In this article, we discuss the top 10 stock picks of billionaire Richard Chilton.
Richard Chilton is an American billionaire investor who founded Chilton Investment Company, a global hedge fund. He currently serves as the chief executive officer, chairman, and chief investment officer of the fund, managing a portfolio worth $4.75 billion for his clients as of the fourth quarter of 2021.
Richard Chilton is a finance and economics graduate from Alfred University, and he started his investment career at Merrill Lynch. Before forming Chilton Investment Company in 1995, he worked at Alliance Capital and Allen & Company, a private bank.
Chilton Investment Company’s fourth quarter portfolio is concentrated with investments in the transports, materials, information technology, industrials, healthcare, finance, consumer staples, and consumer discretionary sectors. The hedge fund purchased 15 new stocks in Q4 2021, sold out of 18 positions, slashed stakes in 58 securities, and made additional purchases in 57 equities.
The top buys of Chilton Investment Company in the December quarter included Canadian Pacific Railway Limited (NYSE:CP), The Home Depot, Inc. (NYSE:HD), and Adobe Inc. (NASDAQ:ADBE). Whereas, the hedge fund sold out of Exxon Mobil Corporation (NYSE:XOM), 3M Company (NYSE:MMM), and Ford Motor Company (NYSE:F).
Some of the most notable stocks from billionaire Richard Chilton’s Q4 portfolio were Microsoft Corporation (NASDAQ:MSFT), Mastercard Incorporated (NYSE:MA), and PayPal Holdings, Inc. (NASDAQ:PYPL). However, in this article, we discuss the top 10 stock picks of the billionaire.
Richard Chilton of Chilton Investment Company
Our Methodology
We used the Q4 2021 portfolio of Richard Chilton’s Chilton Investment Company to enlist the hedge fund’s top 10 stock picks. The securities are ranked according to the billionaire’s stake value in each holding.
Top Stock Picks of Billionaire Richard Chilton
10. Cintas Corporation (NASDAQ:CTAS)
Chilton Investment Company’s Stake Value: $159,708,000
Percentage of Chilton Investment Company’s 13F Portfolio: 3.35%
Number of Hedge Fund Holders: 42
Cintas Corporation (NASDAQ:CTAS) was founded in 1968 and is headquartered in Cincinnati, Ohio. The company supplies uniforms and relevant business services to corporate customers in the United States, Canada, and Latin America. Cintas Corporation (NASDAQ:CTAS) operates via Uniform Rental and Facility Services, First Aid and Safety Services, and All Other segments.
Billionaire Richard Chilton’s hedge fund owned 360,376 shares of Cintas Corporation (NASDAQ:CTAS) in the fourth quarter of 2021, worth $159.70 million, representing 3.35% of the total 13F portfolio. Chilton Investment Company boosted its stake in the company by 2% in Q4 2021.
On April 12, Cintas Corporation (NASDAQ:CTAS) declared a $0.95 per share quarterly dividend, in line with previous. The dividend is payable on June 15, to shareholders of record on May 16.
The company reported earnings for the period ending February 2022 on March 23, posting an EPS of $2.69, beating analysts’ consensus estimates by $0.25. Revenue for the period grew 10.33% year-over-year to $1.96 billion, topping market predictions by $54.41 million.
Deutsche Bank analyst Faiza Alwy initiated coverage of Cintas Corporation (NASDAQ:CTAS) on March 29 with a Buy recommendation and a $517 price target. The analyst noted that many of the commercial services names in the firm’s coverage are top players in fragmented industries with chances for consolidation. Cintas Corporation (NASDAQ:CTAS) offers top class execution, the analyst told investors in a bullish thesis.
According to Insider Monkey’s fourth quarter database, 42 hedge funds were long Cintas Corporation (NASDAQ:CTAS), up from 36 funds in the prior quarter. John Allison’s Unio Capital is the leading shareholder of the company, with a position worth $926.2 million.
In addition to Microsoft Corporation (NASDAQ:MSFT), Mastercard Incorporated (NYSE:MA), and PayPal Holdings, Inc. (NASDAQ:PYPL), Cintas Corporation (NASDAQ:CTAS) is one of the top stock picks of billionaire Richard Chilton.
Here is what Cooper Investors Global Equities Fund has to say about Cintas Corporation (NASDAQ:CTAS) in its Q1 2022 investor letter:
“During the quarter the Fund established a position in Cintas Corporation, a market leader in uniform rental services across North America (Mcap $44bn). This service provides workwear for large corporate and government clients, for example managing supply and laundry of uniforms for the nationwide employee base of customers such as Home Depot.
