$50 Billion Fund Has A Fortune Invested In These 5 Stocks

Harris Associates LP was founded in 1976. The investment firm follows fundamental and proprietary research for portfolio management. It had $105 billion worth of assets under management as of September 30,2016. The biggest portion of its portfolio is invested in Finance stocks, followed by Information Technology stocks.

During the September quarter, the fund’s major holdings consisted of prominent companies such as General Motors Company (NYSE:GM), Bank of America Corp (NYSE:BAC), Alphabet Inc (NASDAQ:GOOG), TE Connectivity Ltd (NYSE:TEL) and American International Group Plc (NYSE:AIG). This article will discuss the fund’s strategy regarding the stocks.

The smart money sentiment is an important metric that can be used to assess the long-term profitability of a stock. While there are thousands of stocks trading daily on the market, taking a look at what hedge funds think about certain companies can narrow down the search significantly. At Insider Monkey, we track more than 700 hedge funds, whose 13F filings we analyze as part of our small-cap strategy. Our research has shown that imitating a portfolio that includes the 15 most popular small-cap stocks among hedge funds can outperform the market by as much as 95 basis points per month on average (see more details here).

General Motors Company (NYSE:GM) is slightly up so far this year. However, it offers healthy dividend yield of 4.3%. The stock accounted for 4.34% of Harris Associates’ portfolio. For the quarter ended on 30^th September, 2016, the investment fund trimmed its holding of the stock by 6% to 68.49 million shares. The fund’s holding amounted to $2.19 billion. Of the hedge funds in our database, 65 funds held $3.29 billion worth of General Motors shares in their portfolio at the end of the June quarter, which equals to 7.5% of the outstanding shares. This number declined to 62 by the end of September. The head of the United Auto Workers union said that General Motor may employ nearly 2,000 of recently laid workers at other sites. The union president Dennis Williams said on Thursday that the wokers union is currently in negotiations with the automaker. To know more about the top auto exporting nations in the world, read our article here.

Bank of America Corp (NYSE:BAC) stock gained about 25% in this year so far. Harris Associates boosted its holding of the stock by 3% during the quarter ended on 30^th September, 2016 right before the large increases in BAC’s share price. The fund held $2.019 billion worth of Bank of America stock at the end of the quarter, forming 4% of its portfolio. Harris Associates  had 129 million shares of the company in its portfolio at the end of the period. Among the funds we track, 112 funds held $5.28 billion worth of Bank of America’s stock in aggregate at the end of September, having amassed 4.5% of its outstanding stock. Bank of America. The company stock hit its new 52 weeks high today despite receiving a ratings downgrade by Deutsche Bank last month. The DB analyst rated the stock Hold, down from Buy. The report cited the stock to be expensive at a P/E ratio of 11.

Alphabet Inc (NASDAQ:GOOG) stock forms 3.64% of Harris Associates’ portfolio at the end of September quarter. The fund held 2.365 million shares of the company with the market value of $1.83 billion.  Alphabet Inc’s two classes of shares are the most popular tickers among 700+ hedge funds tracked by Insider Monkey. According to Insider Monkey’s hedge fund database, Viking Global, led by Andreas Halvorsen, holds the largest position in Alphabet Inc (NASDAQ:GOOGL). Viking Global has a $1.5785 billion position in the stock, comprising 6.8% of its 13F portfolio. Coming in second is Lansdowne Partners which holds a $1.0707 billion position; the fund has 9.2% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish consist of Ken Fisher’s Fisher Asset Management, Ken Griffin’s Citadel Investment Group and David Blood and Al Gore’s Generation Investment Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Alphabet is currently embroiled in Antitrust case with European Union. The company responded to EU’s allegation regarding its mobile service Android. The company denied that its mobile operating system stifles competition.

TE Connectivity Ltd (NYSE:TEL) stock gained almost 10% this year so far. The company also offers dividend yield of 2.2%. Harris Associates trimmed its holding of the stock by 50,949 shares during the September quarter and held 28.077 million shares. The market value of the holding stands at $1.807 billion and forms 3.58% of Harris Associates’ portfolio. Heading into the fourth quarter of 2016, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from the previous quarter. TE Connectivity recently announced its fourth quarter net income at $1.27 per share, beating market estimates of $1.19 per share. The company’s revenue at $3.33 billion, narrowly missed consensus expectation of $3.35 billion.

American International Group Plc (NYSE:AIG) stock climbed 3% this year as it also saw 5% decline in its holding by Harris Associates. The investment firm held 30.442 million shares of American International Group worth $1.806 billion as on the end of September quarter. At the end of the third quarter, a total of 82 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -4% from the second quarter of 2016. American International Group reported its adjusted operating income for the third quarter at $1 per share, widely missing consensus estimate of $1.21  per share. American International Group is carrying out strategic initiatives announced earlier this year such as restructuring capital allocation and actions to run-off the legacy portfolio.

DISCLOSURE – NONE