Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Best Value Stocks: Diageo PLC (ADR) (DEO), Anheuser Busch Inbev SA (ADR) (BUD), Brown-Forman Corporation (BF.B), and Visa Inc (V)

Insider Monkey collates data relating to more than 700 hedge funds and their investments in diverse companies every quarter. In this article we will focus on two great value investors: Tom Gayner‘s Markel Gayner Asset Management and Tom Russo‘s Gardner Russo & Gardner. In the last round of 13F filings, both investors disclosed sizeable positions in some of the best value stocks, including Diageo plc (ADR) (NYSE:DEO), Anheuser Busch Inbev SA (ADR) (NYSE:BUD), Brown-Forman Corporation (NYSE:BF.B), and Visa Inc (NYSE:V). Let’s take a closer look at each one of these companies and see why value investors might be bullish on them.

Tom Gayner

Why are we interested in the 13F filings of a select group of hedge funds? We use these filings to determine the top 15 small-cap stocks held by these elite funds based on 16 years of research that showed their top small-cap picks are much more profitable than both their large-cap stocks and the broader market as a whole. These small-cap stocks beat the S&P 500 Total Return Index by an average of nearly one percentage point per month in our back tests, which were conducted over the period between 1999 to 2012. Moreover, since the beginning of forward testing from August 2012, the strategy worked just as our research predicted, outperforming the market every year and returning 144% over the last 32 months, which is more than 84 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).

Tom Gayner
Markel Gayner Asset Management

Having understood that, let’s now consider the four stocks. First, we look at the two funds’ positions in Diageo plc (ADR) (NYSE:DEO). At the end of the first quarter of 2015, Markel Gayner Asset Management held 1.25 million shares valued at $137.99 million, representing up to 4.08% of its equity portfolio. On the other hand, Gardner Russo & Gardner held 9.08 million shares worth $250.77 million, equal to 2.25% of its portfolio, which makes it as the biggest shareholder out of the funds we track, leaving Markel Gayner Asset Management at the second position. The British producer of alcoholic beverages ranks is one of the industry leaders, but has been facing enormous pressure from investors to raise its sales and improve its profits. This has led to a possible agreement to sell its luxury Gleneagles hotel and a golf resort located in Scotland. If the hotel sale goes through, it could fetch the company close to $310 million, which will provide it with some cash to invest in corporate activities. Moreover, earlier this month there have been rumors about a possible takeover of Diageo plc (ADR) (NYSE:DEO). John Osterweis‘ Osterweis Capital Management and Mario Gabelli’s GAMCO Investors are two of the funds that had stakes in the stock at the end of the first quarter.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.