In this article, we discuss the top 10 stock picks of John Hempton’s Bronte Capital.
John Hempton and Simon Maher established the Australia-based global long/short fund Bronte Capital in 2009. Hempton is the co-founder, chief investment officer, and co-owner of the hedge fund. He has been involved with the financial markets since 1999. Hempton was Platinum Asset Management’s youngest partner and the head of finances. He launched Bronte following the Platinum listing in 2007. Maverick investor Hempton takes delight in his eccentricity and enjoys hunting for business scams so he may short-sell the companies’ stock.
Bronte Capital is managed by a performance-driven firm with a distinctive approach and portfolio. The fund’s goals include reducing the risk of permanent capital loss and offering global diversification without the drawdown and market risks common to long-only funds. Bronte conducts “top down” macro analysis and regular portfolio concentration reviews to reduce risk. In addition, Bronte utilizes derivatives, ETFs, and other assets to increase returns and protect capital.
Photo by Austin Distel on Unsplash
For the year ending March 31, 2021, Bronte’s Australian “Amalthea” fund had a negative 24.3% return in Australian dollars. It lagged behind its benchmark, the MSCI World Index (in AUD), by 48.2%. Bronte’s Cayman “Callisto” fund had a return of negative 7.5% in US dollars for the 12-month period ending March 31, which also underperformed the MSCI World Index (in USD) by a margin of 62.1%.
Bronte Capital’s Q2 2022 portfolio declined to $872.51 million from $1.19 billion in Q1 2022. The fund’s top 10 holdings, which include investments mainly in the healthcare, financial, and communications sectors, accounted for 72.8% of the total portfolio. In the second quarter of 2022, John Hempton’s Bronte Capital reorganized its holdings and reduced its interests in 9 securities while completely removing 1 stock. On the other hand, the hedge fund made additional purchases in 20 equities and added 2 new stocks to its portfolio. Some of Hempton’s favorite stocks include Alphabet Inc. (NASDAQ:GOOG), Meta Platforms, Inc. (NASDAQ:META), and Berkshire Hathaway Inc. (NYSE:BRK-A).
Our Methodology
With this industry outlook in mind, let’s start our list of top 10 stock picks of John Hempton’s Bronte Capital. For this research, we analyzed Hempton’s Q2 2022 portfolio, focusing on the top 10 investments made by his hedge fund, Bronte Capital.
Top Stock Picks of John Hempton’s Bronte Capital
10. Philip Morris International Inc. (NYSE:PM)
Bronte Capital’s Stake Value: $20,186,000
Percentage of Bronte Capital’s 13F Portfolio: 2.31%
Number of Hedge Fund Holders: 56
Philip Morris International Inc. (NYSE:PM) owns and manages the manufacturing and distribution of Marlboro and several other brands. Philip Morris International Inc. (NYSE:PM) is the sole owner of the top 15 global cigarette brands. The firm is betting its future on new products and has invested heavily in the development of its heated tobacco product, iQOS. Since it accounts for more than 10% of the overall volume of the corporation, it is becoming more significant for Philip Morris International Inc. (NYSE:PM).
According to Insider Monkey’s data, 56 hedge funds were long Philip Morris International Inc. (NYSE:PM) at the end of June 2022, compared to 55 funds in the last quarter. Rajiv Jain’s GQG Partners is the biggest shareholder of Philip Morris International Inc. (NYSE:PM), with 30.44 million shares worth about $3.01 billion.
On July 19, Jefferies analyst Owen Bennett maintained a ‘Hold’ rating on Philip Morris International Inc. (NYSE:PM) while lowering his price objective to $99 from $107. John Hempton’s Bronte Capital held 204,440 shares of Philip Morris International Inc. (NYSE:PM) in the second quarter of 2022, worth $20.19 million.
Like Alphabet Inc. (NASDAQ:GOOG), Meta Platforms, Inc. (NASDAQ:META), and Berkshire Hathaway Inc. (NYSE:BRK-A), Philip Morris International Inc. (NYSE:PM) is one of the top stock picks of John Hempton’s Bronte Capital.
