Ravenel Boykin Curry III founded Eagle Capital Management in 1988. Eagle looks for a combination of two things when it invests: a reasonable price for the current business (though not necessarily “undervalued”) and some strategic development that gives the fund the equivalent of a call option- if it works out the stock appreciates in price dramatically, while if it doesn’t there is in theory little change in the stock price as Eagle has been sure to buy at an understandable price. The fund also likes to snap up stocks which are temporarily depressed due to poor investor sentiment.
The most recent 13F filing for Eagle covers many of its long equity positions at the end of September. That is some time ago, obviously, but our analysis of the fund is that it tends to be a long-term investor with only modest changes in its position sizes from quarter to quarter. As a result we’d think that most of its top picks are still among the largest holdings in its portfolio. Read on for a quick look at the five largest 13F positions as of the end of the third quarter or see the full list of stocks Eagle reported owning.
Wal-Mart, Comcast, and two more stocks:
Liberty Global Inc. (NASDAQ:LBTYK). Eagle kept its position about constant at 13 million shares of stock. Liberty Global is up 52% in the last year, bringing it to a market capitalization of almost $17 billion. Revenue was up marginally in the third quarter of 2012 compared to the same period in the previous year. Tiger Cub Philippe Laffont’s Coatue Management reported a 28% increase in the size of its own Liberty Global position, to a total of 6.5 million shares.
Aon PLC (NYSE:AON). The $18 billion market cap insurance broker was another of Curry’s top picks as his fund owned over 13 million shares at the end of the quarter. The stock looks a bit expensive on a trailing basis with a P/E of 20, but analyst expectations are for higher earnings this year and so the current valuation is only 12 times consensus for 2013. Southeastern Asset Management, managed by Mason Hawkins, had over $1.3 billion invested in the stock (find more stocks Southeastern had $1 billion invested in).
Wal-Mart Stores, Inc. (NYSE:WMT). Eagle owned 8.6 million shares of Wal-Mart, which was one of the most popular retail stocks among hedge funds in the third quarter (see the full top ten list). Wal-Mart of course has little correlation to the broader economy at a beta of 0.4, and its revenue and net income have been up modestly. At trailing and 2013 P/E multiples of 14 and 13, respectively, we think that it has the potential to be a good value stock.
Comcast Corporation (NASDAQ:CMSCK). A slight increase brought the fund’s position in Comcast to almost 18 million shares. Comcast has been another good investment over the last year, up 49%, and the company reported growth on both top and bottom lines in Q3 2012 versus a year earlier. Billionaire Ken Fisher’s Fisher Asset Management initiated a position in Comcast between July and September (research more stocks Fisher was buying). The company’s enterprise value comes out to 6.4x trailing EBITDA.
Disclosure: I own no shares of any stocks mentioned in this article.
