This article discusses the top ten stock picks of Robert B. Gillam’s McKinley Capital Management at the end of the second quarter.
Bob Gillam, an Alaskan of the second generation, established McKinley Capital Management, LLC in 1990. With 30 years of experience, McKinley Capital Management, LLC is a methodical global growth asset manager that focuses on identifying fast-growing opportunities in Alaska and throughout the world. Its international clientele includes sovereign wealth funds, labor unions, religious organizations, business and public pension schemes, and 401K programs. More than $7 billion in assets are being managed by McKinley Capital Management. McKinley Capital is still a privately held company today and is regarded as a pioneer in the financial sector when it comes to investing in global expansion. The fund is currently headed by Robert A. Gillam, CFA, who holds the positions of Chief Executive Officer and Chief Investment Officer.
McKinley Capital Management has 306 clients and $3.234 billion in discretionary assets under management (Form ADV from 2022-04-06). Their 13F filing for Q2 2022 showed that they had $765.378 million in managed 13F securities and a 30.74% concentration in their top 10 holdings. McKinley Capital Management owns stocks in several well-known companies as of the end of the second quarter of 2022, such as Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and Alphabet Inc. (NASDAQ:GOOG). Its largest holding is Microsoft Corp., with shares held of 168,534.
For this article, we picked the top 10 holdings of McKinley Capital Management from the fund’s Q2, 13F portfolio.
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Top 10 Stock Picks of Robert B. Gillam’s McKinley Capital Management
10. Thermo Fisher Scientific Inc. (NYSE:TMO)
McKinley Capital Management’s Stake Value: $12.805 million
Percentage of McKinley Capital Management’s 13F Portfolio: 1.67%
Number of Hedge Fund Holders as of Q1 2022: 101
In the second quarter of 2022, Thermo Fisher Scientific Inc. (NYSE:TMO) had EPS valued at $5.51, beating estimates by $0.53, and posted revenue valued at $10.97 billion, surpassing estimates by $1.02 billion. The company has a gross profit margin of 46.66% and has lost 9.93% year to date. McKinley Capital upped its stake in Thermo Fisher Scientific Inc. by 31% during the second quarter.
In its Q2 2022 investor letter, Stewart Asset Management mentioned Thermo Fisher Scientific Inc. and explained its insights for the company. Here is what the fund said:
“Recently we initiated two new investments. One in Thermo Fischer Scientific, a supplier to the life sciences industry. We have followed the company for many years and the recent downturn in share price gave us a good entry price at which to invest. Thermo has had strong earnings growth for many years and is led by a superb team. The company’s recent acquisitions make it a full-service supplier to the biopharma and biotech industries.”
09. Stryker Corporation (NYSE:SYK)
McKinley Capital Management’s Stake Value: $13.238 million
Percentage of McKinley Capital Management’s 13F Portfolio: 1.72%
Number of Hedge Fund Holders as of Q1 2022: 41
In the second quarter of 2022, Stryker Corporation (NYSE:SYK) had EPS valued at $2.25, missing estimates by $0.03, and reported revenue valued at $4.49 billion, missing estimates by $44.57 million. The company has a gross profit margin of 64.81% and has lost 19.92% year to date. McKinley Capital’s stake in the Stryker Corporation declined marginally by 4% during the second quarter.
On July 28, Edward Jones analyst John Boylan upgraded the stock to buy from hold and stated that the recent stock decline brought about by inflation and shorter-term costs presents an opportunity to buy shares of “one of the faster-growing medical technology companies.” Boylan anticipates that the company’s MAKO orthopedic robot, which entered the market early and helped expand its market share in knee implants, would eventually be used for other big joints.
Just like Microsoft Corporation (NASDAQ: MSFT), Apple Inc., and Alphabet Inc., Stryker Corporation is one of the best stocks to buy, according to Robert B. Gillam’s McKinley Capital Management.
08. Abbott Laboratories (NYSE:ABT)
McKinley Capital Management’s Stake Value: $13.283 million
Percentage of McKinley Capital Management’s 13F Portfolio: 1.73%
Number of Hedge Fund Holders as of Q1 2022: 68
In the second quarter of 2022, Abbott Laboratories (NYSE:ABT) had EPS valued at $1.43, beating estimates by $0.35. It reported revenue valued at $11.26 billion, beating estimates by $856.54 million. The company has a gross profit margin of 57.98% and has lost 22.39% year to date. The stake of McKinley Capital in Abbott Laboratories declined by 4% during the second quarter.
