In this article we present the list of 10 Stocks Billionaire David Harding is Buying in Droves.
Ulta Beauty, Inc. (NASDAQ:ULTA), Amazon.com, Inc. (NASDAQ:AMZN), and Citrix Systems, Inc. (NASDAQ:CTXS) are among the stocks that billionaire money manager David Harding was buying in droves during the first quarter of 2022.
David Harding’s Winton Capital Management is a London-based multistrategy investment firm that was founded with less than $2 million in 1997 by Mr. Harding. Less than two decades later, the fund was managing nearly $34 billion in assets and Mr. Harding had been elevated to billionaire status, with a net worth of $1.8 billion in 2018.
The fund, which formerly operated as more of a pure-play quant fund, has been gradually implementing other strategies since 2004. In 2018, the fund rebranded itself as a quant-managed, multistrategy fund after its main quant fund’s assets dropped below 50% of Winton’s overall assets. That rebranding caused some investors to pull capital from the fund, while its lackluster performance in recent years has driven away others.
Winton Capital has endured a rough stretch since 2015 that has seen its assets under management crumple from a peak of close to $34 billion at the end of 2015 to less than $8 billion. Winton’s flagship fund posted no better than 7.9% returns between 2015 and 2020 and lost money in three of those six years.
2020 was a particularly dreadful one for the multistrategy quant fund, which somewhat understandably could not predict the coronavirus outbreak and the resulting impact that it would have on the markets. Winton’s main fund had its worst year ever, losing just over 20% and the firm’s assets shrank by $12.5 billion.
Winton has been rebounding solidly since then however, posting gains over 12 of the next 14 months through February 2022, which included being up by 8.8% this year through late February. The fund’s algorithms were much more successful predicting commodity prices than they were pandemics, as skyrocketing commodities are credited with fueling Winton’s 2022 gains.
Winton was clearly prepping its portfolio for something big in Q4, as its turnover percentage skyrocketed to 85%, more than double its rate of the prior six quarters. That figure remained higher than normal at 53% in Q1, as the fund unloaded 273 former holdings while adding 220 new positions to its portfolio. The market value of its 13F portfolio rose to $1.91 billion on March 31 from $1.65 billion at the end of 2021.
In this article we’ll look at ten of the stocks that David Harding was buying in droves during a successful first quarter of 2022 for his multistrategy quant fund.
David Harding of Winton Capital Management
Our Methodology
The following data is gathered from Winton Capital Management‘s latest 13F filing with the SEC. We follow hedge funds like Winton Capital Management because Insider Monkey’s research has uncovered that their consensus stock picks can deliver outstanding returns.
All hedge fund data is based on the exclusive group of 900+ funds tracked by Insider Monkey that filed 13Fs for the Q1 2022 reporting period.
10 Stocks Billionaire David Harding is Buying in Droves
10. Williams-Sonoma, Inc. (NYSE:WSM)
Value of Winton Capital Management‘s 13F Position: $12.8 million
Number of Hedge Fund Shareholders: 38
Ulta Beauty, Inc. (NASDAQ:ULTA), Amazon.com, Inc. (NASDAQ:AMZN), and Citrix Systems, Inc. (NASDAQ:CTXS) aren’t the only stocks David Harding couldn’t keep his hands off of during Q1. Another was Williams-Sonoma, Inc. (NYSE:WSM), as the money manager grew his fund’s WSM stake 43-fold during Q1, building up 88,557 shares total. Hedge fund ownership of WSM hit an all-time high at the end of 2021 before dipping slightly in Q1.
Williams-Sonoma, Inc. (NYSE:WSM) shares have gained 23% since the company reported its first quarter (ended May 1) results in late May. Net revenue hit a record $1.9 billion during the quarter, growing by 8.1% year-over-year, while adjusted diluted EPS of $3.50 also represented a new record for the home products retailers. The company’s Pottery Barn and West Elm brands were some of its strongest revenue drivers during the quarter, achieving double-digit year-over-year growth. On the other hand, its eponymous Williams-Sonoma brand suffered a revenue decline during the quarter.
