Jacob Rothschild Stock Portfolio: 10 Top Stock Picks

Published on November 18, 2023 at 12:16 pm by Usman Kabir in Hedge Funds, News

In this article, we discuss Jacob Rothschild and his top 10 stock picks. If you want to read about some more stocks in the Rothschild portfolio, go directly to Jacob Rothschild Stock Portfolio: 5 Top Stock Picks.

Even though the Rothschild name is primarily associated with banking, Jacob Rothschild, the chief of RIT Capital Partners, has had a successful career in the hedge fund industry. In 1980, he sold his stake in the family bank due to a dispute over succession and founded his hedge fund that has now become one of the biggest in the United Kingdom. Rothschild also retains significant interests in the venture capital and property businesses. He is also the unofficial head of the Rothschild family which is one of the richest and most influential families in the world.

Per figures from the hedge fund itself, RIT Capital Partners has returned, on average, close to 11% to investors per year since it was founded more than three decades ago. During this time, the investment firm has contributed to 74% of monthly market upside. In contrast, it has only been involved in around 40% of the market declines. This performance is on-par with the performance of the benchmark S&P 500 in the United States, which has returned around 11.5% to investors since the 1980s.

According to latest data, the value of the equity portfolio of RIT Capital Partners at the end of the third quarter of 2023 was $399 million, up from $358 million at the end of the second quarter. During the third quarter, Rothschild made new purchases in 3 stocks, additional purchases in 3, sold out of none, and reduced holdings in 2 stocks. Some of the top stocks in the RIT Capital Partners portfolio include Mastercard Incorporated (NYSE:MA), Thermo Fisher Scientific Inc. (NYSE:TMO), and Canadian Pacific Kansas City Limited (NYSE:CP).

Our Methodology

These were picked from the investment portfolio of RIT Capital Partners at the end of the third quarter of 2023. In order to provide readers with a more comprehensive overview of the companies, the analyst ratings for each firm are mentioned alongside other details. A database of around 900 elite hedge funds tracked by Insider Monkey in the second quarter of 2023 was used to quantify the popularity of each stock in the hedge fund universe.

Jacob Rothschild Stock Portfolio: Top Stock Picks

10. The Estée Lauder Companies Inc. (NYSE:EL)

Number of Hedge Fund Holders: 44

The Estée Lauder Companies Inc. (NYSE:EL) markets personal care products. Latest data shows that RIT Capital Partners owned 74,600 shares in The Estée Lauder Companies Inc. (NYSE:EL) at the end of the third quarter of 2023 worth $10.7 million, representing 2.70% of the portfolio.

On November 3, investment advisory DA Davidson maintained a Buy rating on The Estée Lauder Companies Inc. (NYSE:EL) stock and lowered the price target to $146 from $185, citing the sales miss of the firm in the third quarter as one of the reasons behind the price update.

Among the hedge funds being tracked by Insider Monkey, New York-based investment firm D E Shaw is a leading shareholder in The Estée Lauder Companies Inc. (NYSE:EL) with 3 million shares worth more than $441 million.

Just like Mastercard Incorporated (NYSE:MA), Thermo Fisher Scientific Inc. (NYSE:TMO), and Canadian Pacific Kansas City Limited (NYSE:CP), The Estée Lauder Companies Inc. (NYSE:EL) is one of the top stocks in the portfolio of Jacob Rothschild.

In its Q3 2023 investor letter, Madison Investments, an asset management firm, highlighted a few stocks and The Estée Lauder Companies Inc. (NYSE:EL) was one of them. Here is what the fund said:

“NextEra, The Estée Lauder Companies Inc. (NYSE:EL), Target, Oracle, and TE Connectivity were the largest detractors. Estee Lauder has seen a steep decline in its travel retail business in both China and Korea. We expect the travel retail business to begin to recover as we move into 2024.”

9. Analog Devices, Inc. (NASDAQ:ADI)

Number of Hedge Fund Holders: 65

Analog Devices, Inc. (NASDAQ:ADI) makes and sells semiconductor products. It operates from Massachusetts. Latest data reveals that RIT Capital Partners owned 63,700 shares in Analog Devices, Inc. (NASDAQ:ADI) at the end of the third quarter of 2023 worth over $11 million, representing 2.79% of the portfolio.

On November 16, investment advisory Morgan Stanley upgraded Analog Devices, Inc. (NASDAQ:ADI) stock to Overweight from Equal Weight and raised the price target to $225 from $176, predicting the fourth quarter earnings of the firm would be mixed but the last cut.

At the end of the second quarter of 2023, 65 hedge funds in the database of Insider Monkey held stakes worth $5.1 billion in Analog Devices, Inc. (NASDAQ:ADI), compared to 73 the preceding quarter worth $4.8 billion.

