10 Stocks to Buy According to Mason Hawkins’ Southeastern Asset Management

In this article, we discuss the top 10 stock picks of Mason Hawkins’ Southeastern Asset Management.

Mason Hawkins is the founder, chairman, and CEO at Southeastern Asset Management, a Tennessee-based hedge fund he founded in 1975. The value investor has a bachelor’s degree in finance from the University of Florida and an MBA in Finance from the University of Georgia. Prior to establishing Southeastern Asset Management, Hawkins was Director of Research at Atlantic National Bank in Jacksonville and held the same position at First Tennessee Investment Management in Memphis. He also founded Longleaf Partners Fund in 1987, which is a suite of mutual and UCITS funds. In 2005, the magazine Institutional Investor gave Hawkins their Lifetime Achievement Award. The investor has over 50 years of investment expertise under his belt.

Over the last 20-year period, Hawkins has posted annualized returns of 10.31%, whereas the S&P 500 returned 7.81% over the same time frame.

As of the third quarter, Southeastern Asset Management has $5.26 billion in assets under management (AUM), increasing 1.06% over the last quarter. The fund has its holdings concentrated in the financial, services, technology, basic materials, conglomerates, consumers goods, and others segments.

Some of the most notable stocks in Mason Hawkins’ portfolio include FedEx Corporation (NYSE:FDX), General Electric Company (NYSE:GE), and Hyatt Hotels Corporation (NYSE:H), among others mentioned in detail below.

Mason Hawkins of Southeastern Asset Management

Our Methodology

Let’s take a look at the top 10 stock picks of Mason Hawkins’ Southeastern Asset Management. Hedge fund sentiment around each stock has been derived using Insider Monkey’s database of 867 elite hedge funds. Analyst ratings and business fundamentals around each stock have also been mentioned.

Stocks to Buy According to Mason Hawkins’ Southeastern Asset Management

10. MGM Resorts International (NYSE:MGM)

Southeastern Asset Management’s Stake Value: $238.42 million

Southeastern Asset Management’s 13F Portfolio: 4.52%

Number of Hedge Fund Holders: 50

Starting off this list is MGM Resorts International (NYSE:MGM), a Nevada-based holding company that owns and operates casino resorts. According to regulatory filings for the third quarter, Mason Hawkins owns 5.53 million shares in MGM Resorts International, worth $238.42 million.

On December 14, research firm Goldman Sachs kept a ‘Neutral’ rating on MGM Resorts International stock, setting a $49 price target. The company has announced an agreement to sell operations of its property The Mirage to Hard Rock International, for $1.075 billion in cash and $815 million after taxes and fees. The firm’s analyst Stephen Grambling noted that the deal could be a strategic advantage for MGM Resorts International, given its leverage to drive deleveraging for the enterprise, and would allow the company to focus on capital allocation on other ventures.

As for the third quarter, 50 hedge funds reported owning stakes in MGM Resorts International, worth a combined $2.74 billion. In comparison, 59 hedge funds disclosed ownership of stakes in the company a quarter ago.

Investment firm Longleaf Partners Fund mentioned MGM Resorts International in its Q3 investor letter. Here is what the fund said:

“MGM (1%, 0.09%), the casino and iGaming company, was a top contributor. With Vegas and regional casinos open, results in the quarter were strong and above 2019 cash flow levels at many properties. Revenues remain around 70% of 2019 levels and should reach new highs when large conventions return in a year. BetMGM is now the #2 mobile app in its category nationally and has exceeded all our expectations. CEO Bill Hornbuckle also grew MGM’s value by selling the real estate of several casinos at great prices and repurchasing shares at a 7% annualized pace. His excellent work over the last two years pulled the company through lockdowns and positioned it to be stronger than ever in 2022 and the years to come.”

Along with FedEx Corporation, General Electric Company, and Hyatt Hotels Corporation, MGM Resorts International is an exciting stock on the radar of investors.

9. Affiliated Managers Group, Inc. (NYSE:AMG)

Southeastern Asset Management’s Stake Value: $241.70 million

Southeastern Asset Management’s 13F Portfolio: 4.58%

Number of Hedge Fund Holders: 30

As of the end of the third quarter, 30 out of 867 elite hedge funds had bullish bets on Affiliated Managers Group, Inc. (NYSE:AMG), holding a combined value of $753.84 million. The same number of hedge funds held stakes in the company a quarter ago as well.

Affiliated Managers Group, Inc. is a Florida-based asset management firm, which manages investments for mutual funds, high net-worth individuals, and institutional clients in the United States. It posted earnings per share of $4.00 in Q3, beating analysts’ estimates by $0.09.

