In this article, we discuss 10 stocks to buy according to GuardCap Asset Management.
GuardCap Asset Management is a specialized investing hedge fund with headquarters in London, England. Its entire concentration is on managing focused, bottom-up strategies for index-agnostic institutional investors. Global Equities and Global Emerging Market Equities are the hedge fund’s strategies. GuardCap Asset Management is a wholly-owned indirect subsidiary of Guardian Capital Group Limited (GCGL), a Canadian company incorporated in 1962 and whose shares are traded on the Toronto Stock Exchange.
As of Q1 2022, GuardCap Asset Management held a 13F portfolio valued at over $7.63 billion, down from $8.05 billion in the previous quarter, and a top 10 holdings concentration of 81.78%. In the first quarter, the hedge fund added 1 new stock to its portfolio, increased existing stakes in 19 stocks, sold out of 2 firms, and decreased holdings in 5 others. GuardCap Asset Management made investments in the communications, consumer discretionary, consumer staples, finance, healthcare, information technology, and industrial sectors. Some of the hedge fund’s significant holdings include Microsoft Corporation (NASDAQ:MSFT), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and Alibaba Group Holding Limited (NYSE:BABA).
In Microsoft Corporation (NASDAQ:MSFT), GuardCap Asset Management increased its hold by 3% in the first quarter. On May 23, Jefferies analyst Brent Thill cut his price objective on Microsoft Corporation (NASDAQ:MSFT) from $400 to $325 while maintaining a Buy rating. Given increasing economic headwinds and the approaching prospect of recession, Thill cut projections for 28 software businesses he covers.
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Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is another company in which GuardCap Asset Management has a significant investment. Hans Engel of Erste Group lowered Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) from Buy to Hold on April 14. Due to low global economic growth, Engel advised investors that the company’s sales and profitability expectations for 2022 had recently been slashed.
Alibaba Group Holding Limited (NYSE:BABA) is another large-cap stock in GuardCap Asset Management’s portfolio, in which the fund upped its stake by 6% in Q1. Alibaba Group Holding Limited (NYSE:BABA)’s price objective was trimmed to $200 from $220 on May 27 by Benchmark analyst Fawne Jiang, who maintained a Buy recommendation on the stock. Apart from economic and regulatory concerns, Jiang claimed that Alibaba’s stock had underperformed in the previous year due to weaker monetization of its central marketplace and a significant decline in profitability due to increased investment.
Our Methodology
With this industry outlook in mind, let’s start our list of 10 stocks to buy according to GuardCap Asset Management. We used the hedge fund’s 13F portfolio for Q1 2022 for this analysis.
Stocks to Buy According to GuardCap Asset Management
10. Accenture plc (NYSE:ACN)
GuardCap Asset Management’s Stake Value: $414,579,000
Percentage of GuardCap Asset Management’s 13F Portfolio: 5.43%
Number of Hedge Fund Holders: 63
Clients in approximately 40 sectors, including health care, insurance, automobile manufacturing, finance, energy, travel, retail, media, and technology rely on Accenture plc (NYSE:ACN) for information technology assistance. On April 8, Baird analyst David Koning boosted his price target on Accenture plc (NYSE:ACN) to $378 from $360 and maintained a Neutral rating on the shares.
Accenture plc (NYSE:ACN) announced on May 31 that it had entered into a partnership agreement with A2Z Smart Technologies Corp. (NASDAQ:AZ) to increase brand recognition and market presence of the Cust2Mate Smart Cart Platform in Europe through its subsidiary and European partners.
In the first quarter of 2022, GuardCap Asset Management bought an additional 27,136 shares of Accenture plc (NYSE:ACN), bringing its total stake in the firm to 1.23 million shares, amounting to $414.58 million.
At the end of the first quarter of 2022, 63 hedge funds monitored by Insider Monkey had holdings in Accenture plc (NYSE:ACN). This is an increase over the past quarter when 50 hedge funds declared ownership of Accenture plc (NYSE:ACN).
In addition to Microsoft Corporation (NASDAQ:MSFT), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and Alibaba Group Holding Limited (NYSE:BABA), Accenture plc (NYSE:ACN) is one of the stocks to buy according to GuardCap Asset Management.