Travis Cocke’s Voss Capital also loves Williams-Sonoma, Inc. (NYSE:WSM), with the stock ranking as its top pick on March 31. The fund shared its thoughts on the company’s impressive performance in its Q1 2022 investor letter:
“We believe shorting furniture retailers has arguably become a consensus view on the back of widely known tough comps from early 2021 (+26% and +40% SSS Comps for WSM in calendar Q1/Q2 ‘21) and fear of pull forward of demand, which seems to be corroborated by weak credit card data in the category the last few weeks and a poor outlook from furniture e-Commerce giant Wayfair, not to mention a panic-inducing, rambling conference call from the oft colorful CEO of Restoration Hardware. Lazy thematic macro analysis that stops there, however, paints an incomplete picture of what has transpired at many individual companies like WSM that have been deemed COVID beneficiaries that are now at all-time low valuations.
WSM is a furniture and home décor retailer that owns several well-known brands: William Sonoma, Pottery Barn, Rejuvenation, Mark & Graham, and most importantly, west elm. While perhaps thought of as a dying mall-based brick & mortar retailer, WSM derives the vast majority (66%+) of its revenue from e-Commerce and has been a remarkably steady performer, remaining free cash flow positive every year since at least 2007 and achieving positive same store sales comps since 2010, including +17% in 2020, +22% in 2021 with guidance for a further mid-to-high single digit growth again this year. Within the overall positive sales trends, west elm’s consistent growth has been even more impressive, with a 16% average annual same-store sales growth rate since 2012. To little fanfare, by our calculation, WSM has become the single highest quality retailer in public markets with a 58% return on invested capital (ROIC) in 2021 and a 39% ROIC on average over the past 3 years…” (Click here to see the full text)
9. Whirlpool Corporation (NYSE:WHR)
Value of Winton Capital Management‘s 13F Position: $13.8 million
Number of Hedge Fund Shareholders: 33
David Harding certainly has a different take on Whirlpool Corporation (NYSE:WHR) than Jim Cramer, who recently classified the home appliances manufacturer as one of several value stocks to avoid. Harding was doing anything but in Q1, growing his fund’s WHR stake by 625% to 79,614 shares. Overall hedge fund ownership of WHR remains well off its all-time highs.
Whirlpool Corporation (NYSE:WHR) is another home products company that Harding likes, and it’s not hard to see why. The stock currently trades at a trailing 12-month P/E of just 5.99x, nearly half the sector median. Shares are also much cheaper than their five-year averages across numerous other metrics, including EV/EBITDA (5.08x), price/sales (0.46x), price/book (2.04x), and price/cash flow (5.51x).
Whirlpool Corporation (NYSE:WHR) recently hit ten consecutive years of dividend growth, giving its quarterly dividend payouts a hefty 25% raise to $1.75 during the first quarter. The stock’s forward yield stands at an attractive 4.28%, while the company’s payout ratio is just 24%, meaning there’s little risk of its dividend putting Whirlpool’s finances in disarray any time soon. Whirlpool also ended Q1 with $2.1 billion in cash and equivalents.
8. Universal Health Services, Inc. (NYSE:UHS)
Value of Winton Capital Management‘s 13F Position: $14.5 million
Number of Hedge Fund Shareholders: 41
David Harding built up his fund’s formerly small stake in Universal Health Services, Inc. (NYSE:UHS) into one of its largest during Q1, growing it 39-fold to 100,084 shares. Hedge fund ownership of the healthcare services provider is up by just over 50% since bottoming out in the middle of 2019.
Universal Health Services, Inc. (NYSE:UHS) slashed its financial forecasts for the year in late June, citing a significant decline in Covid-19 patients in April and May, which was not offset by an increase in non-Covid patients. Rising labor costs, in particular nursing costs, are also proving to be a major headwind for healthcare operators, with both HCA Healthcare, Inc. (NYSE:HCA) and Community Health Systems (NYSE:CYH) cutting their guidance in recent months due to soaring expenditures on labor.
