Billionaire Jacob Rothschild’s RIT Capital Three New Picks & Two Stocks It Dumped

RIT Capital Partners was founded as Rothschild Investment Trust in 1961 by Jacob Rothschild to manage investments outside of the Rothschild family’s banking business in the United Kingdom. Although the fund invests in a wide range of financial instruments, its main focus, however, is investments in private and public equity. Jacob Rothschild no longer plays an active role in day-to-day business, which has been taken over by an executive committee. At the end of the first quarter, the fund’s equity portfolio carried an estimated market value of $185 million and comprised 8 equity positions. The fund has a large exposure to the consumer discretionary sector, which accounts for 60% of its portfolio. During the first quarter, the fund’s management has shaken up its portfolio, having liquidated a number of its top bets and added several new ones. In this article we’ll take a look at three new acquisitions and two holdings that were dumped.

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Dumped Colgate-Palmolive

At the end of the fourth quarter, Colgate-Palmolive Company (NYSE:CL) was RIT Capital’s number one bet as it held 1.03 million shares. Three months later, the fund’s 13F filing reveals that the executive committee has dumped the entire position. At the end of April, Colgate-Palmolive Company (NYSE:CL) posted first quarter results that met and exceeded analysts’ expectations. Adjusted for restructuring costs, earnings stood at $0.63 per share, in line with the consensus among analysts. Revenues came in at $3.76 billion, topping expectations of $3.73 billion. So far this year, the stock has been in a solid uptrend and has advanced by 7.7% to yesterday’s closing price of $70.43 per share.  Billionaire Jim Simons‘ Renaissance Technologies cut its exposure to Colgate-Palmolive by 2% during the quarter to 9.88 million shares, which is the largest stake among the funds followed by Insider Monkey.

No Love For This Cable Company

Comcast Corporation (NASDAQ:CMCSA) is another big position RIT Capital’s management liquidated over the course of the first quarter. According to the fund’s previous 13F filing, it held 898,500 shares of the media company which were valued at $50.7 million at the end of 2015. Comcast Corporation (NASDAQ:CMCSA) has recently announced a deal to acquire Dreamworks Animation Skg Inc(NASDAQ:DWA) as it looks to bolster its animation portfolio. Comcast is set to splash roughly $3.8 billion for Dreamworks Animation or $41, which was a 50% premium on the price the shares were trading prior to the announcement. Dreamworks will join Illumination Entertainment under NBCUniversal’s umbrella. NBCUniversal CEO Steve Burke said the studio was attracted by Dreamworks’ “deep library of intellectual property,” which means they were more interested in its content, which includes Shrek, The Penguins of Madagascar, and Kung Fu Panda, than current operations. “DreamWorks will help us grow our film, television, theme parks, and consumer products businesses for years to come,” added Burke. Alex Snow‘s Lansdowne Partners still holds a large position in Comcast Corporation (NASDAQ:CMCSA), but has reduced its exposure by 11% to 26.2 million shares worth over $1.6 billion.

On the next page we’ll take a look at the three new positions initiated by RIT’s management team.

The Coca-Cola Co (NYSE:KO) kicks off the list of additions, with RIT Capital having amassed 412,000 shares by the end of the first quarter. According to its latest 13F filing, the position is worth approximately $19.1 million. Billionaire Stanley Druckenmiller is also very optimistic about the prospects of The Coca-Cola Co (NYSE:KO) as his family office, Duquesne Capital, revealed a fresh position at the end of the quarter that amounts to 1.39 million shares valued at $64.4 million. Hurt by currency headwinds and a slump in economic activity in Europe, The Coca-Cola Co (NYSE:KO) is flirting with the idea of merging of its European businesses into a single company. European operations have generated sales of $12 billion in 2015 and a profit of roughly $700 million. If combined into one single entity, the new company could reduce total operating expenses by $350 million to $375 million over the next three years. Shareholders are set to vote on the proposal on May 24.

Bullish On Medical Device Manufacturer

A solid performer so far this year, Baxter International Inc (NYSE:BAX) has also found its way on RIT Capital’s shopping list. Valued at $7.89 million, the fund’s stake amounted to 192,000 shares at the end of March. A leading medical devices manufacturer, Baxter International managed to beat analysts’ expectations for three consecutive quarters. The latest earnings report showed a 1.1% decline in revenues to $2.37 billion, but earnings of $0.36 per share were miles ahead of analysts’ projections. The report also signals a revival in the company’s hospitals segment, which accounts for 62% of revenue, and suggests the we can expect more surprises in the coming quarterly reports. Dan Loeb, the manager of Third Point, is also very bullish on Baxter International Inc (NYSE:BAX), having established a new position for his fund in the first quarter. According to its latest 13F filing, the fund holds 53.8 million shares valued at $2.21 billion.

Keep An Eye On This Baby Food Producer

RIT Capital management team has also initiated a minor stake in Mead Johnson Nutrition CO (NYSE:MJN), a pediatric nutrition company. According to its latest 13F filing, RIT Capital holds exactly 10,000 shares worth in the region of $850,000. Dmitry Balyasny also sees some upside potential and has initiated a stake in Mead Johnson Nutrition CO (NYSE:MJN) for his fund, Balyasny Asset Management, which reportedly holds 830,514 shares worth $70.5 million. The company has a market cap of $15.4 billion and pays an annual dividend of $1.65 per share, a modest 2% yield. Mead Johnson Nutrition CO (NYSE:MJN) shares are currently trading at a trailing P/E ratio of 31, which is higher than the forward P/E of 22 as reported by Yahoo! Finance. This relationship between the two ratios suggests that investors expect the company’s earnings to improve significantly in the next 18 months. Susquehanna has recently reiterated its ‘Hold’ rating on the stock and its price target of $82 per share.

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