In this article, we discuss the 10 stocks that legendary value investor Joel Greenblatt loves. If you want to read about some more stocks in the Greenblatt portfolio, go directly to Legendary Value Investor Joel Greenblatt Loves These 5 Stocks.
Joel Greenblatt, the chief of Gotham Asset Management, has had a storied career in the finance world. The legendary value investor, who is also a writer and an academic, began his hedge fund in 1985 with just $7 million in capital. Greenblatt was immediately successful at the stock market, managing an annual return of around 50% before all fees in the 1985-1994 period. The fund had managed these returns with successful bets on spin-offs and corporate restructurings. Greenblatt managed around $500 million for outside investors in 1995, all of which was returned to partners that year and the fund closed for outside investors.
Gotham Asset Management was created in 2008 as the successor to the initially successful fund of Greenblatt. As of December 2021, the equity portfolio of the fund is worth more than $3 billion with the top holdings concentrated in the technology, healthcare, and industrial goods sectors. The portfolio value of the fund increased by around $700 million between October and December 2021, according to the latest 13F data. The fund made new purchases in 273 stocks during the period, additional purchases in 479, sold out of 152 stocks, and reduced holdings in 365 stocks. The top ten holdings of the fund comprise just 21% of the portfolio.
Some of these top holdings in the Gotham Asset Management portfolio at the end of December 2021 included Medtronic plc (NYSE:MDT), The Coca-Cola Company (NYSE:KO), and Johnson & Johnson (NYSE:JNJ), among others discussed in detail below.
Our Methodology
The stocks were picked from the fourth quarter regulatory filings of Gotham Asset Management. All the stocks listed below are long-term holdings of the fund present in the portfolio for around five or more years.
Data from around 900 elite hedge funds tracked by Insider Monkey in the fourth quarter of 2021 was used to identify the number of hedge funds that hold stakes in each firm.
Joel Greenblatt of Gotham Asset Management
Legendary Value Investor Joel Greenblatt Loves These Stocks
10. Berkshire Hathaway Inc. (NYSE:BRK-A)
Number of Hedge Fund Holders: 108
Berkshire Hathaway Inc. (NYSE:BRK-A) is a conglomerate that has interests in several businesses, including insurance and transportation. Latest filings show that Gotham Asset Management owned 90,926 shares in the company at the end of December 2021 worth $27.1 million, representing 0.87% of the portfolio. The fund increased its stake in the firm by 146% between October and December compared to filings for the third quarter.
Berkshire Hathaway Inc. (NYSE:BRK-A) has featured in the Gotham portfolio consistently since the first quarter of 2016. The fund first bought shares in the firm in the third quarter of 2013 before selling that stake in early 2014. It then opened a new position in the stock in early 2016 comprising just over 2,000 shares purchased at an average price of around $200,000 per share. Since then, the fund has added to that holding substantially.
Just like Medtronic plc (NYSE:MDT), The Coca-Cola Company (NYSE:KO), and Johnson & Johnson (NYSE:JNJ), Berkshire Hathaway Inc. (NYSE:BRK-A) is one of the stocks that value investors are monitoring amid rising inflation.
At the end of the fourth quarter of 2021, 108 hedge funds in the database of Insider Monkey held stakes worth $19.3 billion in Berkshire Hathaway Inc. (NYSE:BRK-A), compared to 106 in the preceding quarter worth $19.4 billion.
In its Q1 2021 investor letter, Vltava Fund, an asset management firm, highlighted a few stocks and Berkshire Hathaway Inc. (NYSE:BRK-A) was one of them. Here is what the fund said:
“Despite the considerable rise in stock markets over the past year, there are still many attractive opportunities. Human nature also is playing a bit into our hands. Investor crowds often chase popular stocks, hot IPOs, or mysterious SPACs and completely leave aside stocks they consider boring and not sexy enough. A typical example of this category is our long-term largest position in Berkshire Hathaway. Since we bought it for the first time, its price has nearly quadrupled and yet it remains just as undervalued today as it was at that time. Considering the current rate at which it is buying back its own shares and the amount of cash that Berkshire Hathaway Inc. (NYSE:BRK-A) has, my greatest wish as a shareholder is for the company’s share price to remain as low as possible for as long as possible.”
9. Pfizer Inc. (NYSE:PFE)
Number of Hedge Fund Holders: 83
Pfizer Inc. (NYSE:PFE) makes and sells biopharma products. Regulatory filings show that Gotham Asset Management owned 373,485 shares in the company at the end of December 2021 worth more than $22 million, representing 0.71% of the portfolio. The fund slashed its position in the firm by 30% in the fourth quarter compared to filings for the third quarter of 2021.
Pfizer Inc. (NYSE:PFE) has been in the Gotham Asset Management portfolio, with minor exceptions, since the first quarter of 2011. The first stake that the fund purchased in the firm consisted of around 24,000 shares bought at an average price of $18 per share. Since then, the holding has swelled dramatically. The shares are now trading at close to $50 per share. The fund has reduced its stake in the firm in four of the last five quarters.
At the end of the fourth quarter of 2021, 83 hedge funds in the database of Insider Monkey held stakes worth $5 billion in Pfizer Inc. (NYSE:PFE), up from 74 in the preceding quarter worth $2.6 billion.