In its Q2 2022 investor letter, First Eagle Investments Global Fund mentioned Philip Morris International Inc. (NYSE:PM) and explained its insights into the company. Here is what the fund said:
“Philip Morris shares benefited from the market rotation into defensive areas of the market. The company continued to make progress in its transition to next-generation, non-combustible products and during the quarter entered into an agreement to acquire Swedish Match, which is a Stockholm-based maker of Zyn oral nicotine pouches.”
9. Pinterest, Inc. (NYSE:PINS)
Bronte Capital’s Stake Value: $26,299,000
Percentage of Bronte Capital’s 13F Portfolio: 3.01%
Number of Hedge Fund Holders: 41
Pinterest, Inc. (NYSE:PINS) manages a photo-sharing website with a pinboard-like user interface. The firm had worldwide average revenue per user (ARPU) growth of 17% in the June quarter, despite a drop of 21 million MAU from the prior-year quarter. The business also has $2.65 billion in cash, cash equivalents, and marketable securities.
In the second quarter of 2022, John Hempton’s hedge fund owned 1.45 million shares of Pinterest, Inc. (NYSE:PINS), worth about $26.30 million, representing 3.01% of the total 13F portfolio. The hedge fund increased its stake in Pinterest, Inc. (NYSE:PINS) by 9% in the second quarter of 2022.
On September 7, Deepak Mathivanan at Wolfe Research raised Pinterest, Inc. (NYSE:PINS) from ‘Peer Perform’ to ‘Outperform’ with a $28 price objective. In the long run, the analyst thought the firm had a sizable runway for user growth and monetization.
According to Insider Monkey’s data, Pinterest, Inc. (NYSE:PINS) was part of 41 hedge fund portfolios at the end of the second quarter of 2022, down from 56 funds in the prior quarter. Harris Associates, with approximately 29.75 million shares worth $540.30 million, is the largest shareholder of Pinterest, Inc. (NYSE:PINS) as of Q2.
Harding Loevner mentioned Pinterest, Inc. (NYSE:PINS) in its Q1 2022 investor letter. Here is what the fund said:
“Other detractors within Communication Services included Pinterest (NYSE:PINS), which is finding it hard to sustain the extremely rapid growth they enjoyed over the past two years of pandemic lockdown and social distancing.”
8. Activision Blizzard, Inc. (NASDAQ:ATVI)
Bronte Capital’s Stake Value: $31,985,000
Percentage of Bronte Capital’s 13F Portfolio: 3.66%
Number of Hedge Fund Holders: 84
Activision Blizzard, Inc. (NASDAQ:ATVI) is a holding company for video games with its main office in Santa Monica, California. On August 4, analyst Benjamin Soff at Deutsche Bank cut his price objective on Activision Blizzard, Inc. (NASDAQ:ATVI) from $95 to $84 while maintaining a ‘Hold’ rating on the stock. The analyst provided a reasonable assessment of the likelihood that Microsoft Corporation (NASDAQ:MSFT)’s proposed acquisition of Activision would receive regulatory clearance.
In the second quarter of 2022, John Hempton’s Bronte Capital portfolio held 410,805 shares of Activision Blizzard, Inc. (NASDAQ:ATVI), worth about $31.99 million, representing 3.66% of the total 13F securities. Bronte Capital’s stake in Activision Blizzard, Inc. (NASDAQ:ATVI) increased by 1% in the second quarter of 2022.
As per Insider Monkey’s data, 84 hedge funds were bullish on Activision Blizzard, Inc. (NASDAQ:ATVI) at the end of the second quarter of 2022, up from 80 funds in the earlier quarter. Warren Buffett’s Berkshire Hathaway is the largest shareholder of Activision Blizzard, Inc. (NASDAQ:ATVI), with more than 68.40 million shares worth $5.33 billion.
7. Corteva, Inc. (NYSE:CTVA)
Bronte Capital’s Stake Value: $48,737,000
Percentage of Bronte Capital’s 13F Portfolio: 5.58%
Number of Hedge Fund Holders: 42
Corteva, Inc. (NYSE:CTVA) operates in the agricultural industry. After Corteva, Inc. (NYSE:CTVA)’s Q2 results beat market consensus, RBC Capital analyst Arun Viswanathan increased his price objective on the stock to $72 from $67 and reiterated an ‘Outperform’ rating on August 9. In addition, the analyst anticipated that despite rising inflationary costs, Corteva, Inc. (NYSE:CTVA)’s demand would remain strong during FY22.
Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is one of the leading shareholders of Corteva, Inc. (NYSE:CTVA), with 2.61 million shares worth $141.38 million. Securities filings for the second quarter of 2022 revealed that John Hempton’s Bronte Capital owned 900,196 shares of Corteva, Inc. (NYSE:CTVA), worth $48.74 million, representing 5.58% of the total portfolio.
Fund managers added to their Corteva, Inc. (NYSE:CTVA) holdings in the second quarter. Among the hedge funds tracked by Insider Monkey, 42 funds were bullish on Corteva, Inc. (NYSE:CTVA) at the end of the second quarter of 2022, up from 39 in the prior quarter.
In its Q1 2022 investor letter, Aristotle Capital Management mentioned Corteva, Inc. (NYSE:CTVA). Here is what the fund said:
“Corteva Agriscience, one of the world’s largest seed and crop protection companies, was a primary contributor for the quarter. Due to its respected brand and the value-added benefits of its patented seeds and crop protection solutions for farmers, Corteva has been able to more than offset input cost inflation with sustainable price increases. In addition, the company’s ongoing mix shift to higher-margin, premium products, a catalyst we previously identified, is aiding both sales and profit growth. Shares were likely also buoyed by the rise in crop prices. Market participants, perhaps eager to chase short-term trends, poured into the sector. At Aristotle Capital, we look past such gyrations and, as long-term investors, do not attempt to predict short-term changes in commodity prices. We remain excited about what we view to be high-quality characteristics and fundamental improvements that permeate Corteva’s business, not the least of which include its pricing power.”
6. Interactive Brokers Group, Inc. (NASDAQ:IBKR)
Bronte Capital’s Stake Value: $48,867,000
Percentage of Bronte Capital’s 13F Portfolio: 5.6%
Number of Hedge Fund Holders: 41
Interactive Brokers Group, Inc. (NASDAQ:IBKR) manages the global automated electronic broker activities. In the month of August, daily average revenue trades, or DARTs, for Interactive Brokers Group, Inc. (NASDAQ:IBKR) came in at 1.968 million, down 9% Y/Y but up 8% M/M.
On August 31, Barclays analyst Benjamin Budish initiated coverage of Interactive Brokers Group, Inc. (NASDAQ:IBKR) with an ‘Overweight’ rating and a $77 price target. According to Insider Monkey’s data, 41 hedge funds were bullish on Interactive Brokers Group, Inc. (NASDAQ:IBKR) at the end of June 2022, up from 40 funds in the last quarter.
Bronte Capital elevated its position in Interactive Brokers Group, Inc. (NASDAQ:IBKR) by 14% in Q2 2022. The hedge fund owned 888,328 Interactive Brokers Group, Inc. (NASDAQ:IBKR) shares in the second quarter of 2022, worth $48.87 million, representing 5.6% of the total 13F portfolio.
Alphabet Inc. (NASDAQ:GOOG), Meta Platforms, Inc. (NASDAQ:META), and Berkshire Hathaway Inc. (NYSE:BRK-A) are some of the well-known firms in the portfolio of John Hempton’s Bronte Capital. Interactive Brokers Group, Inc. (NASDAQ:IBKR) is another name on the same list.
Here is what TGV Partners Fund has to say about Interactive Brokers Group, Inc. (NASDAQ:IBKR) in its Q4 2021 investor letter:
“Interactive Brokers has had a very good year operationally. In the Corona year 2020, Interactive Brokers was swamped with customers like most other online brokers. Due to the lockdown from March that year, the number of customers in 2020 increased by over + 50 %. Most market observers expected this influx of customers to calm down after the lockdowns in 2020 and return to a more normal growth path. With around 1.67 million customers, Interactive Brokers now had 56 % more customers by the end of the year than the previous year, and there was little sign of a decline in customer influx even up to December 2021. Since the business model is a very fixed-cost business in the form of a software platform and every new customer is incrementally very valuable, this is fantastic news.”
