We recently compiled a list of the Billionaire Mason Hawkins’ Top 15 Long-Term Stock Picks. In this article, we are going to take a look at where Empire State Realty Trust, Inc. (NYSE:ESRT) stands against the other stocks.
Mason Hawkins is a prominent figure in the world of value investing, best known as the founder and chairman of Southeastern Asset Management, an investment firm established in 1975. The firm began with a modest pool of assets but grew to manage approximately $20 billion within a few years. With decades of experience and a reputation for disciplined investment strategies, Hawkins has earned widespread respect among investors and financial professionals for his long-term approach to wealth creation. His firm specializes in managing concentrated portfolios based on in-depth research, fundamental analysis, and a value-oriented philosophy. Hawkins believes that patience and a contrarian mindset are critical to success, often holding onto investments for years to allow their true value to emerge.
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This strategy has been central to the success of the flagship Longleaf Partners Funds run by Southeastern Asset Management. For example, during the 20 years leading up to the mid-2000s, the fund achieved an annualized return of approximately 12%, compared to around 10% for the S&P 500. A native of Tennessee, Hawkins graduated from the University of Florida with a degree in Finance and later earned his MBA from the University of Georgia. His early career included roles at Atlantic National Bank and First Tennessee Investment Management before he decided to establish Southeastern Asset Management. Under his leadership, the firm grew from managing a small pool of assets to overseeing billions of dollars across various funds.
One hallmark of the investment style made popular by Hawkins is his emphasis on what he calls a “margin of safety.” This concept, pioneered by Benjamin Graham, involves purchasing stocks at a significant discount to their estimated intrinsic value. By doing so, Hawkins aims to minimize downside risk while maximizing potential returns. This disciplined approach has helped Southeastern Asset Management weather multiple market cycles, including challenging periods like the dot-com bubble and the 2008 financial crisis. Hawkins focuses on quality rather than quantity, reflected in the 13F portfolio of his fund that typically holds positions in twenty to thirty stocks, highlighting a preference for concentration rather than diversification. This approach allows the firm to take significant positions in companies it believes in, leading to outsized returns when these investments succeed.
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For this article, we selected stocks by combing through the 13F portfolio of Southeastern Asset Management at the end of the third quarter of 2024. Only the companies that have been in the 13F portfolio of the fund consistently for the past three years were selected. These stocks are also popular among other hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Aerial view of a modern city skyline, showcasing a diversified real estate portfolio.
Empire State Realty Trust, Inc. (NYSE:ESRT)
Number of Hedge Fund Holders: 17
Empire State Realty Trust, Inc. (NYSE:ESRT) is a NYC-focused REIT that owns and operates a portfolio of modernized, amenitized, and well-located office, retail, and multifamily assets. Southeastern Asset Management’s Q3 2023 filing revealed ownership of 1.8 million shares in the company, valued at over $20.7 million and comprising 0.98% of its 13F portfolio. Strong revenue growth, core funds from operations, and strategic leasing activity are the notable factors that make the stock a compelling investment opportunity in the real estate sector. While the earnings demonstrate solid operational performance and effective cost management, the company has signed important leases, such as an 11-year, 24,503 square foot agreement with Dynadmic Corporation at 1350 Broadway and an 11-year, 24,209 square foot lease with Bloomsbury Publishing at 1359 Broadway in the past few months.
Overall ESRT ranks 11th on our list of Billionaire Mason Hawkins’ top long-term stock picks. While we acknowledge the potential of ESRT as an investment, our conviction lies in the belief that some stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a stock that is more promising than ESRT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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