10 Stocks to Buy According to Peter Simmie’s Bristol Gate Capital Partners

Published on September 15, 2022 at 9:01 am by Ruchi Gupta in Hedge Funds, News

In this article, we discuss 10 stocks to buy according to Peter Simmie’s Bristol Gate Capital Partners. If you want to skip our detailed analysis of Simmie’s history, investment philosophy, and hedge fund performance, go directly to 5 Stocks to Buy According to Peter Simmie’s Bristol Gate Capital Partners.

Richard Hamm and Peter Simmie founded Toronto-based hedge fund Bristol Gate Capital Partners in 2006. Peter Simmie, the company’s former chief investment officer (CIO), retired in 2019, and Richard Hamm has taken over as CIO since then.

The hedge fund employs data analytics to invest in high-dividend growing companies. Because of artificial intelligence (AI), Bristol Gate Capital Partners has been producing greater results for its consumers. The hedge fund uses gradient-boosting machine technologies to give human analysts the best possible starting point for making investment decisions. Richard Hamm discussed the potential benefits of artificial intelligence (AI) on trading strategies in one of his interviews. He said that Bristol Gate Capital has been using these strategies from the beginning, even though the investing business is still not entirely on board with data analytics. The hedge fund invests in businesses after assessing the strength and quality of the company, in addition to concentrating on dividend growth equities.

Image by Sergei Tokmakov Terms.Law from Pixabay

Bristol Gate Capital Partners has produced profitable returns for investors since its establishment. Since its inception, Bristol Gate Capital has generated positive returns for its shareholders. The hedge fund generated returns of 7.3% over the last three years and 11.2% over the previous five years. Additionally, from 2009 to 2021, the hedge fund generated returns of 30.2% as opposed to the S&P 500’s return of 28.7%.

Bristol Gate Capital has 32 long positions in its portfolio. As of Q2 2022, Bristol Gate Capital Partners’ 13F portfolio is valued at $1.77 billion, with a 51.06% concentration of the top 10 holdings. Most of the hedge fund’s investments are focused on the information technology, finance, industrials, consumer discretionary, and healthcare sectors. Some of the fund’s significant holdings in Q2 were Mastercard Incorporated (NYSE:MA), Visa Inc. (NYSE:V), and Microsoft Corporation (NASDAQ:MSFT).

Our Methodology

We picked these stocks from the Q2 2022 portfolio of Peter Simmie’s Bristol Gate Capital Partners. We rated the list based on hedge fund sentiment around the securities, as determined by Insider Monkey’s Q2 2022 database of 895 elite hedge funds.

Stocks to Buy According to Peter Simmie’s Bristol Gate Capital Partners

10. Starbucks Corporation (NASDAQ:SBUX)

Bristol Gate Capital Partners’ Stake Value: $84,945,000

Percentage of Bristol Gate Capital Partners’ 13F Portfolio: 4.8%

Number of Hedge Fund Holders: 55

Starbucks Corporation (NASDAQ:SBUX) runs a global business as a retailer of specialty coffee. Starbucks Corporation (NASDAQ:SBUX) has 34,317 outlets worldwide as of January 2, 2022, including a little under 17,000 stores in the United States. In fiscal 2022, the company intends to open 2,000 net new stores. Starbucks Corporation (NASDAQ:SBUX) is trading at a forward P/E ratio of 25.91x, which is higher than the forward P/E for its industry of 19.63x.

Andy Barish, a Jefferies analyst, praised Laxman Narasimhan’s appointment as the new CEO as “positive” for Starbucks Corporation (NASDAQ:SBUX). Therefore, on September 8, the analyst maintained a ‘Buy’ rating on Starbucks Corporation (NASDAQ:SBUX) with a $100 price target.

There were 55 hedge funds in our database that held stakes in Starbucks Corporation (NASDAQ:SBUX) at the end of the second quarter of 2022, compared to 58 funds in the first quarter of 2022.

In the second quarter of 2022, Peter Simmie’s Bristol Gate Capital Partners boosted its stake in Starbucks Corporation (NASDAQ:SBUX) by 47%, holding 1.11 million shares worth $84.95 million. Ray Dalio’s Bridgewater Associates is Starbucks Corporation (NASDAQ:SBUX)’s most significant stakeholder, with 3.24 million shares worth $247.71 million.

In addition to Starbucks Corporation (NASDAQ:SBUX), Mastercard Incorporated (NYSE:MA), Visa Inc. (NYSE:V), and Microsoft Corporation (NASDAQ:MSFT) were some of the significant holdings of Bristol Gate Capital Partners in Q2.

