Q1 2022, Chilton Investment Company owns 32,749 shares of the tech giant, valued at approximately $91 million.
On June 1, Morgan Stanley analyst Brian Nowak lowered the price target on Alphabet Inc. (NASDAQ:GOOG) to $3,000 from $3,270 and maintained an Overweight rating on the shares. The analyst lowered estimates in the internet space to reflect a more conservative online advertising and e-commerce view amid “rising macro and micro uncertainty.” Given the probability of a recession, the analyst states that he is taking a more “pragmatic approach” with his online ad and e-commerce estimates.
At the close of Q1 2022, 160 hedge funds were long Alphabet Inc. (NASDAQ:GOOG) with stakes worth $29.58 billion. This is compared to 158 positions in the previous quarter with stakes worth $36.62 billion.
Farrer Wealth Advisors mentioned Alphabet Inc. (NASDAQ:GOOG) in its first-quarter 2022 investor letter. Here is what they said:
“We won’t waste much time trying to explain to our clients why Alphabet is such a phenomenal business, we believe that is quite self-evident. The better explanation is why we never bought Alphabet before. The reason was a personal bias we held based on three beliefs (which we now believe to be incorrect)
Growth in YouTube would stall as the increased ad-load would turn-off viewers (the double ad-load at the beginning of videos for example). Consumers will focus on discovery rather than search to purchase new items. For example – using Instagram/TikTok to decide what new clothes to buy instead of ‘googling’ for clothes. Other Bets: In general, we felt that capital spent on “Other Bets” has been a bit wasteful with the segment earning just around $3.1bn in revenue versus nearly $21bn in operating losses over the last five years…” (Click here to see the full text)
4. Mastercard Incorporated (NYSE:MA)
Chilton Investment Company’s Stake Value: $145 million
Percentage of Chilton Investment Company’s 13F Portfolio: 3.48%
Number of Hedge Fund Holders: 136
Mastercard Incorporated (NYSE:MA) is an American multinational financial services corporation that operates through a payment network that is widely spread across the globe, facilitating electronic transactions between merchants’ banks and the customers’ banks for “Mastercard” brand credit and debit cards. Chilton Investment Company’s stake in the company amounts to $145 million as of the first quarter of 2022.
Earlier this May, Goldman Sachs analyst Will Nance initiated coverage of Mastercard Incorporated (NYSE:MA) with a Buy rating and $460 price target, implying a 38% upside. After what he calls “lackluster returns in 2021 and a choppy start to 2022,” the analyst is constructive on the payments sector, stating that relative valuations have fallen significantly over the past six months and that the companies are positioned well to navigate a low-growth, inflationary world. He believes Mastercard Incorporated (NYSE:MA) will continue to deliver “best-in-class” earnings growth, supported by “strong secular tailwinds, and strong operating leverage as the company continues to add scale.”
Among the hedge funds being tracked by Insider Monkey, Virginia-based investment firm Akre Capital Management is a leading shareholder in Mastercard Incorporated (NYSE:MA) with 5.8 million shares worth more than $2 billion. Overall, 136 elite funds reported holding stakes in the payment services company.
Here is what Ensemble Capital had to say about Mastercard Incorporated (NYSE:MA) in its Q1, 2022 investor letter:
“Mastercard (7.6% weight in the Fund): This company literally earns a percent based fee on dollars spent. When inflation increases the prices of goods across the economy, Mastercard’s revenue increases along with inflation. Thus, the company in some respects is perfectly hedged against inflation with their revenue accelerating automatically when inflation surges.”
3. The Home Depot, Inc. (NYSE:HD)
Chilton Investment Company’s Stake Value: $220 million
Percentage of Chilton Investment Company’s 13F Portfolio: 5.28%
Number of Hedge Fund Holders: 75
The Home Depot, Inc. (NYSE:HD) is an American multinational home improvement retail corporation that sells tools, construction products, appliances, and services. At the end of Q1 2022, Richard Chilton’s hedge fund owned 735,171 shares of The Home Depot, Inc. (NYSE:HD), valued at over $220 million, making up 5.28% of Richard Chilton’s portfolio.
On May 20, Citi analyst Steven Zaccone raised his price target on The Home Depot, Inc. (NYSE:HD) to $348 from $327 and kept a Buy rating on the shares. The analyst increased fiscal 2022 earnings estimates following the company’s earnings report.
The Home Depot, Inc. (NYSE:HD) maintains a 14-year track record of consistent dividend growth, and on May 19, the retail corporation announced announced a quarterly payout of $1.90 per share, with a dividend yield of 2.81%, as of the close of June 17.
In the first quarter of 2022, the company experienced a positive hedge fund sentiment, with 75 elite funds tracked by Insider Monkey owning stakes in the company, up from 68 in the previous quarter. The aggregate value of these stakes is roughly $5.6 billion. Ken Fisher’s Fisher Asset Management was the company’s largest shareholder in Q1 2022, with shares worth over $2.4 billion.