5. Visa Inc. (NYSE:V)
Bronte Capital’s Stake Value: $58,265,000
Percentage of Bronte Capital’s 13F Portfolio: 6.67%
Number of Hedge Fund Holders: 166
Insider Monkey data shows that Bronte Capital owned 295,928 shares of Visa Inc. (NYSE:V) at the end of the second quarter of 2022, worth more than $58.27 million, representing 6.67% of the portfolio. TCI Fund Management is Visa Inc. (NYSE:V)’s most significant stakeholder. In Q2 2022, 166 hedge funds owned positions worth $24.08 billion in Visa Inc. (NYSE:V), compared to 159 funds with stakes valued at nearly $28.08 billion a quarter earlier.
Visa Inc. (NYSE:V) announced on September 10 that it would provide a new merchant category code for American gun merchants to help customers identify purchases made at gun shops.
On August 16, Daiwa analyst Kazuya Nishimura downgraded Visa Inc. (NYSE:V) from ‘Outperform’ to ‘Neutral’ and trimmed his price objective from $230 to $225. The analyst anticipated that there would be less prospects for profitability to exceed market expectations despite the practically complete elimination of border barriers.
Here is what Baron Funds has to say about Visa Inc. (NYSE:V) in its Q2 2022 investor letter:
“The Fund’s holdings in the Payments and Information Services themes also contributed to relative performance. Within Payments, lower exposure to this lagging theme and outperformance of Visa, Inc. (NYSE:V). These global payment networks are viewed as safe havens during market downturns but are also benefiting from resilient payment volumes and a sharp rebound in international travel.”
4. Herbalife Nutrition Ltd. (NYSE:HLF)
Bronte Capital’s Stake Value: $61,282,000
Percentage of Bronte Capital’s 13F Portfolio: 7.02%
Number of Hedge Fund Holders: 28
Herbalife Nutrition Ltd. (NYSE:HLF) provides nutrition solutions across South and Central America, North America, Mexico, Europe, China, the Middle East, Africa, and the rest of the Asia Pacific. Following the release of the Q2 results, Riley analyst Jeff Van Sinderen reduced his price objective on Herbalife Nutrition to $38 from $41 and reiterated a ‘Buy’ recommendation on the stock on August 3. The analyst lowered projections to account for currency fluctuations and a slow sales rebound.
Regulatory filings revealed that Bronte Capital owned 3 million shares of Herbalife Nutrition Ltd. (NYSE:HLF) at the end of the second quarter of 2022, valued at $61.28 million, representing 7.02% of the portfolio. Herbalife Nutrition Ltd. (NYSE:HLF) has been in Bronte Capital’s portfolio since the fourth quarter of 2018.
At the end of June, a total of 28 hedge funds tracked by Insider Monkey held long positions in Herbalife Nutrition Ltd. (NYSE:HLF). By comparison, 34 hedge funds held shares in Herbalife Nutrition Ltd. (NYSE:HLF) a quarter ago.
In its Q3 2021 investor letter, Bronte Capital mentioned Herbalife Nutrition Ltd. (NYSE:HLF). Here is what the fund said:
“Herbalife is – as we have discussed many times before – a multi-level marketing scheme selling weight-loss shakes. The idea is simple. If I replaced six meals a week with low-calorie protein shakes and I walked an extra 15km a week I would quickly lose 15-20kgs. It would be good for me. It is also well-nigh impossible to do…..(Click to read the full text).”
3. Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN)
Bronte Capital’s Stake Value: $88,190,000
Percentage of Bronte Capital’s 13F Portfolio: 10.1%
Number of Hedge Fund Holders: 44
Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) researches, develops, produces, and sells medications for the treatment of several illnesses around the world. On September 12, Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) released preliminary data for the treatments, ubamatamab and REGN5093, for advanced non-small cell lung cancer with MET mutations.
Bronte Capital has owned a stake in Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) since the fourth quarter of 2020. The hedge fund increased its stake in Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) by 8% in the second quarter of 2022. The fund held 149,189 shares worth $88.19 million as of June 30, making Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) the third-largest stock in its 13F portfolio.
Following the latest success in the Phase III PULSAR and PHOTON trials employing a higher dosage, 8mg formulation of aflibercept, Guggenheim analyst Yatin Suneja increased his price objective on Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) to $925 from $740 and reaffirmed a ‘Buy’ rating on September 12.
According to Insider Monkey’s database, 44 hedge funds had a stake in Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) as of Q2 2022. The total value of their holdings was $1.60 billion. Jim Simons’ Renaissance Technologies is the leading shareholder of Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN), with a stake worth over $344.67 million.