In its Q3 2023 investor letter, Ensemble Capital Management, an asset management firm, highlighted a few stocks and Analog Devices, Inc. (NASDAQ:ADI) was one of them. Here is what the fund said:

“Analog Devices, Inc. (NASDAQ:ADI): Analog Devices, known in the industry as ADI, makes semiconductor chips that predominantly operate at the boundary of the physical world and the digital world, more commonly referred to as analog and mixed signal chips. These chips usually play a supporting role to the sexier “digital brain” that is the latest and greatest processor from Nvidia, Intel, AMD, Apple, or Qualcomm. While the digital brains get a lot more media attention, the supporting analog chips are as vital as those big expensive digital processors in driving value in electronic devices, which are becoming ubiquitous and intelligent throughout our lives.

Anything with an on-off switch requires lots of these analog chips if it is going to relay input and output information with the physical world as well as manage the electrical power supply feeding the device. While these analog chips are relatively inexpensive to manufacture and distribute, it takes a long time to design and build a catalog of literally thousands of specific products to create the scale that makes them economically attractive businesses with a reputation of dependability and quality…” (Click here to read the full text)

8. Golar LNG Limited (NASDAQ:GLNG)

Number of Hedge Fund Holders: 33

Golar LNG Limited (NASDAQ:GLNG) is an LNG transportation firm. Per 13F filings, the hedge fund chaired by Rothschild owned 980,000 shares in Golar LNG Limited (NASDAQ:GLNG) at the end of the third quarter of 2023 worth $23.7 million, representing 5.95% of the portfolio.

In late September, Citi analyst Christian Wetherbee resumed coverage of Golar LNG Limited (NASDAQ:GLNG) stock with a Neutral rating and a price target of $27, noting the one remaining LNG carrier of the firm was a non-core asset.

At the end of the second quarter of 2023, 33 hedge funds in the database of Insider Monkey held stakes worth $608 million in Golar LNG Limited (NASDAQ:GLNG), the same as in the preceding quarter worth $607 million.

7. Coupang, Inc. (NYSE:CPNG)

Number of Hedge Fund Holders: 47

Coupang, Inc. (NYSE:CPNG) owns and operates an e-commerce business through its mobile applications and Internet websites primarily in South Korea. According to latest filings, the investment firm led by Rothschild owned 1.4 million shares in Coupang, Inc. (NYSE:CPNG) at the end of the third quarter of 2023 worth 23.9 million, representing 6.10% of the portfolio.

On November 9, investment advisory Bank of America maintained a Neutral rating on Coupang, Inc. (NYSE:CPNG) stock and lowered the price target to $20 from $22, noting the firm remained one of the best-managed firms in the coverage of the advisory.

Among the hedge funds being tracked by Insider Monkey, Dallas-based investment firm Maverick Capital is a leading shareholder in Coupang, Inc. (NYSE:CPNG) with 77 million shares worth more than $1.3 billion.

In its Q3 2023 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Coupang, Inc. (NYSE:CPNG) was one of them. Here is what the fund said:

“Coupang is a leading Korean e-commerce company founded in 2010. It went public in March of 2021, and we have been investors in this Fund since the IPO. After spending half a day with management, touring the company’s fulfillment center, asking questions, and learning more about the reasons behind the remarkable success the company has achieved over the last 13 years, we decided we wanted to own it in this Fund as well. When we originally invested in Coupang, our thesis was constructed around the company’s wide product selection, low prices, and unrivaled convenience thanks to its investments in an end-to-end infrastructure that covers over 70% of Korea’s population, enabling over 99% of orders to be delivered within one day or less, rather than the industry norm of two to three days, driving customer satisfaction, which translates to higher customer retention rates and lifetime value. We thought that Coupang would continue to gain market share in the U.S. $500 billion-plus Korean retail market, while expanding its offerings into additional categories, expanding its ecosystem via a third-party marketplace, and continuing to invest in infrastructure density to further capture inefficiencies, enhancing the customer experience, and improving profit margins. The company has since outperformed our expectations, growing its market share to 25% (#1 in the industry), despite not being a first mover, while building an unrivaled user experience with 99.8% of products delivered the next day (with the majority of them by dawn) and becoming profitable significantly faster than we expected. Our biggest takeaway from the visit was that despite all of Coupang’s success, there is still a long runway of growth ahead. For example, while most of the facility we visited is operated with pickers going to shelves to pick up items for orders, there was one room in which shelves drove themselves to pickers on the back of autonomous robots, which increased picker productivity by 3x. Additionally, while Coupang has been striving to reduce its reliance on distributors, which enables them to expand margins while lowering prices for consumers, a significant opportunity remains for further reduction. Lastly, we got plenty of examples of out-of-the-box thinking (no pun intended) from the company’s singulation process (improves the picking process by reducing the constraint to search for items order by order), decreasing use of boxes (80% of shipments are now boxless), enabling grocery delivery without cold-chain logistics (thanks to end-to-end supplychain efficiency), or how Coupang is able to fill trucks so that each carries more than 2x the parcels a UPS or a FedEx truck can, despite being half the size. The 4% free-cash-flow yield, which is also negatively impacted by the significant reinvestments the company is making into its emerging offerings, also contributed to our decision to add to our Coupang position upon returning to New York.”