Ensemble Capital mentioned The Home Depot, Inc. (NYSE:HD) in its Q1 2022 investor letter. Here is what the firm has to say:
“Home Depot (7.7% weight in the Fund): The demand surge for remodeling and home improvement goods sparked by shelter in place orders, remote work going mainstream, and a shortage of homes on the market to buy, ran headlong into the supply chain crisis, triggering surging prices in the products Home Depot sells. But the company has been able to pass nearly all of these increased costs on to customers, with revenue growing 37% over the past two years while gross profits, or the profits the company makes on each item they sell, increased by 35%. Even this small difference appears to be due not to inflation eating away at Home Depot’s profits, but rather be a function of the huge increase in revenue the company has been generating in low margin lumber sales.”
2. Costco Wholesale Corporation (NASDAQ:COST)
Chilton Investment Company’s Stake Value: $243.36 million
Percentage of Chilton Investment Company’s 13F Portfolio: 5.84%
Number of Hedge Fund Holders: 61
Costco Wholesale Corporation (NASDAQ:COST) is an American multinational corporation that operates a chain of membership-only big-box retail stores. The company is one of the oldest holdings of Chilton Investment Company, as the hedge fund started investing in the company over a decade ago, purchasing shares worth over $33.5 million. As of Q1 2022, the company is the fifth-largest holding of the hedge fund, accounting for 5.84% of its 13F portfolio.
On June 2, Jefferies analyst Corey Tarlowe raised his price target on Costco Wholesale Corporation (NASDAQ:COST) to $580 from $560 and maintained a Buy rating on the shares as he took over coverage of the name. According to the analyst’s survey of 900+ warehouse club members about renewal intentions and shopping behaviors, the results proved to be “bullish” for Costco Wholesale Corporation (NASDAQ:COST). With renewal intentions appearing strong, data suggests there is an opportunity to raise membership prices, and members indicated that they are visiting clubs more frequently and spending more versus compared to prior surveys.
According to Insider Monkey’s database, Costco Wholesale Corporation (NASDAQ:COST) was spotted on 61 investment portfolios by the end of the first quarter of 2022. The total stakes of these funds in the company amounted to approximately $5.41 billion, up from $5.40 billion in the previous quarter with 57 positions. As of March 31, Fisher Asset Management is the largest stakeholder in Costco Wholesale Corporation (NASDAQ:COST), with stakes valued at $2.43 billion.
Here is what ClearBridge Investments had to say about Costco Wholesale Corporation (NASDAQ:COST) in its “Sustainability Leaders Strategy” fourth-quarter 2021 investor letter:
“Portfolio gains were led by a diverse group of contributors. Also in consumer discretionary, Costco, which operates a chain of membership-only big-box retail stores, continues to impress as it takes to share and becomes more relevant for the consumer even as the world opens up.”
1. Microsoft Corporation (NASDAQ:MSFT)
Chilton Investment Company’s Stake Value: $317.42 million
Percentage of Chilton Investment Company’s 13F Portfolio: 7.62%
Number of Hedge Fund Holders: 259
Microsoft Corporation (NASDAQ:MSFT) is a Washington-based tech giant with exposure in various industries ranging from cloud computing, consumer electronics, gaming consoles, personal computer, and software. The second-largest holding in billionaire Richard Chilton’s portfolio, it accounted for 7.62% of his hedge funds portfolio by the end of the fiscal first quarter of 2022.
On June 13, Jefferies analyst Brent Thill spoke about the company’s Intelligent Data Platform, and placed a Buy rating on the shares of Microsoft Corporation (NASDAQ:MSFT), alongside a $320 price target. He views the company as a diversified business better positioned to weather potential macro weakness than others and thinks that its enhancements should sustain durable revenue growth for “the foreseeable future.”
As per Insider Monkey’s database for the first quarter, 259 hedge funds owned stakes in Microsoft Corporation (NASDAQ:MSFT), down from 262 in the previous quarter. These stakes hold a consolidated value of over $65.6 billion. With stakes worth roughly $8.6 billion, Fisher Asset Management held the largest position in the company in Q1.
Baron Funds, an asset management firm, mentioned Microsoft Corporation (NASDAQ:MSFT) in its Q1 2022 investor letter. Here is what the firm said:
“Microsoft (NASDAQ:MSFT) re-enters our portfolio after a long gap. MSFT sells enterprise and consumer software products as well as hardware products such as the Xbox video game console and Surface laptops. All business segments experienced double-digit revenue growth and earnings per share have compounded in the mid-double digits over the last 5 years. We believe MSFT continues this momentum in the years ahead.”
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Disclose. None. 10 Blue Chip Stocks to Buy According to Billionaire Richard Chilton is originally published on Insider Monkey.
