Hedge Fund Manager Charles Akre’s Top Stock Picks Include Mastercard

Ross Stores, Inc. (NASDAQ:ROST). The discount apparel store boasts an ROE of 47%, and net income was up 11% in its most recent fiscal quarter compared to the same period in the previous fiscal year. The enterprise value comes out to a little more than 8 times EBITDA, which does seem high but it’s possible that the company offers “growth at a reasonable price.” Renaissance Technologies, whose founder Jim Simons is now a billionaire, added shares in Ross Stores last quarter (check out Renaissance’s stock picks).

American Tower Corp (NYSE:AMT). Akre has long been an investor in the cell phone tower operator, saying that it is a fantastic business model as it costs little for these companies to lease more capacity on their towers. It is still one of the fund’s top picks as Akre reported a position of 1.7 million shares at the end of the third quarter. Billionaire Ken Griffin’s Citadel Investment Group was buying the real estate investment trust in the third quarter (find more stocks Griffin likes).

Markel Corporation (NYSE:MKL). The fund also liked the $4.1 billion enterprise value property and casualty insurance company, owning about 200,000 shares; that EV figure comes out to a little over 8 times Markel’s trailing EBITDA. The company seems to be a bit of an exception to Akre’s strategy as the ROE is only 7%. Net income was actually down 7% in the third quarter compared to the same period in 2011, though revenue was up.

Moody’s Corporation (NYSE:MCO). Akre’s 1.8 million share position in the ratings agency was essentially unchanged from three months earlier. Warren Buffett’s Berkshire Hathaway had over $1 billion invested in Moody’s according to the holding company’s most recent 13F, compared to the $11 billion market capitalization (research more of Buffett’s stock picks). Return on assets here is 20%, so Moody’s certainly qualifies as a high return business. The EV/EBITDA multiple is a little over 10x.