BMO downgraded Universal Health Services, Inc. (NYSE:UHS) to ‘Underperform’ from ‘Market Perform’ earlier this month, with analyst Matt Borsch noting simultaneous pressures affecting the company’s top and bottom lines. The analyst expects UHS’s earnings growth to slide both this year and next, and slashed his three-year revenue and earnings estimates for the company. He has a $90 price target on the stock, down from $133 previously.
7. Marathon Petroleum Corporation (NYSE:MPC)
Value of Winton Capital Management‘s 13F Position: $15.1 million
Number of Hedge Fund Shareholders: 44
Hedge fund ownership of Marathon Petroleum Corporation (NYSE:MPC) has declined substantially since the end of 2018, falling by 44% during that time. Winton Capital certainly hasn’t lost faith in the refiner, growing its MPC stake 20-fold during Q1 to 176,653 shares. Ray Dalio’s Bridgewater Associates built a new stake in MPC during Q1, buying 165,212 shares.
Wells Fargo has an ‘Overweight’ rating on Marathon Petroleum Corporation (NYSE:MPC) and recently raised its price target on the stock to $129 from $117. Analyst Roger Read believes the company can outperform its Q2 EPS estimate of $6.66 by as much as 30% should its natural gas capture rate during the quarter approach MPC’s 102% long-term average. That figure was 98.8% in 2021, up from 97% in 2020.
On the other hand, the Biden administration has been putting pressure on refiners to boost their capacity in light of soaring gas prices, which could pressure those companies’ bottom lines as they strain against their production capacities. JPMorgan estimated that refineries were already tapping out greater than 93% of their capacity.
6. Alphabet Inc. (NASDAQ:GOOG)
Value of Winton Capital Management‘s 13F Position: $15.3 million
Number of Hedge Fund Shareholders: 372
Closing out the first half of the list is Alphabet Inc. (NASDAQ:GOOG). Winton Capital grew its stake in the technology giant by 275% during Q1, giving it 5,508 shares as of March 31. Alphabet ranks as the most popular stock among hedge funds when combining ownership of both classes of the company’s shares, with GOOG shares ranking 5th individually.
Alphabet Inc. (NASDAQ:GOOG) will execute a 20-for-1 stock split tomorrow, which will drive its shares down to about $110 from their current $2,200 levels. That move is expected to make the stock more palatable to investors, as though trading in fractional shares has now become commonplace, investors still generally prefer to own full shares in a company. The move could also allow Alphabet shares to be added to the price-weighted Dow index, which they previously would’ve overwhelmed.
While Winton Capital was loading up on GOOG shares during Q1, the Baron Global Advantage Fund decided to trim its stake in Alphabet Inc. (NASDAQ:GOOG) to profit off the stock’s strong run, explaining its decision in the fund’s Q1 2022 investor letter:
“We have modestly reduced the size of our position in Alphabet Inc. (NASDAQ:GOOG) (from 6.5% at the end of the fourth quarter of 2021 to 5.3% as of the end of the first quarter of 2022), after the stock rallied 64% in 2021 and continued outperforming during the first quarter, declining just 3%.”
Check out the second half of this article, linked to below, to see the latest hedge fund activity on Ulta Beauty, Inc. (NASDAQ:ULTA), Amazon.com, Inc. (NASDAQ:AMZN), and Citrix Systems, Inc. (NASDAQ:CTXS).
5. Citrix Systems, Inc. (NASDAQ:CTXS)
Value of Winton Capital Management‘s 13F Position: $16.2 million
Number of Hedge Fund Shareholders: 40
The second part of our list of stocks that David Harding’s Winton Capital Management is buying in droves begins with Citrix Systems, Inc. (NASDAQ:CTXS). The fund grew its stake in the cloud computing company by 919% to 160,771 shares during Q1. There was a 60% surge in hedge fund ownership of CTXS during Q1.