2. Berkshire Hathaway Inc. (NYSE:BRK-A)
Bronte Capital’s Stake Value: $116,496,000
Percentage of Bronte Capital’s 13F Portfolio: 13.35%
Number of Hedge Fund Holders: 109
Berkshire Hathaway Inc. (NYSE:BRK-A)’s specializes in the utilities, energy, freight rail transportation, banking, manufacturing, and retail businesses. In addition, the firm offers property and liability insurance, as well as reinsurance. John Hempton’s Bronte Capital owned 426,694 Berkshire Hathaway Inc. (NYSE:BRK-A) shares in the second quarter of 2022 after purchasing an additional 365,649 shares.
On August 7, Keefe Bruyette analyst Meyer Shields boosted his price objective on Berkshire Hathaway Inc. (NYSE:BRK-A) to $535,000 from $480,000 and maintained a ‘Market Perform’ rating on the stock. In a research note, Shields explained to investors why the company’s Q2 operating earnings were remarkably beyond those expected by the Street, a lower than expected tax rate and higher than expected results from the insurance, railroads, utilities, and energy sectors.
Among the hedge funds tracked by Insider Monkey, 109 were bullish on Berkshire Hathaway Inc. (NYSE:BRK-A) at the end of June 2022, compared to 104 funds in the preceding quarter. Michael Larson’s Bill & Melinda Gates Foundation Trust is a prominent shareholder of Berkshire Hathaway Inc. (NYSE:BRK-A) as of Q2 2022, with 34.69 million shares worth $9.47 billion.
In its Q1 2022 investor letter, Diamond Hill Capital mentioned Berkshire Hathaway Inc. (NYSE:BRK-A) and explained its insights for the company. Here is what the fund said:
“Diversified holding company Berkshire Hathaway reported strong earnings during the quarter and benefited from continued share repurchases below intrinsic value. The company also announced significant deployments of excess cash during the quarter, including the acquisition of Alleghany and a large increase in its stake in Occidental Petroleum.”
1. Alphabet Inc. (NASDAQ:GOOG)
Bronte Capital’s Stake Value: $120,058,000
Percentage of Bronte Capital’s 13F Portfolio: 13.76%
Number of Hedge Fund Holders: 153
Following interruptions in China caused by COVID-19 lockdowns and Beijing’s escalating tensions with the United States, the tech giant Alphabet Inc. (NASDAQ:GOOG) is considering shifting part of the manufacture of Pixel phones to India. Chris Hohn’s TCI Fund Management is the leading stakeholder of Alphabet Inc. (NASDAQ:GOOG-A), with 2.48 million shares worth $5.42 billion.
Ivan Feinseth, an analyst at Tigress Financial, increased his price target on Alphabet Inc. (NASDAQ:GOOG) to $186 from $183 on August 3 and maintained a ‘Strong Buy’ recommendation on the stock, citing the company’s Q2 results as evidence of the strength of its core businesses in Cloud and Search.
John Hempton’s Bronte Capital boosted its stake in Alphabet Inc. (NASDAQ:GOOG) by 3% in Q2 2022, holding about 55,091 shares worth $120.06 million, representing 13.76% of the total securities.
Overall, 153 hedge funds in the database of Insider Monkey owned positions in Alphabet Inc. (NASDAQ:GOOG) at the end of June, with a collective stake value of $22.30 billion. This was a decrease of 7 hedge funds from the previous quarter when 160 hedge funds owned stakes in Alphabet Inc. (NASDAQ:GOOG).
Here is what Baron Funds has to say about Alphabet Inc. (NASDAQ:GOOG-A) in its Q2 2022 investor letter:
“Alphabet Inc. is the parent company of Google, the world’s largest search and online advertising company. Shares of Alphabet declined 21.6% in the quarter due to concerns about slower global growth impacting the company’s core advertising business. We retain conviction in Alphabet’s merits as it continues to benefit from growth in mobile and online video advertising, which accrues to its core assets of search, YouTube, and the Google ad network. We are further encouraged by Alphabet’s investments in Cloud, AI, and Autonomous Driving (through its Waymo subsidiary).”
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Disclosure: None. Top 10 Stock Picks of John Hempton’s Bronte Capital is originally published on Insider Monkey.
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