On December 16, BofA analyst Craig Siegenthaler initiated coverage of Affiliated Managers Group, Inc. with a ‘Neutral’ rating and a $186 price target. The analyst noted that the company’s strategic pivot towards growth verticals will improve its growth trajectory, although the outflows from traditional and quantitative products will continue to stagnate the rate of its organic growth. The firm’s recent investment in Parnassus Investments is an indicator of its serious growth plans in the area of ESG.

With approximately 1.6 million shares valued at $241.70 million, Mason Hawkins’ Southeastern Asset Management is the leading shareholder of Affiliated Managers Group, Inc., which has upped its stake in the company by 6% over the last quarter.

8. FedEx Corporation (NYSE:FDX)

Southeastern Asset Management’s Stake Value: $251.84 million

Southeastern Asset Management’s 13F Portfolio: 4.77%

Number of Hedge Fund Holders: 49

FedEx Corporation reported earnings per share of $4.83 for the third quarter, which came in above estimates by $0.54. Quarterly revenue of $23.50 billion was above projections by an impressive $1.08 billion. FedEx Corporation provides e-commerce and transportation services in the United States and around the globe.

On December 17, JPMorgan analyst Brian Ossenbeck maintained an ‘Overweight’ rating on FedEx Corporation stock, revising the price target to $312 from $305, after the firm posted strong earnings for the quarter. The analyst notes that the company was getting past labor availability issues which will help grow volumes faster than expected and that the announced buyback authorization, accelerated share repurchase, and a two-day investor event in June 2022 were all positive signs and “a welcome surprise”.

“Our weakest Q3 performers included FedEx. Shares of FedEx, a global shipping and logistics firm, were held back by disappointing business results as labor cost headwinds and air network disruptions overshadowed solid top-line trends. We think the company should be able to overcome these near-term issues. Importantly, FedEx has strong pricing power as it operates in a consolidated global shipping industry. In September, the company announced it would increase its shipping rates by an average of 5.9% across most of its services, which is the first time in several years that its annual increase would exceed 5.0%. The industry’s renewed pricing discipline is a welcome change, reflecting a broader commitment to earn better returns on invested capital. FedEx is also closer to fully integrating TNT, a European-focused parcel company it acquired in 2016. The market is beginning to incorporate a higher probability FedEx will fully integrate TNT, which will provide a significant boost to profits. The stock now trades at a near-trough multiple of less than 12X 2022 earnings, so we added to our position on weakness.”

7. Discovery, Inc. (NASDAQ:DISCK)

Southeastern Asset Management’s Stake Value: $253.64 million

Southeastern Asset Management’s 13F Portfolio: 4.81%

Number of Hedge Fund Holders: 28

According to filings for the third quarter, Southeastern Asset Management owns 10.45 million shares in Discovery, Inc. (NASDAQ:DISCK), which amounts to a $253.64 million value representing 4.81% of the fund’s total portfolio.

Discovery, Inc. is a media company that distributes content in 50 languages around the world, operating channels including Discovery Channel, Animal Planet, HGTV, and Food Network, as well as its streaming service Discovery+.

28 hedge funds were long Discovery, Inc. by the close of the third quarter, in comparison to 35 in the preceding quarter, showing a downward trend.

Artisan Partners is an investment fund that mentioned Discovery, Inc. in its third-quarter investor letter. Here’s what they said:

“Discovery is a media company that distributes content across US and international networks, such as HGTV, Discovery, TLC, Food Network and Animal Planet, among others, as well as its streaming service Discovery+. The company’s large collection of lower budget, unscripted programming is highly popular. The company has three share classes. We hold the C share, which doesn’t have voting rights and trades at a discount to the A and B share classes with voting rights, but all three will be treated equally when collapsed into a single class in the planned merger with WarnerMedia. The merger— slated to close in Q2 2022—will combine Discovery’s content with WarnerMedia’s HBO, potentially making it the third-largest streaming company behind Netflix and Disney. We like the outlook of this merger as the new combined entity will have a good mix of content that should attract viewers. Discovery has already had significant success with rolling out Discovery+ as it had better than expected
subscribership. Further, Discovery’s shares are priced as a legacy media asset in decline, but we see significant upside given how the market values Netflix and Disney. However, we sized the position on the smaller end given the risks around integrating the businesses.”

6. General Electric Company (NYSE:GE)

Southeastern Asset Management’s Stake Value: $265.58 million

Southeastern Asset Management’s 13F Portfolio: 5.03%

Number of Hedge Fund Holders: 53

Up next is General Electric Company, which operates through its segments: Power, Renewable Energy, Aviation, Healthcare, and Capital. Southeastern Asset Management owns 2.57 million shares in the firm, at a value of $265.58 million.

