In this article we discuss the 10 best stocks to buy according to billionaire David Harding.
David Harding is a British billionaire businessman and the founder of Winton Capital Management. He studied theoretical physics and uses a scientific approach when investing and uses quantitative models to pick stocks. Previously, he co-founded Man AHL, which was later sold to hedge fund The Man Group in 1994. He is also known for his philanthropy as he runs David and Claudia Foundation, which supports science, finance, and mathematics initiatives. In 2019, the foundation gave about $125 million to Cambridge University.
The Winton Group was founded in 1997 with less than $2 million. This London-based group is the pioneer of computer-driven investment and uses statistical and mathematical inference to invest in global financial markets. Winton Capital Management was one of the leading and successful hedge fund firms, but recently it suffered a lot in the Covid-19 crisis. The fund’s market value was $1.39 billion as of Q4 2020, compared with $3.08 billion in the last quarter. According to Financial Times, the assets of the company have declined by 80% in the past five years. This drop has also resulted in client withdrawals, with investor assets standing at $7.3 billion in 2020, significantly lower than $33.7 billion in 2015. 2020 was the weakest year for the firm, as the assets fell by around $12.5 billion during this year, equivalent to 20.5% of its portfolio.
Harding isn’t alone. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Before the financial crisis, the Winton fund had made double-digit gains for at least a decade but lost over 20.5% in 2020. The losses for the company mainly came from equities and currencies, according to analysts. Moreover, the data-driven investments were declined due to the crippled global economy. Winton Diversified Fund, which was founded in 2017 to achieve long-term investment growth, fell by 16% in 2020.
Winton Capital has been investing in Chinese futures markets for over a decade now. The firm also has a foreign-owned enterprise in Shanghai, China, and is all set to launch an onshore strategy via its private fund management PFM platform. The company launched the diversified fund in China in 2018, which is worth $650 million and gained 25% in 2020.
The firm has invested in 176 new stocks, with finance taking up over 22.98% of its portfolio. Berkshire Hathaway Inc. (NYSE: BRK-B) is a notable holding of the firm as it has a $73 million stake in the company as of the fourth quarter of 2020. Apple Inc. (NASDAQ: AAPL) is not included in the top 5 but makes up 1.07% of the portfolio. Moreover, Varian Medical Systems Inc. (NYSE: VAR), Dow Inc. (NYSE: DOW), and CME Group Inc. (NASDAQ: CME) account for 0.95%, 0.8% and 0.79% of Winton’s Q4 portfolio, respectively.
David Harding of Winton Capital Management
Let’s start our list of the 10 best stocks to buy according to the billionaire David Harding. We used Winton’s 13F data for the fourth quarter of 2020 for this analysis.
Best Stocks to Buy According to Billionaire David Harding
10. McCormick & Company, Incorporated (NYSE: MKC)
Value: $7,145,000
Percent of David Harding’s 13F Portfolio: 0.51%
Number of Hedge Fund Holders as of Q1: 35
McCormick & Company, Incorporated (NYSE: MKC) is a multinational food company that manufactures, markets, and distributes spices, condiments, and other flavoring products. The products are sold to food manufacturers, retailers, and foodservice businesses. Winton Capital owns 74,739 shares of the company, which are worth $7.1 million. In recent months, the stock is moving higher and the price has climbed over 7% in March. According to the annual report, the company reported earnings of $0.74 per share in Q4 2020. The overall sales also increased 5% from the year-ago period. In 2021, McCormick & Company, Incorporated (NYSE: MKC) expects to increase year-on-year sales by 9%. The stock ranks 10th in our list of the best stocks to buy according to billionaire David Harding.
For the past 35 years, the company has increased its dividend payout. The board has declared a quarterly dividend of $0.34 per share on its common stocks on 31 March 2021. This amount has brought the quarterly dividend up to $0.89 per share.
9. NextEra Energy, Inc. (NYSE: NEE)
Value: $8,491,000
Percent of David Harding’s 13F Portfolio: 0.61%
Number of Hedge Fund Holders as of Q1: 63
NextEra Energy, Inc. (NYSE: NEE) is an American energy company with about 46 gigawatts of generating capacity. The company delivers clean energy across much of North America and provides a sustainable solution to meet evolving energy needs. It generates all its energy from renewable sources and wind and solar account for nearly 70% of the generation last year. Winton Capital has 110,060 shares of the company, worth $8.4 million. NextEra Energy, Inc. (NYSE: NEE) has performed well over the years. Its adjusted earnings per share EPS grew by 10.5% in 2020 and are expected to grow from $2.48 to $2.54 in 2021, making it one of the best stocks to buy according to the billionaire David Harding.