Here is what Baron Funds has to say about Accenture plc (NYSE:ACN) in its Q1 2022 investor letter:
“Another good example is the leading consulting company, Accenture, plc (NYSE:ACN), whose stock was down 18% during the quarter despite the company reporting sparkling results with mid-20s year-over-year growth rates in revenues, EBIT, and EPS, driven by double-digit growth across all markets, industries, and services while continuing to gain market share (growing at nearly 3 times the market rate). In addition to expected strength in smaller deals, Accenture had 36 clients booking over $100 million worth of business in the last quarter alone. While most investors remain concerned about a pull-forward of demand, the company is not seeing a slowdown as digital transformations became a must for organisations to remain competitive as described by the company in its latest earnings conference call:
‘Pre-pandemic, what we saw were clients much more into – they did transformation quite sequentially, right? The pandemic was a major shock. You saw the leaders who were kind of coming into that saying we’ve got to go even faster, and you saw a bunch of companies saying we need to leapfrog, right? We need to move online. We need to do digital transformation. And that meant that we saw companies starting to take on not sequential transformation but what we call compressed transformation, where they’re at the same time doing manufacturing as well as sales’.”
9. Illumina, Inc. (NASDAQ:ILMN)
GuardCap Asset Management’s Stake Value: $476,912,000
Percentage of GuardCap Asset Management’s 13F Portfolio: 6.24%
Number of Hedge Fund Holders: 54
Illumina, Inc. (NASDAQ:ILMN) develops, manufactures, and sells life science instruments and systems for large-scale genetic variation and function investigation. As of May 31, the stock is down 36.21% year to date, however, GuardCap Asset Management increased its position in Illumina, Inc. (NASDAQ:ILMN) by 3% in the first quarter of 2022, thereby consisting of 1.36 million shares worth $476.91 million. This represented 6.24% of the fund’s total portfolio.
Following the Q1 report, Piper Sandler analyst David Westenberg decreased his price objective on Illumina, Inc. (NASDAQ:ILMN) to $360 from $460 and maintained an Overweight rating on the stock. In addition, the analyst cut pricing estimates in the life science equipment and genomics domains to reflect changes in comp values.
Overall, hedge funds are loading up on Illumina, Inc. (NASDAQ:ILMN). 54 hedge funds reported bullish bets on the company shares at the end of the first quarter of 2022, up from 53 hedge funds a quarter ago.
Ensemble Capital, in its Q4 2021 investor letter, mentioned Illumina, Inc. (NASDAQ:ILMN). Here is what the fund has to say:
“Illumina (7.6% weight in the Fund): The far and away leader in genetic sequencing equipment, used to develop the COVID mRNA vaccines, has a 90% market share. As the dominant provider of one of the most fundamental tools in genetic research and clinical applications, the company can essentially set any price they choose to for their equipment. However, the company recognizes that the big opportunity is not to squeeze customers today, but rather to relentlessly work to improve their technology and reduce the price in order to spur along massive increased usage. But while their goal is to bring down the cost of sequencing, this is a strategic choice on their part, not something they are forced to do via competition. We are confident that to the degree the company faces increased costs, they can raise prices to fully offset these increases and ensure that their profits are inflated along with the general level of prices across the economy.”
8. MarketAxess Holdings Inc. (NASDAQ:MKTX)
GuardCap Asset Management’s Stake Value: $497,255,000
Percentage of GuardCap Asset Management’s 13F Portfolio: 6.51%
Number of Hedge Fund Holders: 39
MarketAxess Holdings Inc. (NASDAQ:MKTX) is an electronic trading platform that enables financial professionals to trade corporate bonds and other fixed-income securities. MarketAxess Holdings Inc. (NASDAQ:MKTX) has attracted the attention of hedge funds lately. At the end of Q1 2022, 39 hedge funds declared favorable bets on the company’s stock, compared to 32 hedge funds in the previous quarter.
Analyst Brian Bedell of Deutsche Bank decreased his price objective on MarketAxess Holdings Inc. (NASDAQ:MKTX) to $270 from $300 on May 19, maintaining a Hold rating. According to Bedell in a research note, despite the equities market downturn, more purchasing opportunities are appearing in the brokerage, asset management, and exchange sectors.
GuardCap Asset Management started investing in MarketAxess Holdings Inc. (NASDAQ:MKTX) during the fourth quarter of 2018, purchasing shares worth over $27.24 million. At the end of Q1 2022, the hedge fund owned a $497.26 million stake in the company, which accounted for 6.51% of the 13F portfolio. It is the most significant stakeholder of MarketAxess Holdings Inc. (NASDAQ:MKTX) as of the first quarter of 2022.
