Here Are This Elite Fund’s Top Stock Picks

#3 Kinder Morgan Inc (NYSE:KMI)

Shares held (as of September 30): 663,220
Total Value (as of September 30): $18.36 million
Percent of Portfolio (as of September 30): 7.29%

Grisanti bought 586,340 shares of Kinder Morgan Inc (NYSE:KMI) between July 1 and September 30, as shares of the midstream giant offer extraordinary value. Shares of the oil and gas pipeline operator pay a dividend yield of 7.83%, or over three-times higher than the 10-year yield, because investors worry that the low energy prices will negatively affect the oil and gas volumes running through Kinder Morgan’s pipes. The bearish investors could be operating under a false premise, however, as management still believes Kinder Morgan’s dividend yield will grow at a fast rate over the next five years. Eight analysts have ‘Buy’ ratings on the stock, while five have ‘Hold’ ratings, with them having a consensus price target of $41.79 among them, over 50% upside from its current price.

#2 Morgan Stanley (NYSE:MS)

Shares held (as of September 30): 584,350
Total Value (as of September 30): $18.41 million
Percent of Portfolio (as of September 30): 7.31%

Morgan Stanley’s third quarter was a bit deflating, as EPS missed by $0.29 and revenue missed by $1.21 billion. Revenue also declined by 15.7% year-over-year. Weak trading results and increased volatility were the primary culprits for the bad quarter. Despite the disappointing results, there is value in Morgan Stanley shares, as Morgan Stanley is trading under 1.2x tangible book value. Many hedge funds own Morgan Stanley, as 48 funds owned $2.76 billion of Morgan Stanley (NYSE:MS) shares on June 30. Grisanti increased its position in the investment bank by 82% in the third quarter.

#1 AbbVie Inc (NYSE:ABBV)

Shares held (as of September 30): 404,550
Total Value (as of September 30): $22.01 million
Percent of Portfolio (as of September 30): 8.74%

AbbVie reported solid third quarter results, with EPS of $1.13 on revenues of $5.94 billion, versus estimates of $1.08 and $5.934 billion. Revenue increased by 18.3% year-over-year, driven by an increase in the sales of Viekira Pak and Imbruvica, along with continued strength in AbbVie’s number one product Humira. Guidance is optimistic, with non-GAAP EPS expected to be $4.26-to-$4.28 for 2015, versus the previous $4.10-to-$4.30 range. Shares have rebounded nicely since late October when the FDA asked AbbVie to add extra warning labels to Viekira Pak and Technivie. Healthcare-focused billionaire Larry Robbins of Glenview Capital owned 17.86 million shares of AbbVie at the end of June.

Disclosure: None