Uniform rental is a tough local business (Cintas has a million customers) but management have built a high quality business operating with stable and growing recurring revenues and have consistently delivered for shareholders. They have the scale and a superior service offering which drives a unique and attractive return profile, including mid-to-high single digit sales growth, 40% returns on tangible funds employed, and earnings per share that have risen for an impressive 50 of the last 52 years.
The opportunity to invest arose following a 20% sell-down as Cintas was caught up in the sell-down in stable compounding businesses during the quarter, despite no change in the outlook or fundamentals for the business.
We view Cintas as a well-positioned Stalwart that can successfully navigate the existing environment. They have the ability to leverage what is a dominant position to grow market share and raise pricing to align with inflation. Cintas could enter a strong period of growth as job openings are filled, manufacturing moves back onshore and the continued growth from service-based industries outsourcing their uniforms. Led by Chairman and descendent of the founder Scott Farmer (also the largest shareholder at 15% of the company) we expect Cintas to continue their track record as excellent operators over the short, medium and long term.”
9. Republic Services, Inc. (NYSE:RSG)
Chilton Investment Company’s Stake Value: $188,460,000
Percentage of Chilton Investment Company’s 13F Portfolio: 3.95%
Number of Hedge Fund Holders: 38
Republic Services, Inc. (NYSE:RSG) is an Arizona-based company that specializes in recyclable materials, waste collection, disposal of non-hazardous solid waste, and other environmental solutions.
Richard Chilton’s Chilton Investment Company held 1.35 million shares of Republic Services, Inc. (NYSE:RSG) in Q4 2021, worth $188.46 million, representing 3.95% of the total 13F portfolio. The fund elevated its stake by 4% in the fourth quarter of 2021.
On February 10, Republic Services, Inc. (NYSE:RSG) declared a $0.46 per share quarterly dividend. The dividend was distributed on April 14, to shareholders of record on April 1. Republic Services, Inc. (NYSE:RSG)’s dividend yield stood at 1.33% as of April 28.
JPMorgan analyst Stephanie Yee reinstated coverage of Republic Services, Inc. (NYSE:RSG) with a Neutral rating and a $135 price target on March 1. The analyst likes the solid waste business, observing that the companies offer an essential service while generating good margins and significant free cash flow. The analyst noted that Republic Services, Inc. (NYSE:RSG) has been improving its margins by setting prices that cover its operational costs.
According to Insider Monkey’s Q4 data, 38 hedge funds were long Republic Services, Inc. (NYSE:RSG), with collective stakes worth $1.35 billion, compared to 31 funds in the earlier quarter, holding stakes in the company valued at $1.2 billion. Cliff Asness’ AQR Capital Management is the leading position holder in Republic Services, Inc. (NYSE:RSG), with 1.65 million shares worth approximately $229 million.
8. Mettler-Toledo International Inc. (NYSE:MTD)
Chilton Investment Company’s Stake Value: $208,338,000
Percentage of Chilton Investment Company’s 13F Portfolio: 4.37%
Number of Hedge Fund Holders: 34
Mettler-Toledo International Inc. (NYSE:MTD) is based in Columbus, Ohio, operating as a manufacturer and supplier of precision laboratory instruments and services worldwide. Richard Chilton has held a stake in Mettler-Toledo International Inc. (NYSE:MTD) since Q2 2016, and as of the last quarter of 2021, the billionaire owned 122,753 shares of the company, worth $208.3 million. Chilton Investment Company boosted its position in the company by 4% in Q4 2021 and the stock represents 4.37% of the total portfolio.
Wells Fargo analyst Timothy Daley on April 25 upgraded Mettler-Toledo International Inc. (NYSE:MTD) to Overweight from Equal Weight, but slashed the price target to $1,410 from $1,600. The analyst noted that Mettler-Toledo International Inc. (NYSE:MTD)’s current valuation is “fair” but estimates are possibly conservative since the company has had best in class and most consistent pricing power in the sector due to its highly diversified portfolio and established distribution channels. He sees consensus estimates for FY23 and beyond as conservative since the market is not fully appreciating the extent of Mettler-Toledo International Inc. (NYSE:MTD)’s possible margin accretive price trajectory.
Among the hedge funds tracked by Insider Monkey, Mettler-Toledo International Inc. (NYSE:MTD) was found in the public stock portfolios of 34 funds at the end of December 2021, compared to 31 funds in the preceding quarter. Ian Simm’s Impax Asset Management is the largest shareholder of the company, with 126,057 shares worth roughly $214 million.