In its first-quarter 2022 investor letter, Upslope Capital Management mentioned MarketAxess Holdings Inc. (NASDAQ:MKTX). Here is what the fund said:
“After what appeared to be bottoming fundamentals for MKTX, the two most recent months of trading volume and market share data have been increasingly disappointing. Given a not-obviously-cheap valuation (inconsistent with a takeout bid – for now) and management commentary seemingly in denial about obvious problems, I sold the small remainder of our shares post-Q1. The back-and-forth has been frustrating but warranted. I know MKTX better than just about any company Upslope has been involved with, so at least the distraction has been mild. This is likely not the last time Upslope will be involved with the stock.”
7. Colgate-Palmolive Company (NYSE:CL)
GuardCap Asset Management’s Stake Value: $502,775,000
Percentage of GuardCap Asset Management’s 13F Portfolio: 6.58%
Number of Hedge Fund Holders: 50
Colgate-Palmolive Company (NYSE:CL) has evolved into a multinational consumer goods corporation. Colgate-Palmolive Company (NYSE:CL) also makes shampoos, shower gels, deodorants, and home care products, which are distributed in over 200 countries. International sales account for about 70% of its consolidated revenue, including approximately 45% from emerging regions.
On May 23, Barclays analyst Lauren Lieberman cut her price objective on Colgate-Palmolive Company (NYSE:CL) to $71 from $77 while maintaining an Equal Weight rating. For 2023, the analyst cut expectations for the large-cap home and personal care industry by an average of 2% to 3%.
At the end of the first quarter of 2022, elite funds were seen pumping money into Colgate-Palmolive Business (NYSE:CL), with 50 hedge funds holding stakes in the company, up from 48 funds a quarter earlier.
During Q1 2022, GuardCap Asset Management increased its position in Colgate-Palmolive Company (NYSE:CL) by 3% and held shares worth over $502.78 million. The company made up 6.58% of the hedge fund’s portfolio. With $7.55 million in shares, the hedge fund began building its position in the firm in 2018.
6. NIKE, Inc. (NYSE:NKE)
GuardCap Asset Management’s Stake Value: $510,025,000
Percentage of GuardCap Asset Management’s 13F Portfolio: 6.68%
Number of Hedge Fund Holders: 67
NIKE, Inc. (NYSE:NKE) designs, develops, manufactures, and markets footwear, clothes, equipment, and accessories worldwide. At the end of the first quarter of 2022, 67 hedge funds in the database of Insider Monkey held stakes worth $3.98 billion in NIKE, Inc. (NYSE:NKE), down from 68 in the preceding quarter worth $5.40 billion.
During Q1 2022, GuardCap Asset Management boosted its position in NIKE, Inc. (NYSE:NKE) by 3% and held a stake worth over $510.03 million. The company accounted for 6.68% of the hedge fund’s portfolio. Of the 67 hedge funds that were bullish on NIKE, Inc. (NYSE:NKE), according to the first quarter database of Insider Monkey, Fisher Asset Management is the leading stakeholder of the company, holding 8.28 million shares worth $1.11 billion.
Following the firm’s monthly sneaker-release tracker, Wedbush analyst Tom Nikic dropped his price objective on NIKE, Inc. (NYSE:NKE) to $139 from $163 and maintained an Outperform rating on the stock. In Q4 2022, the analyst predicted a 25% drop in constant-FX revenues for China, while earlier forecasting flat revenues.
Like Microsoft Corporation (NASDAQ:MSFT), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and Alibaba Group Holding Limited (NYSE:BABA), NIKE, Inc. (NYSE:NKE) is gaining the attention of GuardCap Asset Management.
Here is what ClearBridge Investments, an investment management firm, has to say about Q4 2021 investor letter:
“Nike is another play on e-commerce as well as the anticipated growth in consumer spending as we learn to live with COVID-19. After selling out of the stock in 2016 due to competitive concerns, we were motivated to repurchase shares because of optimism around a new management team’s focus on accelerating Nike’s shift toward e-commerce and direct-to-consumer (DTC) distribution. Near-term supply chain issues in Vietnam and retail weakness in China that we see as ephemeral provided a good buying opportunity. We do not believe the market is giving proper credit to Nike’s potential to deliver attractive, high-single-digit revenue growth while delivering operating margin expansion as more merchandise is sold direct. Nike is also still under indexed to the women’s category, which we see as a significant ongoing catalyst.
