Tech, Energy Stocks Lead Winton Capital Management’s Portfolio Into 2016

#3 Archer Daniels Midland Company (NYSE:ADM)

– Shares Owned by Winton Capital Management (as of December 31): 4.42 million

– Value of Holding (as of December 31): $162.2 million

The fall in commodity prices along with a strong U.S dollar took a heavy toll on Archer Daniels Midland Company (NYSE:ADM)’s stock in 2015. A large part of that decline came in the last quarter of the year, after the company reported dismal third quarter financial results. Nevertheless, Winton Capital Management displayed its conviction in the stock by buffing its position in it by 38% during the period. The company recently reported its fourth quarter numbers and even though the numbers were again disappointing, its stock didn’t suffer the same fate as it did in the previous quarter. Market experts believe that this might be because the stock is already trading at a fairly cheap valuation, with a forward price-to-earnings multiple of 11 and price-to-book multiple of only 1.12. Given the low valuation, coupled with an annual dividend yield of over 3.57%, the stock appears to be insulated enough to prevent falling much farther. Billionaire Mario Gabelli‘s GAMCO Investors reduced its stake in Archer Daniels Midland Company (NYSE:ADM) by 3% to 825,918 shares during the fourth quarter.

#2 Corning Incorporated (NYSE:GLW)

– Shares Owned by Winton Capital Management (as of December 31): 9.18 million

– Value of Holding (as of December 31): $167.74 million

Corning Incorporated (NYSE:GLW) is the only company among Winton Capital Management’s top-nine equity holdings in which the fund reduced its stake during the fourth quarter, albeit by only 3%. Shares of the glass and ceramics manufacturer slumped heavily between February and August of last year, but thanks largely to the $20 billion long-term capital allocation plan that the company announced during the fourth quarter, they are now in a recovery mode. On January 26, Corning Incorporated (NYSE:GLW) reported EPS of $0.34 on revenue of $2.40 billion for the fourth quarter, beating analysts’ expectations of EPS of $0.32 on revenue of $2.33 billion. Corning also revealed that it generated free cash flow of $628 million during the fourth quarter and spent $1.3 billion to repurchase shares during the period. Furthermore, it raised its quarterly dividend by 12.5% to $0.135 per share, which at current market price represents an annual dividend yield of nearly 3%. Richard S. Pzena‘s Pzena Investment Management increased its stake in Corning Incorporated by 12,185 shares to 4.80 million shares during the October-December period.

#1 International Business Machines Corp. (NYSE:IBM)

– Shares Owned by Winton Capital Management (as of December 31): 1.4 million

– Value of Holding (as of December 31): $194.8 million

Despite its stock declining by 3.4% during the quarter, International Business Machines Corp. (NYSE:IBM) jumped 11 spots quarter-over-quarter to become Winton Capital Management’s top stock pick at the end of fourth quarter, as the fund nearly doubled its stake in the company during that period. IBM recently reported its fourth quarter results and yet again disappointed investors by reporting 16.7% and 8.5% year-over-year declines in earnings and revenue, respectively. Due to the consistent decline in its revenue, shares of International Business Machines Corp. (NYSE:IBM) have been on a gradual decline since 2013 and now trade at a forward price-to-earnings multiple of 8.77. However, despite the low valuation and the growth that its cloud business has shown, in addition to its lead in the still-evolving Internet of Things (IoT) space, most analysts are still not optimistic about the company’s future. On January 22, analysts at Bank of America reiterated their ‘Neutral’ rating on the stock, while lowering their price target on it to $135 from $160. With ownership of over 81.00 million shares of the company, Warren Buffett‘s Berkshire Hathaway was the largest shareholder of International Business Machines Corp. among the funds tracked by us at the end of third quarter.

Disclosure: None