Martin Taylor’s Crake Asset Management Portfolio: Top 10 Stock Picks

In this article, we discuss the top 10 stock picks of Martin Taylor’s Crake Asset Management. If you want to skip our detailed analysis of these stocks, go directly to Martin Taylor’s Crake Asset Management Portfolio: Top 5 Stock Picks.

Martin Taylor joined Crake Asset Management in 2019 as its portfolio manager, which is a successful hedge fund based out of London. With a top ten holdings concentration of 73.6%, Taylor’s Q3 securities are concentrated in the consumer staples, finance, transport, information technology, healthcare, consumer discretionary, and communications sector. 

Martin Taylor is a British hedge fund manager known for running multiple billion dollar funds, with a keen interest in emerging markets. After completing his Master’s degree from King’s College, Taylor joined Coopers & Lybrand in 1991 as an auditor. He qualified as a chartered accountant in 1994, and began auditing investment banks. There, he came across several traders and investors, and after interviewing them for audit purposes, Taylor realized that investors make significantly more money than he was earning, which propelled him into an investment career. He joined Barings LLC in 1994 as a financial analyst and managed its Eastern Europe and Emerging Europe trust funds. 

A significant time in Taylor’s career was when he sold Russian stocks in 1997 after noticing that Russian investors were moving their money around in anticipation of the 1998 Russian financial crisis. Barings LLC purchased their Russian portfolio back at a significant discount as a result. Taylor switched to Thames River Capital LLP in 2000, where he specialized in identifying price inefficiencies. Management of Thames River Capital LLP was transferred to Nevsky Capital LLP, a fund that Taylor owned 2007 onwards. He primarily focused on Russian stocks, but then widened his investment horizons to accommodate stocks from all emerging markets including Asia and Latin America, and eventually moved on to developed markets, such as the US and European Union. 

In 2015, Taylor shut down Nevsky Capital LLP due to uncertain market conditions leading to fund performance that wasn’t up to Taylor’s past track record. He once again stepped into the investment field by joining Crake Asset Management in 2019. 

The largest holding in Taylor’s Q3 portfolio is The Walt Disney Company (NYSE:DIS), which represents 14.06% of his trillion dollar investment portfolio. As of September this year, the most notable stocks in Crake Asset Management’s Q3 portfolio include Meta Platforms, Inc. (NASDAQ:FB), Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN), among others that are discussed in detail below. 

Our Methodology

With this context in mind, let’s dive into the top 10 stock picks of Martin Taylor’s Crake Asset Management. We used Taylor’s Q3 portfolio to compile this list.

Martin Taylor’s Crake Asset Management Portfolio: Top Stock Picks

10. Morgan Stanley (NYSE:MS)

Percentage of Crake Asset Management’s 13F Portfolio: 3.38%

Number of Hedge Fund Holders: 69

Morgan Stanley (NYSE:MS) is a leading multinational financial services company which serves corporations, governments, institutions, and individuals. Morgan Stanley (NYSE:MS) is engaged in investment banking, commodities trading, prime brokerage, and wealth management. Martin Taylor, via Crake Asset Management, owns 638,135 shares in Morgan Stanley (NYSE:MS) as of the third quarter, representing 3.38% of the firm’s Q3 portfolio. 

Morgan Stanley (NYSE:MS) posted its Q3 results on October 14. EPS in the period totaled $2.04, beating estimates by $0.36. Revenue for Q3 was up 26.56% year-over-year, amounting to $14.75 billion. 

Citi analyst Keith Horowitz on October 18 raised the price target on Morgan Stanley (NYSE:MS) to $105 from $100 and kept a Neutral rating on the shares. He stated that despite the strong Q3 performance, the stock’s valuation “looks relatively full” at 2.5 times the tangible book value.

As of June this year, 69 hedge funds in the database of Insider Monkey were long Morgan Stanley (NYSE:MS), down from 79 funds in the preceding quarter. Robert Joseph Caruso’s Select Equity Group is one of the leading stakeholders in Morgan Stanley (NYSE:MS) as of Q3, with a $36.2 billion stake. 

Here is what ClearBridge Investments has to say about Morgan Stanley (NYSE:MS) in its Q2 2021 investor letter:

“The Strategy also benefited from strong showings from financials holdings such as recent addition Morgan Stanley, a leading bank holding company offering a variety of financial services worldwide, and one of the largest broker-dealers, investment banks and wealth managers in the U.S. Morgan Stanley has been a leader in helping direct capital to address global sustainability challenges. Its sustainability efforts include capital markets actions such as issuing green bonds and it was early in its support for sustainability in investing and its concern for the environment. Morgan Stanley reported a great quarter with record revenues and strength across the businesses as it works to integrate and find synergies with recent acquisition E*TRADE. Following stress tests for banks, Morgan Stanley increased its dividend and share repurchase plan more than expected.”