5. Mastercard Incorporated (NYSE:MA)
GuardCap Asset Management’s Stake Value: $600,486,000
Percentage of GuardCap Asset Management’s 13F Portfolio: 7.86%
Number of Hedge Fund Holders: 136
Mastercard Incorporated (NYSE:MA), a technology business, provides transaction processing and other payment-related products and services in the US and internationally. Mastercard Incorporated (NYSE:MA) has featured on GuardCap Asset Management’s portfolio since the first quarter of 2018. According to the 13F filings for the first quarter of 2022, the hedge fund held over 1.68 million shares of Mastercard Incorporated (NYSE:MA), amounting to more than $600.49 million and representing 7.86% of the fund’s portfolio value.
On May 17, Goldman Sachs initiated coverage of Mastercard Incorporated (NYSE:MA), retaining a Buy rating and a price objective of $460, representing a 38% upside. Following a tumultuous start to 2022, the analyst remained upbeat about the payments sector, noting that the companies are well-positioned to manage a low-growth, inflationary environment.
By the end of the first quarter of 2022, Insider Monkey identified 136 hedge funds that had stakes in Mastercard Incorporated (NYSE:MA). The total value of these stakes was over $15.44 billion.
Here is what Ensemble Capital had to say about Mastercard Incorporated (NYSE:MA) in its first-quarter 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.”
4. Booking Holdings Inc. (NASDAQ:BKNG)
GuardCap Asset Management’s Stake Value: $734,273,000
Percentage of GuardCap Asset Management’s 13F Portfolio: 9.61%
Number of Hedge Fund Holders: 99
Booking Holdings Inc. (NASDAQ:BKNG) is an online travel and related services firm with six primary brands – Booking.com, Priceline, Agoda, Rentalcars.com, KAYAK, and OpenTable, which serve customers and local partners in over 220 countries and territories.
Thomas Champion of Piper Sandler boosted his price objective on Booking Holdings Inc. (NASDAQ:BKNG) to $2,500 from $2,440 on May 5 and reiterated his Neutral rating on the stock. In a research note to investors, Champion stated that Booking Holdings Inc. (NASDAQ:BKNG)’s first-quarter bookings beat Street forecasts. Management was optimistic about the company’s return to travel and its push into projects like Air and Connected Trip.
GuardCap Asset Management elevated its stake by 3% in Booking Holdings Inc. (NASDAQ:BKNG) in the first quarter of 2022. The hedge fund held 312,663 shares of the firm compared to 306,046 shares in the fourth quarter of 2021. At the end of Q1 2022, there were 99 optimistic hedge fund bets on Booking Holdings Inc. (NASDAQ:BKNG) shares, up from 92 a quarter earlier.
In its Q1 2022 investor letter, ClearBridge Investments mentioned Booking Holdings Inc. (NASDAQ:BKNG) and explained its insights for the company. Here is what the fund said:
“Other actions during the quarter included the sale of consumer name Booking Holdings (NASDAQ:BKNG). We sold Booking, the owner of online travel agencies Booking.com, Priceline and Kayak, due to its higher exposure to Europe where we believe a rebound in travel will be slowed by the spillover effects of the Ukraine invasion on consumer spending.”
3. UnitedHealth Group Incorporated (NYSE:UNH)
GuardCap Asset Management’s Stake Value: $754,533,000
Percentage of GuardCap Asset Management’s 13F Portfolio: 9.88%
Number of Hedge Fund Holders: 103
UnitedHealth Group Incorporated (NYSE:UNH) is a health insurance company located in Minneapolis that provides health benefit plans and services to private and public sector organizations and individuals, as well as Medicare programs and prescription drug coverage.
GuardCap Asset Management increased its stake in UnitedHealth Group Incorporated (NYSE:UNH) by 3% in the first quarter, thereby consisting of 1.48 million shares valued at $754.53 million. Eagle Capital Management is a prominent shareholder of UnitedHealth Group Incorporated (NYSE:UNH), with 2.90 million shares worth more than $1.48 billion.
As part of a comprehensive research note on U.S. Healthcare Services, Bernstein analyst Lance Wilkes downgraded UnitedHealth Group Incorporated (NYSE:UNH) on May 26 from Outperform to Market Perform with a price objective of $561, down from $566. Even though UnitedHealth is the largest federal MCO and supplier of value-based care, Wilkes claimed that his new rating reflected the stock’s strong performance and rising relative earnings multiple.