6. Intercontinental Exchange, Inc. (NYSE:ICE)

Number of Hedge Fund Holders: 62

Intercontinental Exchange, Inc. (NYSE:ICE) operates regulated exchanges and is based in Georgia. According to latest data, the Rothschild-led firm owned 275,800 shares in Intercontinental Exchange, Inc. (NYSE:ICE) at the end of the third quarter of 2023 worth over $30 million, representing 7.60% of the portfolio.

On October 11, Deutsche Bank analyst Brian Bedell maintained a Buy rating on Intercontinental Exchange, Inc. (NYSE:ICE) stock and raised the price target to $135 from $134, noting the stock price performance was being driven more by company-specific factors as opposed to broader sector trends.

At the end of the second quarter of 2023, 62 hedge funds in the database of Insider Monkey held stakes worth $3 billion in Intercontinental Exchange, Inc. (NYSE:ICE), compared to 61 in the previous quarter worth $2.5 billion.

In addition to Mastercard Incorporated (NYSE:MA), Thermo Fisher Scientific Inc. (NYSE:TMO), and Canadian Pacific Kansas City Limited (NYSE:CP), Intercontinental Exchange, Inc. (NYSE:ICE) is one of the top stocks in the portfolio of Jacob Rothschild.

In its Q1 2023 investor letter, Oakmark Funds, an asset management firm, highlighted a few stocks and Intercontinental Exchange, Inc. (NYSE:ICE) was one of them. Here is what the fund said:

“Intercontinental Exchange was founded in the year 2000 after Western Power Group executive Jeff Sprecher bought Continental Power Exchange from MidAmerican Energy for $1. Sprecher made the acquisition because he recognized that the deregulation of the electric power industry in the United States had opened a market for surplus energy to be traded between power plants. Using eBay as a model, Sprecher aimed to develop a transparent marketplace for over-the-counter energy trading. Acquisitions of International Petroleum Exchange, New York Board of Trade, Creditex, Climate Exchange, NYSE Euronext, Interactive Data Corporation, and Ellie Mae followed, with the commonalities of successful acquisition consisting of small companies early in their growth trajectory that could be scaled on ICE’s platform, and large mature companies where ICE’s technological and operating expertise could reinvigorate and scale their growth trajectory.

Today, Intercontinental Exchange is a transactional marketplace and subscription database business with global scale. Entrenched network effects in a wide range of asset class marketplaces provide a platform from which ICE usesits technology and operating expertise to layer on growth opportunities. After applying digital technology to increase the efficiency of marketplaces, ICE rolls out new innovations on top of its scalable infrastructure. Core competencies in collecting and cleansing unstructured data to build databases enforce ICE’s ability to capture the data exhaust from its marketplaces to provide recurring subscription-based revenue streams.“Additionally, we initiated a position in Intercontinental Exchange, Inc. (NYSE:ICE) (U.S.) during the quarter. Intercontinental Exchange is one of the largest and most successful financial exchange operators. The company was created through a series of shrewd acquisitions under founder and CEO Jeff Sprecher. We believe Sprecher is an excellent CEO with a history of astute capital allocation and an ability to adapt to opportunities and competitive threats. Today, Intercontinental Exchange competes in three primary segments: exchanges, fixed income/data services and mortgage technology. We believe each of these businesses exhibits attractive economic characteristics and will grow earnings faster than GDP over time. Investors today are concerned about Intercontinental Exchange’s mortgage segment as rising interest rates have depressed origination volumes. We agree that this segment will be pressured in the near term. However, only 7% of trailing 12-month revenues are sensitive to mortgage volumes, and we believe they will eventually revert to historical norms. Today, however, Intercontinental Exchange sells for what we believe is an underserved discount to its exchange peers and private market valuations.”

Click to continue reading and see Jacob Rothschild Stock Portfolio: 5 Top Stock Picks

AI Fire Sale: Insider Monkey’s #1 AI Stock Pick Is On A Steep Discount

Published on May 1, 2024 at by Inan Dogan, PhD

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Click to continue reading…

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