In its Q2 2022 investor letter, Wedgewood Partners mentioned Starbucks Corporation (NASDAQ:SBUX). Here is what the firm has to say:

“We exited our position in Starbucks during the second quarter. We do not mind admitting that there was a heated internal debate over this position, as there were several conflicting issues to weigh in our decision. Before the pandemic, we had been quite happy with the company’s execution and the stock’s performance, and we were likewise happy with strategic decisions made during and immediately after the initial pandemic-related lockdowns in 2020, as we have written previously. … (Click here to see full text).”

9. UnitedHealth Group Incorporated (NYSE:UNH)

Bristol Gate Capital Partners’ Stake Value: $85,133,000

Percentage of Bristol Gate Capital Partners’ 13F Portfolio: 4.81%

Number of Hedge Fund Holders: 91

UnitedHealth Group Incorporated (NYSE:UNH) is a multifaceted healthcare provider in the United States. Among the hedge funds tracked by Insider Monkey, 91 were long UnitedHealth Group Incorporated (NYSE:UNH) in the second quarter of 2022, down from 103 funds in the previous quarter. Rajiv Jain’s GQG Partners is the biggest shareholder of UnitedHealth Group Incorporated (NYSE:UNH), with 3.11 million shares worth $1.60 billion.

Following UnitedHealth Group Incorporated (NYSE:UNH)’s announcement of a 10-year collaboration with Walmart Inc. (NYSE:WMT), on September 8, Deutsche Bank analyst George Hill increased his price objective on UnitedHealth Group Incorporated (NYSE:UNH) to $569 from $556 and retained a ‘Buy’ recommendation on the shares.

UnitedHealth Group Incorporated (NYSE:UNH) has featured on Bristol Gate Capital Partners’ portfolio since the fourth quarter of 2015. In the second quarter of 2022, Bristol Gate Capital Partners owned 165,747 shares in UnitedHealth Group Incorporated (NYSE:UNH), worth over $85.13 million.

Baron Funds, an asset management firm, mentioned UnitedHealth Group Incorporated (NYSE:UNH) in its second quarter 2022 investor letter. Here is what the fund said:

“UnitedHealth Group Incorporated is a leading diversified health and wellbeing company whose divisions include insurance arm, United Healthcare and health care services arm, Optum, which offers care delivery and other services. Shares increased 1.1% on strong first quarter results (revenues were up 14% year-over-year), and the company increased its annual guidance.

The performance was driven by Optum as a result of a growing adoption of value-based solutions. 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.”

8. Microsoft Corporation (NASDAQ:MSFT)

Bristol Gate Capital Partners’ Stake Value: $85,669,000

Percentage of Bristol Gate Capital Partners’ 13F Portfolio: 4.84%

Number of Hedge Fund Holders: 258

The tech behemoth Microsoft Corporation (NASDAQ:MSFT) is ranked eighth on Bristol Gate Capital Partners’ list of top 10 stocks. On September 7, Microsoft Corporation (NASDAQ:MSFT) revealed the Xbox Elite Wireless Controller Series 2 – Core in white, which is designed to meet the essential needs of today’s professional gamers. According to Microsoft Corporation (NASDAQ:MSFT), 1.4 billion active devices run on Windows 10 or 11 monthly.

Based on its 13F holdings for the second quarter of 2022, Bristol Gate Capital Partners owned 333,562 shares in Microsoft Corporation (NASDAQ:MSFT), valued at $85.67 million. Ken Fisher’s Fisher Asset Management is the biggest shareholder of Microsoft Corporation (NASDAQ:MSFT), with 28.69 million shares worth $7.37 billion as of Q2.

On August 11, Guggenheim analyst John DiFucci initiated coverage of Microsoft Corporation (NASDAQ:MSFT), assigning the stock a ‘Neutral’ rating and a price target of $292. According to Insider Monkey’s Q2 data, 258 hedge funds were bullish on Microsoft Corporation (NASDAQ:MSFT), with combined stakes of $56.01 billion, compared to 259 funds in the earlier quarter, holding stakes in the company valued at $65.64 billion.