The number of hedge funds tracked by Insider Monkey having stakes in UnitedHealth Group Incorporated (NYSE:UNH) grew to 103 in Q1, from 96 in the preceding quarter. These stakes hold a consolidated value of $12.82 billion, down from $13.67 billion.
In its Q1 2022 investor letter, Baron Funds mentioned UnitedHealth Group Incorporated (NYSE:UNH). Here is what the firm said:
“UnitedHealth Group Incorporated (NYSE:UNH) is a leading diversified health and wellbeing company whose divisions include insurance arm, United Healthcare and healthcare services arm, Optum, which offers care delivery and other services. Shares increased 1.8% on good fourth quarter results with revenues up 12.5% year-over-year, operating margins of 7.5% and EPS up 78% while also reaffirming its 2022 guidance. We believe UnitedHealth leads the health care industry in innovation and execution as evidenced by its strong value proposition leading to Medicare Advantage share gains, strong cost controls, and its leadership position in the shift to value-based care.”
2. Alphabet Inc. (NASDAQ:GOOG)
GuardCap Asset Management’s Stake Value: $765,233,000
Percentage of GuardCap Asset Management’s 13F Portfolio: 10.02%
Number of Hedge Fund Holders: 160
Alphabet Inc. (NASDAQ:GOOG) is an American global technology giant. On May 24, Jefferies analyst Brent Thill lowered his price target on Alphabet Inc. (NASDAQ:GOOG) to $3,100 from $3,400 while maintaining his Buy rating, claiming that Snap Inc. (NYSE:SNAP)’s expectation of lower Q2 revenue growth than its initial 20%-25% guidance is suggestive of a rapidly declining macro environment that will probably influence the entire ad industry.
At the conclusion of the first quarter of 2022, 160 out of Insider Monkey’s 900+ elite hedge funds were long Alphabet Inc. (NASDAQ:GOOG). At the end of the fourth quarter of the previous year, 158 hedge funds reported owning interests in Alphabet Inc. (NASDAQ:GOOG).
GuardCap Asset Management owned 275,130 shares of Alphabet Inc. (NASDAQ:GOOG) in the first quarter of 2022, down 8% from the previous quarter’s stake of 295,864 shares. The stock accounted for 10.02% of the fund’s total 13F portfolio in Q1 2022.
Here is what Farrer Wealth Advisors has to say about Alphabet Inc. (NASDAQ:GOOG) in its Q1 2022 investor letter:
“Alphabet: 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)
1. CME Group Inc. (NASDAQ:CME)
GuardCap Asset Management’s Stake Value: $987,307,000
Percentage of GuardCap Asset Management’s 13F Portfolio: 12.93%
Number of Hedge Fund Holders: 58
CME Group Inc. (NASDAQ:CME) administers a derivatives marketplace that provides various risk management futures and options products. On May 4, CME Group Inc. (NASDAQ:CME) issued a quarterly dividend of $1.00 per share, in line with previous. The forward yield was 1.83%.
58 hedge funds held positions in CME Group Inc. (NASDAQ:CME) at the close of the first quarter, with a combined value of $2.95 billion. This is up from 55 bullish hedge fund bets on CME Group Inc. (NASDAQ:CME) a quarter ago.
CME Group Inc. (NASDAQ:CME) was raised to Outperform from Perform by Oppenheimer analyst Owen Lau on May 25, with a price target of $223. Lau wrote in a research letter to investors that the upgrade is based on the premise that there would be no significant calamities or recession in the foreseeable future.
GuardCap Asset Management increased its stake by 3% in CME Group Inc. (NASDAQ:CME) in the first quarter of 2022. The hedge fund held 4.15 million shares of the firm compared to 4.06 million shares in the fourth quarter of 2021.
In its Q1 2022 investor letter, Baron Funds mentioned CME Group Inc. (NASDAQ:CME). Here is what the fund said:
“CME Group, Inc. (NASDAQ:CME) operates the world’s largest and most diversified derivatives marketplace. Shares rose 4.6%, contributing to results as elevated market volatility and rising interest rates led to higher trading activity on CME’s exchanges. Average daily trading volume increased 19% year-over-year with notable strength in Interest Rates and Equities products. We continue to own the stock due to CME’s strong competitive moats, underpinned by its product breadth and liquidity depth, as well as its sustainable growth characteristics driven by the secular shift from uncleared over-the-counter trading to exchange-traded futures while also benefiting from the rising rate environment.”
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Disclosure: None. 10 Stocks to Buy According to GuardCap Asset Management is originally published on Insider Monkey.