Here is what Baron Asset Fund has to say about Mettler-Toledo International Inc. (NYSE:MTD) in its Q4 2021 investor letter:
“Mettler-Toledo International, Inc. is a leading provider of weighing systems and measuring instruments for laboratory, industrial, and food retail applications. Its stock performed well after the company reported strong third quarter financial results with revenue and earnings growth, as well as initial 2022 guidance, that exceeded Wall Street forecasts. We believe that Mettler-Toledo remains an exceptionally well-run business with attractive end markets and the ability to compound its earnings at a mid-teens rate for many years.”
7. Union Pacific Corporation (NYSE:UNP)
Chilton Investment Company’s Stake Value: $217,188,000
Percentage of Chilton Investment Company’s 13F Portfolio: 4.56%
Number of Hedge Fund Holders: 59
Union Pacific Corporation (NYSE:UNP) is an American railroad company that offers transportation of grains, fertilizers, food and refrigerated products, coal, petroleum, and liquid petroleum gasses. In the fourth quarter of 2021, Richard Chilton’s hedge fund owned 862,096 Union Pacific Corporation (NYSE:UNP) shares, worth over $217 million, representing 4.56% of the total 13F securities.
On April 21, Union Pacific Corporation (NYSE:UNP) reported its financial results for the first fiscal quarter of 2022. The company posted earnings per share of $2.57, in line with consensus estimates. The revenue grew 17.18% year-over-year to $5.86 billion, outperforming market predictions by $100.84 million.
Raymond James analyst Patrick Tyler Brown on April 22 raised the firm’s price target on Union Pacific Corporation (NYSE:UNP) to $285 from $280 and maintained a Strong Buy rating on the shares after “solid” Q1 results that reaffirmed company guidance. The analyst believes that going forward, “improved service, the ESG benefits of rail, and a tight truck market could all yield a potent elixir, driving volumes, price, and earnings higher than contemplated”.
According to Insider Monkey’s Q4 data, 59 hedge funds placed long calls on Union Pacific Corporation (NYSE:UNP), compared to 63 funds in the prior quarter. The total stakes owned in the fourth quarter amounted to $5.6 billion. Chris Hohn’s TCI Fund Management held the biggest position in the company, with more than 6 million shares worth $1.5 billion.
Here is what ClearBridge Investments Global Growth Strategy has to say about Union Pacific Corporation (NYSE:UNP) in its Q4 2021 investor letter:
“Despite these mixed emerging growth results, the ClearBridge Global Growth Strategy outperformed the benchmark due to resilience among our secular and structural growth holdings. These consistent growers were complemented by solid contributions from structural holdings including Union Pacific.”
6. Canadian Pacific Railway Limited (NYSE:CP)
Chilton Investment Company’s Stake Value: $229,982,000
Percentage of Chilton Investment Company’s 13F Portfolio: 4.83%
Number of Hedge Fund Holders: 55
Canadian Pacific Railway Limited (NYSE:CP) operates a transcontinental freight railway in Canada and the United States, primarily transporting bulk commodities. Chilton Investment Company, as of Q4 2021, boosted its stake in the company by 265%, holding 3.19 million shares worth approximately $230 million. Canadian Pacific Railway Limited (NYSE:CP) stake represents 4.83% of the total 13F securities.
Canadian Pacific Railway Limited (NYSE:CP) reported earnings for Q1 2022 on April 27, announcing an EPS of $0.52, missing consensus estimates by $0.04. The $1.43 billion revenue dropped 8.56% year-over-year, falling short of analysts’ predictions by $40.09 million. The company also declared a C$0.19 per share quarterly dividend, in line with previous. The dividend is payable on July 25, to shareholders of record on June 24.
On April 28, Scotiabank analyst Konark Gupta lowered the firm’s price target on Canadian Pacific Railway Limited (NYSE:CP) to C$105 from C$106 and maintained an Outperform rating on the shares.
Among the hedge funds tracked by Insider Monkey, Canadian Pacific Railway Limited (NYSE:CP) was held by 55 funds at the end of December 2021, up from 38 funds in the earlier quarter. John Armitage’s Egerton Capital Limited is a significant shareholder of the company, with more than 29 million shares worth over $2 billion.
Just like Microsoft Corporation (NASDAQ:MSFT), Mastercard Incorporated (NYSE:MA), and PayPal Holdings, Inc. (NASDAQ:PYPL), elite hedge funds are piling into Canadian Pacific Railway Limited (NYSE:CP).
Here is what ClearBridge International Growth EAFE Strategy has to say about Canadian Pacific Railway Limited (NYSE:CP) in its Q3 2021 investor letter:
“The other major headwind to relative performance in the quarter was Canadian Pacific Railway Limited (NYSE:CP). The stock has been a strong performer for the Strategy but negative sentiment around its bidding war for U.S. rail operator Kansas City Southern has weighed on the stock since late May. As a result, the cyclical uptick we expected from the company has been masked by the takeover. Indeed, we have been frustrated by the muted performance among Canadian Pacific Railway Limited (NYSE:CP) and other recently added positions in our structural bucket of growth companies with more cyclical business models or that are undergoing a restructuring that should lead to a step change improvement in earnings. As more regions reopen from COVID-19 and spending rebounds, we expect better performance from our structural names, including Airbus and hospitality and food service provider Compass.”