Here is what Baron Funds has to say about Microsoft Corporation (NASDAQ:MSFT) in its Q2 2022 investor letter:

“Shares of Microsoft Corporation, a leading global provider of software solutions, declined 16.6% in the quarter along with the broader software group as well as due to growing concerns of a potential macro-driven slowdown. This is despite the company posting strong quarterly financial results and successfully absorbing headwinds from the war in Ukraine. The company had 21% revenue growth, 23% operating income growth, and 35% growth in Microsoft Cloud (all year-over-year in constant currency), which now represents 47% of total revenues.

As discussed above, we continue to believe Microsoft remains a durable and growing business as companies across all industries look to digitally transform, taking advantage of the continuously expanding solution set Microsoft has to offer.”

7. Broadcom Inc. (NASDAQ:AVGO)

Bristol Gate Capital Partners’ Stake Value: $86,622,000

Percentage of Bristol Gate Capital Partners’ 13F Portfolio: 4.9%

Number of Hedge Fund Holders: 66

Broadcom Inc. (NASDAQ:AVGO) is a multinational technology firm that designs, develops, and sells semiconductor and infrastructure software. The business pays out a significant dividend, has robust free cash flows, and is quite profitable. Broadcom Inc. (NASDAQ:AVGO) has a trailing twelve-month operating margin of 40.69% and a forward dividend yield of 3.33% as of September 11, which is supported by $15.30 billion in free cash flows.

Insider Monkey spotted 66 hedge funds that were long Broadcom Inc. (NASDAQ:AVGO) at the end of Q2 2022. The collective value of these hedge funds totalled $4.03 billion, compared to $5.49 billion a quarter ago with 71 positions.

Bristol Gate Capital Partners owned 178,303 shares in Broadcom Inc. (NASDAQ:AVGO), worth over $86.62 million, representing close to 4.9% of its portfolio. Fisher Asset Management is Broadcom Inc. (NASDAQ:AVGO)’s largest shareholder as of Q2 2022, with shares worth $716.29 million.

On September 2, Truist analyst William Stein maintained a ‘Buy’ rating on Broadcom Inc. (NASDAQ:AVGO) while trimming his price objective to $630 from $658. Despite the recent unfavorable tech data points, the business had another excellent quarter, the analyst told investors in a research note, with above-consensus projections and positive supply chain communication.

6. Zoetis Inc. (NYSE:ZTS)

Bristol Gate Capital Partners’ Stake Value: $87,479,000

Percentage of Bristol Gate Capital Partners’ 13F Portfolio: 4.94%

Number of Hedge Fund Holders: 62

Zoetis Inc. (NYSE:ZTS) is a pharmaceutical company that develops, manufactures, and sells medications, vaccines, diagnostic items, bio-devices, genetic testing, and precision animal farming technologies. On September 5, Zoetis Inc. (NYSE:ZTS) acquired NewMetrica, a Scottish company that creates digital instruments for animal health.

As of the end of the second quarter, 62 hedge funds in Insider Monkey’s database of 895 funds held bullish bets on Zoetis Inc. (NYSE:ZTS), compared to 67 funds in the previous quarter. Bristol Gate Capital Partners held 508,924 shares in Zoetis Inc. (NYSE:ZTS), worth over $87.48 million in Q2 2022.

Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital held a notable stake in Zoetis Inc. (NYSE:ZTS) at the end of the second quarter of 2022, equalling $358.70 million. Zoetis Inc. (NYSE:ZTS) is the sixth largest holding of Bristol Gate Capital Partners.

On August 4, Stifel analyst Jonathan Block assigned a ‘Buy’ rating on Zoetis Inc. (NYSE:ZTS) and a price objective of $225. In addition to Zoetis Inc. (NYSE:ZTS), other notable stocks in the portfolio of Peter Simmie’s Bristol Gate Capital Partners include Mastercard Incorporated (NYSE:MA), Visa Inc. (NYSE:V), and Microsoft Corporation (NASDAQ:MSFT).

Here is what Baron Funds had to say about Zoetis Inc. (NYSE:ZTS) in its Q1 2022 investor letter:

“Shares of Zoetis Inc., the global leader in the discovery, development, and manufacturing of companion and farm animal health medicine and vaccines, fell along with shares of other high-multiple 2021 standout performers. We retain conviction as Zoetis recently reported a top and bottom line beat with more than 21% growth driven by dermatology, parasiticides, and recently launched monoclonal osteoarthritic treatments. The company’s 2022 guidance was in line with Street expectations, calling for 9% to 11% operational revenue growth and modest margin expansion despite heavy investment in core growth drivers.”

Click to continue reading and see 5 Stocks to Buy According to Peter Simmie’s Bristol Gate Capital Partners.

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