In this article, we discuss billionaire Julian Robertson’s top 5 stock picks. For Robertson’s comments on interest rates as well as certain stocks please see Billionaire Julian Robertson’s Top 10 Stock Picks.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s take a look at the Julian Robertson’s top 5 stock picks:
5. Microsoft Corporation (NASDAQ: MSFT)
Value: $36,210,000
Change in Position Size: 1%
Percent of Julian Robertson’s 13F Portfolio: 8.2%
Microsoft ranks 21 on the latest list of Fortune 500 companies. Best known for its Microsoft Windows line of operating systems, the company is also considered to be part of America’s ‘Big Five’ companies. In the past 12 months, Microsoft delivered a 43.44% return and settled at $232.38 per share at the closing of February 26, 2021. Based on the company’s Q4 2020 results, its revenue was up $43 billion while also achieving a $2.03 earnings per share.
According to our database, the number of Microsoft’s long hedge funds positions increased at the end of the fourth quarter of 2020. There were 258 hedge funds that hold a position in MSFT by the end of December, compared to the 234 funds in the third quarter. Microsoft ranks 2nd in our list of the 30 Most Popular Stocks Among Hedge Funds: 2020 Q4 Rankings.
4. The Blackstone Group Inc. (NYSE: BX)
Value: $38,335,000
Change in Position Size: 0%
Percent of Julian Robertson’s 13F Portfolio: 8.7%
New York-based Blackstone Group is an alternative investment management business that offers investment opportunities in real estate, hedge fund solutions, private equity, credit and insurance. The firm aims to provide positive economic impact and long-term value for investors and the companies they choose to invest in. Blackstone Group currently has a $619 billion in assets under management. It achieved a $1.8 billion net income in the past quarter, and $2.26 billion for the the full year 2020. With a market capitalization of $48 billion, BX delivered a 28.58% return in the past 12 months.
There were 54 hedge funds in our database that held stakes in The Blackstone Group Inc., compared to 49 funds in the third quarter. Southport Management is the biggest stakeholder in the company. Here is what RiverPart Advisors said about BX and Apollo in its 2020 Q3 investor letter:
“Blackstone & Apollo: Our alternative asset managers BX and APO were top detractors for the quarter as their results were affected by the COVID shutdowns, which have delayed the selling of assets and the realization of performance fees. Both companies (as well as our third alternative asset manager KKR) continue to generate consistently strong fee-related earnings (BX’s and APO’s fee-related earnings increased 28% and 9%, respectively, in the second quarter) and grow their assets under management (AUM) at impressive rates (BX’s and APO’s fee-generating AUM increased 12% and 45%, respectively, year over year).
While both face a temporary slowdown in investment realizations and near-term mark-to-market headwinds from the current crisis, most of their capital is long-dated or even permanent, most of their fees, which are high-margin and recurring, are not sensitive to the market, and both have billions of dollars of capital available to invest ($156 billion and $47 billion at the end of 2Q for Blackstone and Apollo, respectively). We continue to view BX and APO as two of the better risk-reward holdings in our portfolio, offering substantially better-than-average growth and cash flow fundamentals, and world class management teams, as well as dividend yields of 2.8% and 4.2%, respectively.”
3. Facebook, Inc. (NASDAQ: FB)
Value: $41,029,000
Change in Position Size: 4%
Percent of Julian Robertson’s 13F Portfolio: 9.3%
Mark Zuckerberg’s Facebook Inc., stands 8th on the list of billionaire Julian Robertson’s top 5 stock picks. The California-based company was among the best performers on the S&P 500 on Friday February 26, 2021 as it soared 1.15% and settled at $257.62 from Thursday’s closing of $254.69 per share. FB currently has a market capitalization worth $733.6 billion and it delivered a 33.85% return in the past 12 months.
As of the end of the fourth quarter, 242 hedge funds in Insider Monkey’s database of 887 funds held stakes in Facebook Inc., compared to 230 funds in the third quarter. SB Management is the biggest stakeholder in the company, with 12 million shares, worth $3.2 billion. Facebook ranks 3rd in our list of the 30 Most Popular Stocks Among Hedge Funds: 2020 Q4 Rankings.
Kinsman Oak Capital Partners, in their Q4 2020 Investor Letter, said that they have a controversial view on Facebook, Inc. (NASDAQ: FB) because they see it as a ‘not so expensive’ company.