On July 21, RBC Capital analyst Shagun Singh lowered the firm’s price target on Abbott to $132 from $143 and kept an Outperform rating on the shares.
07. Nutrien Ltd. (NYSE:NTR)
McKinley Capital Management’s Stake Value: $16.920 million
Percentage of McKinley Capital Management’s 13F Portfolio: 2.21%
Number of Hedge Fund Holders as of Q1 2022: 60
The company was founded in 2017 and is headquartered in Saskatoon, Canada. Along with financial services, the corporation distributes crop nutrients, crop protection products, seeds, and merchandise through about 2,000 retail outlets throughout the United States, Canada, South America, and Australia.
Nutrien Ltd. (NYSE:NTR) is rated as a strong buy based on 16 analysts offering recommendations for it in the last 3 months. In the second quarter of 2022, Nutrien Ltd. had EPS valued at $5.85, beating estimates by $0.15, and actual revenue valued at $14.29 billion, missing estimates by $440.26 million. The company has a gross profit margin of 42.26% and has gained 16.05% year to date. The stake of McKinley Capital in Nutrien Ltd. declined by 17% during the second quarter.
06. Amazon.com, Inc. (NASDAQ:AMZN)
McKinley Capital Management’s Stake Value: $17.585 million
Percentage of McKinley Capital Management’s 13F Portfolio: 2.29%
Number of Hedge Fund Holders as of Q1 2022: 271
McKinley Capital Management’s stake in Amazon.com, Inc. (NASDAQ:AMZN) has increased by a whopping 1763% during the second quarter, holding 0.166 million shares valuing $17.585 million, representing 2.29% of the total portfolio.
In its Q2 2022 investor letter, ClearBridge Large Cap Growth ESG Strategy mentioned Amazon.com, Inc. (NASDAQ:AMZN). Here is what the fund said:
“Amazon.com (NASDAQ:AMZN) was a primary detractor due to a disappointing outlook for profitability in its retail business. Following a surge of e-commerce demand in 2020 and 2021, the company has now overbuilt fulfillment infrastructure as e-commerce demand has moderated. While we believe current profitability levels are suboptimal, Amazon.com is working rapidly to rectify overcapacity issues and we believe the retail business has a robust long-term profitability outlook. We also believe Amazon is well-positioned to emerge stronger from this difficult operating environment of higher costs. There is a visible path to margin expansion driven by a positive mix shift as the more profitable businesses of third-party sellers, cloud, and advertising become the largest contributors.”
05. Danaher Corporation (NYSE:DHR)
McKinley Capital Management’s Stake Value: $20.129 million
Percentage of McKinley Capital Management’s 13F Portfolio: 2.62%
Number of Hedge Fund Holders as of Q1 2022: 83
The Danaher Corporation (NYSE:DHR) develops, produces, and markets professional, medical, industrial, and commercial goods and services internationally. Life Sciences, Diagnostics, and Environmental & Applied Solutions make up the company’s three operating segments.
For Q2 2022, Danaher Corporation had EPS valued at $2.76, beating estimates by $0.42. It has consistently beaten the earnings forecast for the past four quarters. The company has posted a revenue figure of $7.75 billion, beating estimates by $461.77 million and reflecting year-over-year growth of 7.4%. In the first half of 2022, Danaher Corporation distributed $411 million in dividends to its shareholders, an increase of 14.2% from the prior year. The stake of McKinley Capital in Danaher Corporation declined by 12% during the second quarter.
04. Alphabet Inc. (NASDAQ:GOOG)
McKinley Capital Management’s Stake Value: $21.811 million
Percentage of McKinley Capital Management’s 13F Portfolio: 2.84%
Number of Hedge Fund Holders as of Q1 2022: 365
For Q2 2022, Alphabet Inc. had EPS valued at $1.21, missing estimates by $0.08, and reported actual revenue valued at $69.69 billion, missing estimates by $111.87 million. The stake of McKinley Capital in Alphabet Inc. declined by 9% during the second quarter.