In its Q3 2021 investor letter, Saturna Capital, an asset management firm, highlighted a few stocks and Pfizer Inc. (NYSE:PFE) was one of them. Here is what the fund said:
“The Fund’s strongest performer during the quarter was pharmaceutical manufacturer Pfizer Inc. (NYSE:PFE). The company submitted trial data to the FDA for use of its COVID-19 vaccine for younger children, and it is widely expected that the FDA will approve it. Health authorities also began recommending booster shots of Pfizer Inc. (NYSE:PFE) vaccine for select populations, further increasing demand for vaccinations.”
8. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 72
Intel Corporation (NASDAQ:INTC) markets computer products and technologies. Securities filings reveal that the hedge fund of Joel Greenblatt owned 402,800 shares in the firm at the end of the fourth quarter of 2021 worth $20.7 million, representing 0.66% of the portfolio. The fund has increased its stake in the firm by 57% between October and December compared to the filings for the third quarter.
Intel Corporation (NASDAQ:INTC) has been a constant presence in the Greenblatt portfolio since the fourth quarter of 2010, barring a couple of quarters in 2013. The fund has nearly doubled its stake in the firm in the last three quarters. Back in 2010, Greenblatt had purchased around 55,000 shares in the company at an average price of $20.68 per share. The share price of the firm has now jumped to $51.13.
At the end of the fourth quarter of 2021, 72 hedge funds in the database of Insider Monkey held stakes worth $5.5 billion in Intel Corporation (NASDAQ:INTC), compared to 66 in the previous quarter worth $6.4 billion.
In its Q4 2021 investor letter, Davis Funds, an asset management firm, highlighted a few stocks and Intel Corporation (NASDAQ:INTC) was one of them. Here is what the fund said:
“Within technology and communication services, we own a number of online businesses and semiconductor related companies, including Alphabet, Amazon, Intel Corporation (NASDAQ:INTC), Applied Materials and Texas Instruments. Within the realm of high technology, we believe that leadership positions reflect enduring and widening competitive advantages over smaller competitors, with few exceptions. This is because online businesses, as well as semiconductor companies, benefit from economies of scale. An online search and advertising engine will, in general, be more profitable per unit of cost as it grows larger in terms of users and advertising dollars. It is a hub-and-spoke model, in other words, where it is generally not necessary to grow expenses at the same rate that revenues grow beyond a certain threshold. Therefore, returns on capital tend to be higher, the larger and more dominant the online search company is.”
7. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 63
Walmart Inc. (NYSE:WMT) operates as a retail firm. 13F data shows that Joel Greenblatt’s investment firm owned 139,600 shares in the company at the end of the fourth quarter of 2021 worth $20.1 million, representing 0.65% of the portfolio. The fund increased its stake in the firm by 3% in the fourth quarter compared to third quarter data.
Since the third quarter of 2012, Walmart Inc. (NYSE:WMT) has consistently been in the Gotham portfolio. The fund first purchased a stake in the firm in late 2011 comprising just over 3,000 shares at an average price of $57.21 per share. The share price of the firm has nearly tripled since then. The fund has increased its stake in the firm in the last two quarters.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Walmart Inc. (NYSE:WMT) with 5 million shares worth more than $729 million.
6. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 80
Merck & Co., Inc. (NYSE:MRK) operates as a healthcare firm. According to the latest data, Gotham Asset Management owned 246,569 shares in the company at the end of the fourth quarter of 2021 worth $18.8 million, representing 0.6% of the portfolio. The investment firm increased its stake in the firm by 55% between October and December compared to third quarter filings.
Merck & Co., Inc. (NYSE:MRK) has featured in the Greenblatt portfolio since early 2011. Back then, the fund had held a position in the stock comprising around 19,000 shares purchased at an average price of $31.90 per share. The share price of the firm has now jumped to around $80 per share. The fund has added to the holding substantially in three of the last four quarters.
Among the hedge funds being tracked by Insider Monkey, Boston-based investment firm Arrowstreet Capital is a leading shareholder in Merck & Co., Inc. (NYSE:MRK) with 8.3 million shares worth more than $637 million.
In addition to Medtronic plc (NYSE:MDT), The Coca-Cola Company (NYSE:KO), and Johnson & Johnson (NYSE:JNJ), Merck & Co., Inc. (NYSE:MRK) is one of the stocks that value investors have their eye on as interest rates rise.
In its Q3 2021 investor letter, Miller Howard Investments highlighted a few stocks and Merck & Co., Inc. (NYSE:MRK) was one of them. Here is what the fund said:
“While optimistic about a recovery, we continue to balance our cyclical holdings with dividend-payers in stable, less economically-sensitive industries. We hold three pharmaceutical companies, (which includes) Merck & Co., Inc. (NYSE:MRK). All three have strong cash flows and balance sheets, making their high dividends reasonably safe. The investment controversy surrounding these pharma companies is whether they can develop or acquire new products to replace their current blockbuster drugs. The low valuations on these stocks reflects what we believe to be undue pessimism by investors on the prospects for new drugs.”
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Disclosure. None. Legendary Value Investor Joel Greenblatt Loves These 10 Stocks is originally published on Insider Monkey.