9. Wells Fargo & Company (NYSE:WFC)

Percentage of Crake Asset Management’s 13F Portfolio: 3.60%

Number of Hedge Fund Holders: 94

Wells Fargo & Company (NYSE:WFC) is an American multinational financial services company that operates in more than 35 countries and serves 70 million global customers. Wells Fargo & Company (NYSE:WFC) offers multiple financial services including banking, commodities trading, asset management, private equity, mortgage financing, and investment management, among others. 

Martin Taylor’s Crake Asset Management holds 1.42 million shares in Wells Fargo & Company (NYSE:WFC) as of September, worth over $66 billion, representing 3.60% of the firm’s 13 securities. 

At the end of June, 94 hedge funds monitored by Insider Monkey were bullish on Wells Fargo & Company (NYSE:WFC), down from 96 in the previous quarter. Boykin Curry’s Eagle Capital Management holds a $1.56 billion stake in Wells Fargo & Company (NYSE:WFC) and is one of the leading stakeholders of the company. 

On October 14, the Q3 EPS for Wells Fargo & Company (NYSE:WFC) came in at $1.22, topping estimates by $0.28. Revenue for the quarter amounted to $18.83 billion, outperforming estimates by $542.17 million.

In addition to Meta Platforms, Inc. (NASDAQ:FB), Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN), Wells Fargo & Company (NYSE:WFC) is a notable stock in Martin Taylor’s Q3 portfolio. 

Here is what L1 Capital has to say about Wells Fargo & Company (NYSE:WFC) in its Q2 2021 investor letter:

“Wells Fargo (Long +16%) was the strongest contributor to portfolio performance over the quarter. Wells Fargo shares rallied given a better outlook for bad debts driven by improving employment and house price trends. The company had been very undervalued due to excessive fears around likely bad debts due to the pandemic, the continued regulatory “asset cap” (a punishment that was put in place in 2017 for numerous compliance failures) and an inability to commence buybacks. The share price has subsequently recovered strongly in recent months as the company has progressed its turnaround program under the leadership of the well-regarded CEO, Charles Scharf (former CEO of Visa and BNY Mellon). Wells Fargo is now closer to getting the asset cap lifted and has announced a huge cost out program (US$8b+) as well as an $18b buyback program to be completed over the next 12 months. Wells Fargo shares have rallied more than 50% since we initiated the position in late 2020. Given the strong rally, we elected to exit our position and rotate into stocks with larger valuation upside.”

8. Delta Air Lines, Inc. (NYSE:DAL)

Percentage of Crake Asset Management’s 13F Portfolio: 3.64%

Number of Hedge Fund Holders: 49

Crake Asset Management holds 1.56 million shares in Delta Air Lines, Inc. (NYSE:DAL). Delta Air Lines, Inc. (NYSE:DAL) is a legacy US carrier from Georgia, serving 325 destinations in 52 countries. Delta Air Lines, Inc. (NYSE:DAL) is a major US airline, in addition to being one of the largest airlines in the world.

As of the second quarter of 2021, 49 hedge funds tracked by Insider Monkey were long Delta Air Lines, Inc. (NYSE:DAL), as compared to 50 funds in the first quarter. 

Delta Air Lines, Inc. (NYSE:DAL) on October 13 reported earnings for the third quarter. The Q3 EPS came in at $0.30, beating estimates by $0.15. Revenue for Delta Air Lines, Inc. (NYSE:DAL) equaled $9.15 billion, up 198.95% year-over-year. 

Cowen analyst Helane Becker raised the price target on Delta Air Lines, Inc. (NYSE:DAL) to $54 from $53 on October 14, and kept a Market Perform rating on the stock.

7. Alphabet Inc. (NASDAQ:GOOG)

Percentage of Crake Asset Management’s 13F Portfolio: 4.01%

Number of Hedge Fund Holders: 155

Alphabet Inc. (NASDAQ:GOOG) has been the parent company of Google and Google subsidiaries since 2015, and is one of the biggest US tech corporations.