In its Q2 2022 investor letter, Wedgewood Partners mentioned Alphabet Inc. and explained its insights for the company. Here is what the fund said:
“Alphabet grew its core search revenues +24% on a +30% year-ago comparison. Despite this stellar top-line performance, shares sold off as the market began to discount fears of a recession. However, the stock has outperformed relative to other holdings as core Google Search has been less affected by disruptions related to Apple’s privacy initiatives. Alphabet’s Cloud segment is generating revenue at a $24 billion run rate but is still running at a loss. We think this business can generate much better margins at some point. In the meantime, the Company has 4% to 5% of shares authorized for repurchase which is an attractive use of capital as the stock trades for about just 18X 2023 consensus estimates.”
03. Apple Inc. (NASDAQ:AAPL)
McKinley Capital Management’s Stake Value: $33.699 million
Percentage of McKinley Capital Management’s 13F Portfolio: 4.4%
Number of Hedge Fund Holders as of Q1 2022: 131
Apple Inc. is rated as a Strong Buy based on 27 analysts offering recommendations in the last 3 months. For Q2 2022, Apple Inc. had EPS valued at $1.2, beating estimates by $0.04, and brought in revenue valued at $82.96 billion, missing estimates by $9.43 million.
In its Q2 2022 investor letter, Wedgewood Partners mentioned Apple Inc. and explained its insights for the company. Here is what the fund said:
“Apple grew revenues +9%, driven by +17% growth in the Services segment. While iPhone revenues grew a modest +5%, it was on an exceptional year ago comparison of +66%. iPhone continues to capture most industry smartphone profits by focusing on high-end price tiers. Apple is taking nearly two-thirds of the revenue share in the premium ($400 and above) smartphone segment. Further, most of the growth was driven by expansion in the “ultra-premium” price tier of $1000 or more per unit.[1] As we have highlighted in the past, Apple’s relentless focus on the development and integration between hardware (especially integrated circuits) and software continues to add significant value for customers of its products and services. We expect this favorable competitive dynamic to continue for the foreseeable future.
02. UnitedHealth Group Incorporated (NYSE:UNH)
McKinley Capital Management’s Stake Value: $42.526 million
Percentage of McKinley Capital Management’s 13F Portfolio: 5.55%
Number of Hedge Fund Holders as of Q1 2022: 103
For Q2 2022, UnitedHealth Group Incorporated (NYSE:UNH) had EPS valued at $5.57, beating estimates by $0.37. The stock has beaten the earnings forecast for the consecutive fourth quarter. For the second quarter, the company reported actual revenue valued at $80.33 billion, surpassing estimates by $748 million.
McKinley Capital upped its stake in the diversified healthcare company UnitedHealth Group Incorporated by 3% during the second quarter, holding 0.828 million shares valuing $42.526 million, representing 5.55% of the portfolio.
01. Microsoft Corporation (NASDAQ:MSFT)
McKinley Capital Management’s Stake Value: $43.284 million
Percentage of McKinley Capital Management’s 13F Portfolio: 5.65%
Number of Hedge Fund Holders as of Q1 2022: 259
Microsoft Corporation has returned 304% over the last five years and is probably poised to be a strong leading growth stock in the years to come.
McKinley Capital Management’s stake in Microsoft Corporation declined by 9% during the second quarter.
In its Q1 2022 investor letter, Carillon Clarivest Capital Appreciation Fund mentioned Microsoft Corporation and explained its insights for the company. Here is what the fund said:
“Stock selection contributed the most while sector allocation was also positive. An underweight to communication services and an overweight to energy helped performance, while an underweight to consumer staples and an overweight to materials detracted. Stock selection was strong within healthcare and materials but was weak within information technology and industrials. Microsoft (NASDAQ:MSFT) reported positive results driven by personal computing strength, but analysts were especially positive on its growth outlook for its Azure cloud-computing services.”
You can also take a peek at Donald Yacktman’s Latest Portfolio: Top 10 Stock Picks and Simon Sadler’s Segantii Capital is Bullish on These 10 Stocks
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This article is originally published at Insider Monkey.