Here is what Kinsman Oak Capital Partners has to say about Facebook, Inc. in their Q4 2020 investor letter:
“Our view on Facebook (FB) may be somewhat controversial. The bear case for FB boils down to antitrust risk and valuation. Facebook, although to a lesser degree, is a relative value bargain as well. We believe the company possesses an element of platform risk that Alphabet does not but, compared to the rest of the market, the stock still seems undervalued. We compared Facebook to the Russell 2000, an index full of cyclical businesses that are considered no-brainers at the beginning of a recovery and popular re-opening stocks that are poised to go higher after the vaccine is distributed (Appendix E). Facebook is significantly cheaper, growing faster, has a larger economic moat, superior margin profile, and requires less capex.
In short, we believe the obfuscated earnings power makes Facebook appear more expensive than it really is.”
2. AerCap Holdings N.V. (NYSE: AER)
Value: $64,420,000
Change in Position Size: 0%
Percent of Julian Robertson’s 13F Portfolio: 14.6%
Ireland-based AerCap Holdings is the global leader in aircraft leasing. After acquiring International Lease Finance Corporation, it became the world’s largest aircraft leasing company that is composed of approximately 1,334 aircrafts. With a $6.2 billion market capitalization, AerCap delivered a 24.62% return in the past 3 months, and settled at $48.18 per share at the closing of February 26, 2021. The company is set to announce its Q4 2020 financial results on March 2, 2021.
Our database shows that 40 hedge funds held stakes inAerCap Holdings at the end of December, versus the 38 funds in the third quarter.
Horos Asset Management said in its letter that they increased their stake in AerCap Holdings N.V. (NYSE: AER). Here is what Horos Asset Management has to say about AerCap Holdings N.V. in their Q4 2020 investor letter:
“Regarding AerCap, we believe that the high uncertainty surrounding its aircraft leasing business has slowly begun to subside. On the one hand, the relatively greater global control over the pandemic and the work of airlines to increase flight safety to the best of their ability has allowed a gradual recovery in air traffic. Although, realistically, it is still far from desirable levels, the trend is positive. On the other hand, the eagerly awaited vaccines to combat COVID-19 may mark a definitive turning point for the airline industry, once the population begins to be immunized. While we are well aware that the scenario may change again (new, more contagious strains, less effective vaccines than expected or new lockdowns), we believe that AerCap’s financial and liquidity risk has been drastically reduced.
In addition, the management team has demonstrated its ability to adapt to this environment by renegotiating with Airbus and Boeing a very significant delay in the purchase of new aircraft, thereby reducing its investment needs, as well as taking advantage of the easing of capital markets to refinance debt at lower rates. Finally, the company realized an impairment in the fleet value of just over $900 million last quarter, impacting the risks of expected cash flows for its older aircraft. After this impairment (the only and last one they expect to make), AerCap’s NAV stands at 69 dollars per share at the end of the third quarter, 50% above its share price at the time of writing and despite having risen by 330% from the lows reached during the worst of the crisis.”
1. Adaptive Biotechnologies Corporation (NASDAQ: ADPT)
Value: $65,954,000
Change in Position Size: 0%
Percent of Julian Robertson’s 13F Portfolio: 15%
With a market cap of $7.8 billion, Adaptive Biotechnologies Corporation tops the list of billionaire Julian Robertson’s top 10 stock picks. The Washington-based company is a premier advocate and producer of immune-driven medicines that aims to better people’s lives. The company reported a $30.2 million worth of revenue for the fourth quarter of 2020 and $98.4 million for the full year of 2020, which gives them a 25% and 16% increase respectively, compared to the corresponding periods in 2019. ADPT successfully delivered an impressive 101.32% return in the past 12 months, as it settled at $56.57 per share at the closing of February 26, 2021.
As of the end of the fourth quarter, 30 hedge funds in Insider Monkey’s database of 887 funds held stakes in Adaptive Biotechnologies Corporation, compared to 26 funds in the third quarter. Andreas Halvorsen’s Viking Global is the biggest stakeholder in the company, with 29.9 million shares, worth $1.7 billion.
You can also take a peek at Top 10 Car Company Stocks to Invest In and Ray Dalio’s Top 10 Stock Picks for 2021.