As of December 20, shares of General Electric Company have gained 5.75% in the last 12 months. For the third quarter, General Electric Company reported earnings per share of $0.57, which came in above consensus estimates by $0.13.

At the end of the third quarter, 53 hedge funds reported bullish bets on General Electric Company, down from 67 in the preceding quarter.

On December 10, Deutsche Bank analyst Nicole DeBlase reiterated a ‘Buy’ rating on General Electric Company stock, revising the price target to $119 from $131. The analyst notes that although supply chain and pricing issues will continue to exist till mid-2022, she is constructive on the firm’s macro outlook.

Vulcan Value Partners, an investment firm, mentioned General Electric Company in its investor letter for the third quarter. Here is what the fund said:

“During the quarter, we sold our positions in General Electric Co. General Electric is a company we followed for a long time. In the past, we removed GE from the MVP list due to management’s poor capital allocation decisions which resulted in value instability. Larry Culp, the former CEO of Danaher, became CEO of General Electric in 2018. The company implemented a vast restructuring program to simplify the industrial side of its business, sold off non-core assets, paid down debt with the proceeds, and drastically shrunk GE Capital. These restructuring activities allowed its world-class jet engine and healthcare businesses to shine through, and improved value stability. As a result, we added the company back to the MVP list. While the pandemic negatively impacted General Electric’s aviation business in the short run, it also gave us the opportunity to buy General Electric in the second quarter of 2020 with a substantial margin of safety. GE is a good example of a competitively entrenched, yet slower growing MVP business. As its stock price rose rapidly over the last year, its value growth did not keep up, and the price to value gap closed quickly. As our margin of safety diminished, we sold our position in GE and allocated to more discounted companies.”

In addition to FedEx Corporation, General Electric Company, and Hyatt Hotels Corporation, General Electric Company is a top stock for investors.

5. Lazard Ltd (NYSE:LAZ)

Southeastern Asset Management’s Stake Value: $268.16 million

Southeastern Asset Management’s 13F Portfolio: 5.08%

Number of Hedge Fund Holders: 18

Mason Hawkins owns 5.85 million Lazard shares at a value of $268.16 million. The New York-based company provides financial advisory and asset management services to its clients. For the third quarter, Lazard Ltd (NYSE:LAZ) posted EPS of $0.98, exceeding estimates by $0.03.

On December 8, Morgan Stanley analyst Manan Gosalia maintained an ‘Overweight’ rating on Lazard Ltd shares, lowering the price target to $55 from $61. The company’s Q3 revenue of $702 million implied a 23% growth from Q3 2020 levels. Its financial advisory and asset management segments both delivered symmetrical performances, with reported revenues well above last two years’ levels.

Out of 867 elite hedge funds tracked by Insider Monkey, 18 disclosed ownership of stakes in Lazard Ltd at the end of the third quarter.

4. Hyatt Hotels Corporation (NYSE:H)

Southeastern Asset Management’s Stake Value: $315.66 million

Southeastern Asset Management’s 13F Portfolio: 5.99%

Number of Hedge Fund Holders: 37

Investors are loading up on Hyatt Hotels Corporation, as it was found in the portfolio of 37 hedge funds at the end of the third quarter, up from 23 a quarter ago.

Southeastern Asset Management reported owning 4.09 million shares of Hyatt Hotels Corporation at the end of the third quarter, worth $315.66 million, up 19% over the previous quarter where the fund owned 3.47 million shares. The company develops and manages hotels and resort chains in the United States and internationally.

On December 13, Bernstein analyst Richard Clarke initiated coverage of Hyatt Hotels Corporation with an ‘Outperform’ rating and a $105 price target. The analyst noted that the company represents a phenomenal growth story, having doubled its hotel room count since its 2009 IPO, and currently accounts for roughly 4% of the global development pipeline.

Investment firm Baron Funds mentioned Hyatt Hotels Corporation in its Q3 investor letter. Here’s what the fund said:

“Hyatt Hotels Corp.: Following its recent announcement to acquire Apple Leisure Group, a highly desirable independent resort management company with 102 resorts in 10 countries, we reacquired shares in Hyatt, a leading hotel company. We believe this acquisition will accelerate Hyatt’s industry-leading growth by adding a portfolio of resort brands with a large pipeline. Hyatt’s management has also announced its intention to accelerate its transformation to greater fee-based earnings and create additional liquidity by seeking to sell $2 billion of owned hotels in the next three years. We believe the combination of industry-leading growth, hotel asset sales at attractive valuations, and the company’s ongoing transformation to more of an asset-light business will result in an improvement in Hyatt’s valuation and strong shareholder returns.”