Citrix Systems, Inc. (NASDAQ:CTXS) is set to merge with TIBCO Software in a deal that values Citrix at $104 per share. The deal was facilitated by investment firm Vista Equity Partners and Evergreen Coast Capital, which is an affiliate of Paul Singer’s Elliott Management. Singer’s fund owned 1.2 million CTXS shares on March 31. The deal is expected to close in the third quarter of this year, upon receiving final regulatory approvals.
The ClearBridge Mid Cap Growth Strategy sold out of its Citrix Systems, Inc. (NASDAQ:CTXS) position in Q3 of last year in light of the company’s financial targets being pushed out. It had this to say about the company in its Q3 2021 investor letter:
“When we notice a meaningful slowdown due to growing competitive threats or our thesis has not played out as expected, we remain disciplined in acting. These concerns motivated our sale of Citrix Systems, which is experiencing complications in transitioning its business model to the cloud while a reorganization of its sales force is pushing out financial targets; as well as a small position in technology-driven real estate brokerage Compass.”
4. W.R. Berkley Corporation (NYSE:WRB)
Value of Winton Capital Management‘s 13F Position: $17.3 million
Number of Hedge Fund Shareholders: 35
Winton Capital’s stake in W.R. Berkley Corporation (NYSE:WRB) was 884% larger at the end of Q1 than it was at the beginning of it, with the fund amassing a position of 259,167 shares during the quarter. Jonathan Bloomberg’s BloombergSen is the most bullish shareholder of WRB in our database, having nearly 8% exposure to the stock.
Operating primarily as a property casualty insurer, W.R. Berkley Corporation (NYSE:WRB) appears poised to benefit from rising interest rates in a somewhat unexpected way. Insurers typically invest the majority of their substantial cash flow into bonds, which have been playing close to zilch in recent years. However, with rates on the rise, bonds are likewise on the move up, making them a much more profitably investment for insurers.
Six-month Treasury bills now yield over 2.6%, compared to a paltry 0.1% just a year earlier. That equates to a 26x boost in a major profitability component for insurers, which have slim margins on their premiums but can pocket all of their investment windfalls. W.R. Berkley Corporation (NYSE:WRB) shares have gained 16% this year due to that tailwind, and that run should continue throughout the current rate cycle based on its performance during the two most recent hiking cycles.
3. Amazon.com, Inc. (NASDAQ:AMZN)
Value of Winton Capital Management‘s 13F Position: $18.2 million
Number of Hedge Fund Shareholders: 274
Amazon.com, Inc. (NASDAQ:AMZN) has a lot going for it, which includes topping our list of the 5 Best Data Center Stocks To Invest In. David Harding certainly likes the near-term trajectory of Amazon, as he grew his fund’s stake in the ecommerce titan 13-fold during Q1 to 5,598 shares. John Nevin Jr.’s Ayshire Capital Management topped even that, growing its AMZN holding 20-fold during the quarter.
Amazon.com, Inc. (NASDAQ:AMZN)’s Prime Day was in full swing the past two days, but some analysts suggested it was the company’s stock that was the biggest deal of all. Amazon shares have fallen 32% this year due in part to sagging profitability in Q1, which resulted in the company’s first quarterly loss in seven years. The ecommerce giant suffered an $11.9 billion swing in net income year-over-year during Q1.
A huge chunk of that loss was due to Amazon.com, Inc. (NASDAQ:AMZN)’s $7.6 billion pre-tax valuation loss on its 18% stake in Rivian Automotive, Inc. (NASDAQ:RIVN), shares of which cratered by 51% during the first quarter. That’s a transient issue however. Of more critical import is Amazon’s Web Services, which Harris Associates investment analyst Marko Lazarevic believes will one day be worth Amazon’s entire current market cap. As he put it “you’re essentially getting the retail business for free”, and without taking on much risk.
