Below are Billionaire Richard Chilton’s Top 5 Stock Picks. For a comprehensive list please see Billionaire Richard Chilton’s Top 10 Stock Picks.
5. Mastercard Incorporated (NYSE: MA)
The hedge fund has been holding a position in Mastercard Incorporated (NYSE: MA) over the last eight years. It is the fifth-largest stock holding of billionaire Chilton’s firm. Despite underperformance in 2020, MA stock performed significantly well in the last ten years. Its shares are up 289% in the last five years and grew 1296% in the last ten years.
Del Principe O’Brien Financial Advisors highlighted a few stocks in their investor letter, and that includes Mastercard. Here’s what Del Principe O’Brien Financial Advisors stated:
“The market pullback in the spring gave us a chance to become owners of Mastercard, one of the biggest players in the global payments industry. In the fiscal year 2019, the company processed almost $5 trillion in purchase transactions and holds 29% of the global market share for credit cards and 24% of the global market for debit cards.
In June, Mastercard entered into an agreement to acquire Finicity, a financial data and insight provider, for a purchase price of $825 million. The move is meant to strengthen Mastercard’s existing open banking platform. Open banking is a system that gives third parties, including other banks and tech start-ups that provide financial services (think budgeting apps), digital access to financial data. A user-focused innovation in the banking industry, open banking is thought to be the future of banking. We see an active investment in its open banking platform as a good move for Mastercard toward maintaining its leadership in the global market.”
4. The Home Depot, Inc. (NYSE: HD)
Chilton Investment Company appears to be bullish on The Home Depot, Inc. (NYSE: HD). The hedge fund has been holding a stake in the home improvement retailer over the last ten years. Shares of Home Depot outperformed the broader market in the last twelve months, accelerating ten years gains to 640%.
Ensemble Capital Management stated in an investor’s letter that home improvement spending is likely to remain strong in the months ahead. Here is what Ensemble Capital Management stated:
“A notable detractor from our performance came from our investment in Home Depot. Home Depot reported outstanding results during 2020, with the stock outperforming the S&P 500 for the full year. But after a strong second and third-quarter performance, the stock was down slightly in the fourth quarter, declining approximately 4%. We believe that home improvement spending will remain elevated in the years ahead as housing activity continues to rebound after years of lower than normal rates of Americans moving.”
3. Microsoft Corporation (NASDAQ: MSFT)
The technology giant Microsoft Corporation (NASDAQ: MSFT) is the third-largest stock holding of Chilton Investment Company, as of the end of the third quarter. The firm’s stake in MSFT also helped in generating robust returns over the years. Microsoft’s share price soared close to 40% in the last twelve months and shares are up 351% in the last five years. Moreover, the hedge fund has also received cash in the form of dividends from MSFT.
Wedgewood Partners, which returned 12.2% for the fourth quarter of 2020, highlighted a bullish case for Microsoft Corporation in their investor letter. Here is what Wedgewood Partners stated:
“Microsoft continued to generate solid double-digit top-line, and operating earnings growth. The Company’s all-encompassing portfolio of “hybrid” cloud solutions is compelling for customers as IT organizations vacillate between on-premises and off-premises (and then likely on-premises again). For example, Microsoft 365 has added an array of features to make remote work easier, yet, as customer applications grow in compute intensity, those customers’ on-premises and edge computing topologies retain or grow in importance. Microsoft’s strategic pivot to be more customer-friendly and collaborative will sustain its growth and returns for several more years so we are happy with our position.”
2. Ball Corporation (NYSE: BLL)
The supplier of aluminum packaging products Ball Corporation (NYSE: BLL) has been offering strong dividends and robust share price gains. It is the second-largest stock holding of billionaire Chilton’s hedge fund portfolio, as of the end of the third quarter. Ball Corporation shares price rallied 180% in the past five years and it has topped the S&P 500 index gains in 2020.
Brown Advisory believes that Ball Corporation is a good stock to hold. Here is what Brown Advisory stated in their investor letter:
“Ball Corporation kept our grocery stores stocked while managing through the dramatic worldwide demand shifts from restaurant and bar consumption to in-home. While Brazil is particularly challenging geography, and higher-margin specialty cans made way for more straight-forward production of 6-pack beverages, Ball was able to expand margins on flat sales relative to last year in the same quarter. We maintained our position.”
1. The Sherwin-Williams Company (NYSE: SHW)
Chilton Investment Company has been benefiting from its long-running position in The Sherwin-Williams Company (NYSE: SHW). This is because shares of Sherwin-Williams soared 750% in the past ten years while the company has raised dividends in the past 21 years.
Diamond Hill Capital stated in their investor letter that Sherwin-Williams possess a significant growth potential. Here is what Diamond Hill Capital stated:
“We initiated a position in high-quality paints and coatings retailer Sherwin-Williams Co. Sherwin’s crown jewel is its North American paint stores, which cater primarily to professional painting contractors. There has been a two-decade trend of homeowners hiring painting contractors instead of doing it themselves, which we believe is likely to continue. The pricing power of Sherwin-branded paint is very strong and the store network, which continues to expand, generates very strong returns on invested capital. Longer-term, there is additional opportunity to improve margins from businesses acquired from Valspar.”
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