According to the 13F, Harding had around 540,000 shares of Brown-Forman Corporation (NYSE:BF.B) in his portfolio as of the beginning of April. The alcoholic beverage company, whose brands include Jack Daniels and Southern Comfort, experienced a 10% increase in revenue in its fiscal Q4 (which ended in April) versus a year earlier, with earnings rising 8% over the same time frame. The stock trades at 25 times trailing earnings, which again seems to be a high valuation even as Brown-Forman has at least been delivering good financial results.
Winton owned 1.1 million shares of cigarette company Altria Group Inc (NYSE:MO), a 29% increase from the beginning of 2013. As with many cigarette stocks, Altria Group Inc (NYSE:MO) pays a high dividend yield (close to 5% at current prices) and has a low beta (of 0.4). While net income was up strongly last quarter compared to the first quarter of 2012, revenue numbers were about flat. The trailing P/E of 16 represents a discount to these other companies we’ve mentioned, but still incorporates expectations of at least some future EPS growth. Renaissance Technologies, founded by billionaire Jim Simons, reported a position of 1.7 million shares in its own 13F (find Renaissance’s favorite stocks).
Most of the consumer goods picks we’ve discussed here look expensive to us. It appears that Winton is interested in these stocks as a broad investment theme for the downside protection which they offer to a portfolio- we can see that each of these names carries a beta of less than 0.5. In that sense, the wealth of consumer goods stocks even at their high valuations is likely not an indicator that Harding is looking for high growth in the sector but instead the result of somewhat bearish sentiment. While many of these stocks aren’t appealing on a value basis, Altria Group Inc (NYSE:MO) as well as other cigarette companies may be worth considering for income investors.
Disclosure: I own no shares of any stocks mentioned in this article.