NextEra Energy, Inc. (NYSE: NEE) is going to benefit from the ever-increasing use of renewable energy, as these stocks are now trading at better valuations compared to a few months ago.
8. Otis Worldwide Corporation (NYSE: OTIS)
Value: $8,786,000
Percent of David Harding’s 13F Portfolio: 0.63%
Number of Hedge Fund Holders as of Q1: 52
Otis Worldwide Corporation (NYSE: OTIS) is an American Company that develops and manufactures elevators, escalators, and related equipment. It is the leading manufacturer of vertical transportation systems. Winton Capital owns 130,064 shares of the company worth $8.7 million, making it one of the best stocks to buy according to billionaire David Harding. In 2020, the company generated a revenue of $12.8 billion, and in Q1 2021, it recorded a growth of 15% in sales to $3.4 billion.
The company has a dividend yield of 1.21%. Expedia stock is up 80% over the last 12 months. Like Berkshire Hathaway Inc. (NYSE: BRK-B), Apple Inc. (NASDAQ: AAPL), Varian Medical Systems Inc. (NYSE: VAR), Dow Inc. (NYSE: DOW) and CME Group Inc. (NASDAQ: CME), OTIS is one of the best stocks to buy based on billionaire David Harding’s Q4 portfolio.
7. Expedia Group, Inc. (NASDAQ: EXPE)
Value: $8,874,000
Percent of David Harding’s 13F Portfolio: 0.64%
Number of Hedge Fund Holders as of Q1: 86
Expedia Group, Inc. (NASDAQ: EXPE) operates for consumer and small business travel. It offers a wide range of travel shopping and reservation services. Winton Capital owns 67,023 shares in the stock as of the fourth quarter of 2020, worth $8.8 million. Expedia Group, Inc. (NASDAQ: EXPE) suffered from the pandemic and saw a 44% decline in its Q1 2021 revenue. However, with the robust vaccination program, the stock can certainly benefit from the travel boom. The stock ranks 7th in our list of the best stocks to buy according to billionaire David Harding.
Expedia stock is up 80% over the last 12 months. Like Berkshire Hathaway Inc. (NYSE: BRK-B), Apple Inc. (NASDAQ: AAPL), Varian Medical Systems Inc. (NYSE: VAR), Dow Inc. (NYSE: DOW) and CME Group Inc. (NASDAQ: CME), Expedia is one of the best stocks to buy based on billionaire David Harding’s Q4 portfolio.
6. Rollins, Inc. (NYSE: ROL)
Value: $9,452,000
Percent of David Harding’s 13F Portfolio: 0.68%
Number of Hedge Fund Holders as of Q1: 30
Rollins, Inc. (NYSE: ROL) is a global consumer and commercial services company and a global leader in pest control. The company has over 200 franchises in 800 locations, catering to over 2.4 million customers. With 241,934 shares of the company, Winton is one of the biggest shareholders of the company.
Shares of Rollins, Inc. (NYSE: ROL) have surged 63.4% in 2020, compared to the 36.1% rise of the industry. The total revenue of the company in 2020 increased by 7.2% to $2.16 billion, compared to $2.01 billion in 2019.
Rollins, Inc. (NYSE: ROL) paid $153.8 million in dividends during 2019. Like Berkshire Hathaway Inc. (NYSE: BRK-B), Apple Inc. (NASDAQ: AAPL), Varian Medical Systems Inc. (NYSE: VAR), Dow Inc. (NYSE: DOW) and CME Group Inc. (NASDAQ: CME), ROL is one of the best stocks to buy based on billionaire David Harding’s Q4 portfolio.
5. CME Group Inc. (NASDAQ: CME)
Value: $10,947,000
Percent of David Harding’s 13F Portfolio: 0.79%
Number of Hedge Fund Holders as of Q1: 60
CME Group Inc. (NASDAQ: CME) is an American global markets company, which provides electronic trading on its CME Globex platform. The company also operates a central counterparty clearing provider, CME Clearing, and is one of the biggest financial exchanges. The pandemic affected the stock due to the lower volumes in energy and interest rate contracts over the recent quarters. However, since late March, the stock has gained 30% from seeing an all-time low of $140. Moreover, in 2020, the revenue of the company stood at $4.9 billion, with an operating income of $2.6 billion.
CME Group Inc. (NASDAQ: CME) has increased its dividend for the last 11 years, and this year its dividend is raised to $0.90 per share. Also, it has a five-year annual growth rate of about 10%.