3. Mattel, Inc. (NASDAQ:MAT)

Southeastern Asset Management’s Stake Value: $340.57 million

Southeastern Asset Management’s 13F Portfolio: 6.46%

Number of Hedge Fund Holders: 34

Up next is Mattel, Inc. (NASDAQ:MAT), a children’s entertainment company that makes toys and other consumer goods. The firm was found in the portfolio of 34 hedge funds at the close of the third quarter. This shows a positive trend from the preceding quarter, where 25 hedge funds were bullish on Mattel, Inc..

Mattel, Inc. represents 6.46% of Mason Hawkins’ portfolio, with 8.34 million shares valued at $340.57 million.

Investment firm Longleaf Partners Fund mentioned Mattel, Inc. in its third-quarter investor letter. Here’s what the fund said:

“Mattel (-8%, -0.51%), the global toy and intellectual property franchisor, detracted despite strong quarterly performance that increased our appraisal of the value by 5%. Sales grew 40% above weak 2020 comps, with particularly encouraging results in American Girl, the doll brand that had been struggling for years before CEO Ynon Kreiz initiated a successful turnaround. Despite some cost inflation, the consolidated gross margin increased nearly 4%. We think Mattel will earn $1.50/share next year and the multiple remains too low despite two years of price appreciation. The company has recently announced 13 feature films, 18 TV shows, and 24 other projects in development. The intellectual property (IP) efforts create substantial earnings power but haven’t contributed much yet. These are some of the best non-earning assets in our portfolio and we expect many of them to be realized within the next few years.”

2. CNX Resources Corporation (NYSE:CNX)

Southeastern Asset Management’s Stake Value: $355.43 million

Southeastern Asset Management’s 13F Portfolio: 6.74%

Number of Hedge Fund Holders: 34

CNX Resources Corporation (NYSE:CNX) is a natural gas drilling company based in the United States. Up until 2017, the company was known as CONSOL Energy Inc. and is headquartered in Pennsylvania. Hedge fund sentiment was positive on CNX Resources Corporation, with 34 hedge funds reporting ownership of stakes in the company at the end of the third quarter, up from 30 in the preceding quarter.

Southeastern Asset Management is the leading stakeholder in CNX Resources Corporation, with 28.16 million shares valued at $355.43 million, amounting to 6.74% of the fund’s overall portfolio.

Longleaf Partners Fund, an investment management firm, talked about CNX in its Q3 investor letter. Here’s what the fund said:

“Finally, had you told us two years ago that CNX would 1) accretively buy in its pipeline assets to be the low-cost player in the basin; 2) further lock in FCF with hedges; 3) buy back a material amount of shares to grow FCF/share power above $2; 4) finally see more E&P industry consolidation, we would not have expected a sub-$12 stock price. But now that gas prices are up, hedges are viewed by the market as a negative, and sellsiders struggle for a short-term “catalyst.” We expect CNX to create more catalysts and continue to take advantage of its dramatically undervalued stock price.”

1. Lumen Technologies, Inc. (NYSE:LUMN)

Southeastern Asset Management’s Stake Value: $813.90 million

Southeastern Asset Management’s 13F Portfolio: 15.44%

Number of Hedge Fund Holders: 25

Lumen Technologies, Inc. (NYSE:LUMN) is Mason Hawkins’ top holding, with 65.69 million shares valued at $813.90 million, making up 15.44% of his overall portfolio. In comparison to the last quarter, where he held 61.66 million shares of Lumen Technologies, Inc., Hawkins upped his stake in the company by 7%.

In December, Lumen Technologies, Inc. won a network contract from the U.S. Army Reserve Command, to provide VPN services and remote access solutions to more than 650 Army Reserve locations across the United States. The contract has an initial term of one year with 10 one-year options and is worth $23 million.

25 hedge funds were long Lumen Technologies, Inc. at the close of the third quarter, with combined holdings of $941.37 million. In comparison, 33 hedge funds held stakes in the firm a quarter earlier.

Investment firm Longleaf Partners Fund is mentioned in its Q3 2021 investor letter. Here’s what the fund said:

“Finally, had you told us two years ago that CNX would 1) accretively buy in its pipeline assets to be the low-cost player in the basin; 2) further lock in FCF with hedges; 3) buy back a material amount of shares to grow FCF/share power above $2; 4) finally see more E&P industry consolidation, we would not have expected a sub-$12 stock price. But now that gas prices are up, hedges are viewed by the market as a negative, and sellsiders struggle for a short-term “catalyst.” We expect CNX to create more catalysts and continue to take advantage of its dramatically undervalued stock price.”

You can also take a look at 10 Best High Yield Stocks To Buy Now and Cathie Wood’s Top 10 Stock Picks.

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