At the end of June, 155 hedge funds in the database of elite funds maintained by Insider Monkey were long Alphabet Inc. (NASDAQ:GOOG), down from 159 in Q1. One of the leading stakeholders in Alphabet Inc. (NASDAQ:GOOG) is Aubrey Capital Management, with 3,600 shares amounting to $9.62 billion. 

Alphabet Inc. (NASDAQ:GOOG) reported Q3 results on October 26. EPS for the third quarter equaled $27.99, outperforming estimates by $4.75. Q3 Revenue amounted to $65.12 billion, exceeding analysts’ consensus estimates by $1.83 billion. 

Monness Crespi analyst Brian White on October 27 raised the price target on Alphabet Inc. (NASDAQ:GOOG) to $3,660 from $3,500 and kept a Buy rating on the shares, following solid Q3 results. He stated that Alphabet Inc. (NASDAQ:GOOG) is positioned well to capitalize on digital advertising in the future. 

Here is what Oakmark Funds has to say about Alphabet Inc. (NASDAQ:GOOG) in its Q3 2021 investor letter:

“Alphabet, a U.S. communication services provider, was once again a top contributor for the quarter, solidifying its rank as a top contributing stock for the one-year period. The company’s financial results repeatedly exceeded expectations. In particular, its revenue grew faster than expected and its margin trends improved across all segments. In addition, management has executed $24.4 billion of stock repurchases so far in 2021. After further examination, we recently increased our estimate of Alphabet’s intrinsic value based on the company’s better than expected operating leverage and its notable efficiency improvements. As a result, we continue to believe that Alphabet is trading at a significant discount to its intrinsic value.”

6. Anthem, Inc. (NYSE:ANTM)

Percentage of Crake Asset Management’s 13F Portfolio: 5.16%

Number of Hedge Fund Holders: 67

Anthem, Inc. (NYSE:ANTM) is a healthcare provider from the US, offering health insurance as well. Anthem, Inc. (NYSE:ANTM) is the leading for-profit healthcare company to be part of the Blue Cross Blue Shield Association, which is a federation of 35 US health insurance organizations. Crake Asset Management holds 254,251 shares in Anthem, Inc. (NYSE:ANTM) at the end of Q3.

Anthem, Inc. (NYSE:ANTM) posted its Q3 earnings on October 20. EPS for the period amounted to $6.79, exceeding estimates by $0.42. Revenue for the quarter was up 15.98% year-over-year, totaling $35.55 billion, beating estimated revenue by $200.83 million. 

As of Q2, 67 hedge funds tracked by Insider Monkey were bullish on Anthem, Inc. (NYSE:ANTM), with Crake Asset Management being the leading stakeholder in the company. 

In addition to Meta Platforms, Inc. (NASDAQ:FB), Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN), Anthem, Inc. (NYSE:ANTM) is a notable stock in Martin Taylor’s Q3 portfolio. 

Here is what Nomadic Value Partners has to say about Anthem, Inc. (NYSE:ANTM) in their Q4 2020 investor letter:

“In mid-December we sold our position in Anthem (NYSE: ANTM). At the end of Q3 the Blue Cross Blue Shield Association (BCBSA), the umbrella organization for “blues” across the country, made a preliminary proposal to settle a multi-year antitrust case for $2.67 billion. This payment is to be made proportionate by each BCBSA health plan. The BCBSA covers about 100 million members nationwide and ANTM represents about 40% of total BCBSA membership. ANTM’s proportionate payment could be a $1 billion charge, nearly 25% of its expected 2020 earnings. Interestingly, the share price rallied on the news because included in the settlement proposal was BCBSA agreeing to lift restrictions on local BCBS plan geographic boundaries. BCBS plans can begin to horizontally integrate and compete in markets historically excluded from reach.”

The more I’ve thought about ANTM’s position in this hypothetical marketplace the more I’ve become less optimistic on them. While consolidation certainly brings better economics to the surviving health plan, I think it is only realistically available to much smaller companies. Looking back at anti-trust cases within healthcare over the last decade, the large health insurance companies are generally blocked from major horizontal acquisitions. Why would this change? This leaves ANTM competing in an increasingly crowded marketplace and the only strategy left to grow is to supercharge their vertical integration. ANTM is behind in integration, and I don’t like situations where a company is being forced to play catch up.”

Click to continue reading and see Martin Taylor’s Crake Asset Management Portfolio: Top 5 Stock Picks. 

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Disclosure: None. Martin Taylor’s Crake Asset Management Portfolio: Top 10 Stock Picks is originally published on Insider Monkey.