2. Ulta Beauty, Inc. (NASDAQ:ULTA)
Value of Winton Capital Management‘s 13F Position: $18.4 million
Number of Hedge Fund Shareholders: 48
Winton Capital grew its Ulta Beauty, Inc. (NASDAQ:ULTA) position nearly 7-fold during Q1 to 46,191 shares. Several other hedge funds were also buying up ULTA shares in Q1, as there was a 26% increase during the quarter in terms of the number of funds long the stock. Alexander Mitchell’s Scopus Asset Management built the largest new stake in ULTA during Q1, consisting of 142,500 shares.
Ulta Beauty, Inc. (NASDAQ:ULTA) has been on a roll for several quarters now, driven by the overall strength of the beauty sector. The company grew sales by 21% year-over-year to $2.35 billion during Q1, while earnings soared by 54% to $6.28 per share. That actually represented the company’s weakest quarterly earnings growth in the last year following three consecutive quarters of phenomenal triple-digit growth, including 454% and 519% growth in the middle quarters of 2021. Raymond James upgraded Ulta Beauty to ‘Strong Buy’ from ‘Outperform’ in late June, pointing out that 40% of the company’s customers have six-figure household incomes, which should help insulate it from a recession. The firm has a $485 price target on the stock
The ClearBridge Investments Large Cap Growth Strategy was bullish on consumer spending heading into 2022, predicting it would benefit retailers like Ulta Beauty, Inc. (NASDAQ:ULTA). The following comments are from the fund’s Q4 2021 investor letter:
“Several encouraging macro trends are emerging in support of two areas outside tech: consumer spending and industrial production. Unlike in past recessions and recoveries, consumer balance sheets have actually improved dramatically since the onset of the pandemic. This should feed through to increased spending on discretionary items offered by retailers like Ulta Beauty. We expect the supply chain constraints contributing to inflation and goods shortages will begin to lessen with an ambitious rebuilding of inventories.”
1. Union Pacific Corporation (NYSE:UNP)
Value of Winton Capital Management‘s 13F Position: $21.2 million
Number of Hedge Fund Shareholders: 90
Topping the list of stocks that David Harding is buying in droves is Union Pacific Corporation (NYSE:UNP). Winton Capital grew its UNP stake by 335% during Q1 to 77,643 shares, with the position ranking as its second-largest equity holding as of March 31. Hedge fund ownership of Union Pacific surged to a record high during Q1, jumping by 48% quarter-over-quarter.
Union Pacific Corporation (NYSE:UNP) pulled in $5.86 billion in revenue during Q1, a 17.2% year-over-year increase and topping estimates by $100,000. Earnings per share grew by 29% year-over-year to $2.57, which narrowly topped estimates. Further cost pressures are weighing on the company’s bottom line, with management warning last month that rising fuel prices and other costs would negatively impact its profit margins.
Earlier this month, Susquehanna downgraded UNP to ‘Neutral’ from ‘Positive’. The firm noted the aforementioned cost pressures facing the firm and broader industry, as well as supply chain challenges that are weighing on rail volumes despite strong underlying demand. The firm fears that demand from rail’s rate-sensitive markets like housing could soon weaken though. Susquehanna cut its price target on Union Pacific shares to $235 from $310.
Carillon Eagle Growth & Income Fund is bullish on Union Pacific Corporation (NYSE:UNP) given rising oil prices, having this to say about the company in its Q1 2022 investor letter:
“Union Pacific (NYSE:UNP) benefited from rising oil prices, which typically bring more demand for rail shipping as opposed to moving freight by truck. Rail transportation can be much more fuel-efficient than over-the-road trucking.”
For more of the latest stock picks worth considering for your portfolio, check out 10 Best Undervalued Automobile Stocks to Buy Now and 10 Best Data Center Stocks To Invest In.
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Disclosure: None. 10 Stocks Billionaire David Harding is Buying in Droves is originally published at Insider Monkey.
