Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Monsanto Company (MON) & Vinik Asset’s Top Five

Jeffery Vinik’s Vinik Asset Management has his top five stock picks spread across a number of industries. Vinik is a former manager of Fidelity’s Magellan Fund, the largest actively managed mutual fund in the U.S. He managed the fund from 1992 to 1996, generating an average return of 17% per year.
Vinik left to start his own hedge fund, Vinik Asset Management, which has become a sector-focused fund. Vinik looks for specific value stocks within a sector that are poised for a breakout. Outlined below are Vinik’s top five stocks in his hedge fund, according to its recent quarterly filing with the SEC (check out Vinik’s small-cap picks).
Biggest bet
Vinik’s top stock was Monsanto Company (NYSE:MON), which comes after a 72% increase in shares owned. The seed giant gets more than 70% of its revenue from corn, soybeans, canola, and cotton seeds, as well as vegetable and fruit seeds, including tomato, pepper and eggplant.
Monsanto Company (NYSE:MON)Monsanto posted February-ended quarterly EPS of $2.73, compared to $2.28 for the same period last year and blowing past the consensus estimate of $2.31. These better-than-expected results come as a result of higher corn revenue. An interim future driver for Monsanto Company (NYSE:MON)should be the continued success of the corn business, which will be spurred by developing nations, higher incomes in emerging markets and a general rise in populations across the world.
Housing play
The number two stock in Vinik’s portfolio was Lennar Corporation (NYSE:LEN) after a 57% increase in shares owned. Lennar is one of the leading home-building companies; home-building operations account for almost 90% of its revenue. Lennar also looks cheap at only 13 times earnings, compared to major peers NVR, Inc. (NYSE:NVR) (26 times) and The Ryland Group, Inc. (NYSE:RYL) (38.5 times).
The company should perform nicely over the interim as the housing market stabilizes and shows signs of rebounding. Part of what is bringing home buyers back to the table are low interest rates and increased rentals, which have increased the affordability of homes (see why you should buy homebuilders).
Further to fall?
Barrick Gold Corporation (USA) (NYSE:ABX) saw Vinik increase its shares owned by 12% and have the stock as its third-largest public-equity holding. The gold producer is expected to see a 10% fall in revenue for 2013, after a slight increase of 2.2% in 2012.
Barrick now trades around 6 times 2013 EPS estimates and has a dividend yield of around 4.3%. One possible catalyst includes a reversion closer to the physical commodity. The stock has previously under-performed physical gold. Even still, the recent fall of gold prices is a near-term issue for Barrick, and as the global macro-economic picture becomes brighter, the price of gold could fall further.
Despite a 49% sell-off in shares owned, Best Buy Co., Inc. (NYSE:BBY) remained one of Vinik’s top five stocks, coming in fourth. Year-to-date the stock is already up 125%; not a bad reason to take some shares off the table. Consensus expects a 5% decline in revenue in fiscal 2014, after a 1% fall during fiscal 2013.
Best Buy Co., Inc. (NYSE:BBY) has also been downsizing its real estate portfolio. In fiscal 2013, Best Buy closed 48 U.S. big-box stores, resulting in a 3.5% net reduction in domestic square footage. The company plans to close another five to 10 big-box stores in the U.S. in fiscal 2014.
Even still, I remain cautious about Best Buy Co., Inc. (NYSE:BBY) given the amount of physical retail landscape that is serving the consumer-electronics industry, especially considering that a majority of the industry’s purchases are moving online. Billionaire Ken Griffin of Citadel Advisors is another one of Best Buy’s top hedge fund owners, owning some 5.7 million shares (check out Griffin’s latest stocks).
Stronger demand
Breaking into the top five was Starwood Hotels & Resorts Worldwide, Inc (NYSE:HOT), following a 118% increase in shares owned. Starwood remains one of the world’s largest hotel and leisure companies, with nine brands. With this positioning, the hotel should benefit nicely from higher demand thanks to increasing travel in major North American and international locations as the economy rebounds.
Starwood has already been seeing positive trends with group bookings up in the mid-single digits in fiscal 2012 year-over-year. As well, the company is disposing of unproductive assets. Since late 2010, Starwood has been transitioning to an asset light business model.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.