Cooper Investors Global Equities Fund has mentioned CME Group Inc. (NASDAQ: CME) in their Q1 2021 investor letter. Here is what the fund has to say:
“CME has been owned by the portfolio for five years. CME’s strategic positioning as a monopolistic global financial exchange operator will continue to afford the business a highly attractive margin profile. CME is well managed however we can no longer identify clear value latency opportunities for the management team to execute against and so decided to exit our position.”
4. Dow Inc. (NYSE: DOW)
Value: $11,078,000
Percent of David Harding’s 13F Portfolio: 0.79%
Number of Hedge Fund Holders as of Q1: 41
Dow Inc. (NYSE: DOW) is an American commodity chemical company that produces and distributes chemical products. The company combines science and technology to develop solutions. Winton Capital owns 199,597 shares of the stock worth $11 million, making it one of the best stocks to buy according to billionaire David Harding. Over the past quarter, shares of Dow Inc. (NYSE: DOW) have risen 18.03%. In 2020, the company generated a revenue of $38.5 billion, which is expected to grow by 1.9% in the coming year.
In the last 12 months, Dow Inc. (NYSE: DOW) paid a total of $2.80 per share as dividends, and its next dividend payment will be $0.70 per share.
3. Varian Medical Systems, Inc. (NYSE: VAR)
Value: $13,102,000
Percent of David Harding’s 13F Portfolio: 0.94%
Number of Hedge Fund Holders as of Q1: 40
Varian Medical Systems, Inc. (NYSE: VAR) is an American company that sells, manufactures, and designs medical equipment. It is one of the best stocks to buy according to billionaire David Harding because the shares of the company have grown by 22.4%, compared with the industry’s 15.9% rally in a year. Winton Capital owns nearly 74,866 shares of the stock, worth $13.1 million.
In November 2020, Varian Medical Systems, Inc. (NYSE: VAR) signed a new $10 million investment and partnership agreement with COTA, Inc., another Boston-based company dealing in oncology. In 2020, the company’s revenue stood at $3.1 billion, 2% down from 2019. Millennium Management is the top holder of this fund, with shares worth $35.1 million.
2. Apple Inc. (NASDAQ: AAPL)
Value: $14,856,000
Percent of David Harding’s 13F Portfolio: 1.07%
Number of Hedge Fund Holders as of Q1: 127
Apple Inc. (NASDAQ: AAPL) is second on our list of the best stocks to buy according to billionaire David Harding. It is a global technology company that designs, manufactures, and sells digital gadgets and is one of the first American publicly traded companies to be worth $1 trillion in value. As of Q1, Winton Capital has 111,957 shares of the company worth $14.8 million. However, Winton Capital has decreased its stake in Apple Inc. (NASDAQ: AAPL) by 35% in Q1.
The Q2 reports of the company show a record revenue of $86.9 billion, up 54% year over year, with $1.40 earnings per share. The dividend per share for the quarter was $0.21. Berkshire Hathaway Inc. (NYSE: BRK-B) owns $120 billion worth of shares in Apple Inc. (NASDAQ: AAPL), which equals about 42% of its overall investment portfolio.
1. Berkshire Hathaway Inc. (NYSE: BRK-B)
Value: $73,737,000
Percent of David Harding’s 13F Portfolio: 5.32%
Number of Hedge Fund Holders as of Q1: 111
Berkshire Hathaway Inc. (NYSE: BRK-B) is an American multinational holding company, which owns a business in insurance, energy generation and distribution, and manufacturing. Since the 1960s, the company’s share price has risen by an annual average of 20%, making it one of the best stocks to buy according to billionaire David Harding. Winton Capital owns 212 shares of Berkshire Hathaway Inc. (NYSE: BRK-B), worth $73,737 as of Q1.
Vltava Fund’s Q1 investor letter mentioned Berkshire Hathaway Inc. (NYSE: BRK-B). Here is what the fund said:
“Despite the considerable rise in stock markets over the past year, there are still many attractive opportunities. Human nature also is playing a bit into our hands. Investor crowds often chase popular stocks, hot IPOs, or mysterious SPACs and completely leave aside stocks they consider boring and not sexy enough. A typical example of this category is our long-term largest position in Berkshire Hathaway. Since we bought it for the first time, its price has nearly quadrupled and yet it remains just as undervalued today as it was at that time. Considering the current rate at which it is buying back its own shares and the amount of cash that Berkshire Hathaway has, my greatest wish as a shareholder is for the company’s share price to remain as low as possible for as long as possible.”
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Disclosure: None. 10 Best Stocks to Buy According to Billionaire David Harding is originally published on Insider Monkey.