5. Costco Wholesale Corporation (NASDAQ:COST)
Chilton Investment Company’s Stake Value: $241,484,000
Percentage of Chilton Investment Company’s 13F Portfolio: 5.07%
Number of Hedge Fund Holders: 57
Costco Wholesale Corporation (NASDAQ:COST) is an American multinational big-box retailer, offering branded and private-label merchandise products. Billionaire Richard Chilton’s Chilton Investment Company owns 425,373 shares of Costco Wholesale Corporation (NASDAQ:COST), worth $241.4 million, representing 5.07% of the total 13F securities.
On March 3, Costco Wholesale Corporation (NASDAQ:COST) reported earnings for the quarter ending February 2022. The company announced an EPS of $2.92 and a revenue of $51.90 billion, above consensus estimates by $0.18 and $395.81 million respectively.
Tigress Financial analyst Ivan Feinseth on April 14 raised the price target on Costco Wholesale Corporation (NASDAQ:COST) to $678 from $520 and reiterated a Buy recommendation on the shares. The analyst noted that Costco Wholesale Corporation (NASDAQ:COST) continues to experience robust consumer demand and membership growth.
According to the Q4 database of Insider Monkey, Costco Wholesale Corporation (NASDAQ:COST) was found in the public stock portfolios of 57 hedge funds, compared to 55 funds in the prior quarter. Ken Fisher’s Fisher Asset Management is the leading shareholder of the company, with more than 4 million shares worth $2.3 billion.
Here is what ClearBridge Investments Sustainability Leaders Strategy has to say about Costco Wholesale Corporation (NASDAQ:COST) in its Q4 2021 investor letter:
“Portfolio gains were led by a diverse group of contributors. Also in consumer discretionary, Costco, which operates a chain of membership-only big-box retail stores, continues to impress as it takes to share and becomes more relevant for the consumer even as the world opens up.”
4. The Home Depot, Inc. (NYSE:HD)
Chilton Investment Company’s Stake Value: $299,965,000
Percentage of Chilton Investment Company’s 13F Portfolio: 6.30%
Number of Hedge Fund Holders: 68
The Home Depot, Inc. (NYSE:HD) is the biggest American home improvement retailer, selling building materials, lawn and garden products, home maintenance solutions, and décor, among other offerings. Richard Chilton held 722,790 shares of The Home Depot, Inc. (NYSE:HD) in Q4 2021, worth about $300 million, representing 6.30% of the total 13F securities.
On February 22, The Home Depot, Inc. (NYSE:HD) declared a $1.90 per share quarterly dividend, a 15.2% increase from its prior dividend of $1.65. The dividend was distributed on March 24, to shareholders of record on March 10. The stock delivers a dividend yield of 2.48% as of April 28.
Wells Fargo analyst Zachary Fadem on April 7 maintained an Overweight rating on The Home Depot, Inc. (NYSE:HD) but lowered the firm’s price target on the shares to $350 from $400 based on 20-times his full year 2023 EPS estimate.
According to the fourth quarter database of Insider Monkey, The Home Depot, Inc. (NYSE:HD) was found in the public stock portfolios of 68 hedge funds, compared to 58 funds in the preceding quarter. Ric Dillon’s Diamond Hill Capital is a significant shareholder of the company, with 1.14 million shares worth $475.8 million.
Here is what Ensemble Capital has to say about The Home Depot, Inc. (NYSE:HD) in its Q1 2022 investor letter:
“Home Depot (7.7% weight in the Fund): The demand surge for remodeling and home improvement goods sparked by shelter in place orders, remote work going mainstream, and a shortage of homes on the market to buy, ran headlong into the supply chain crisis, triggering surging prices in the products Home Depot sells. But the company has been able to pass nearly all of these increased costs on to customers, with revenue growing 37% over the past two years while gross profits, or the profits the company makes on each item they sell, increased by 35%. Even this small difference appears to be due not to inflation eating away at Home Depot’s profits, but rather be a function of the huge increase in revenue the company has been generating in low margin lumber sales.”
3. Microsoft Corporation (NASDAQ:MSFT)
Chilton Investment Company’s Stake Value: $340,522,000
Percentage of Chilton Investment Company’s 13F Portfolio: 7.15%
Number of Hedge Fund Holders: 262
Billionaire Richard Chilton’s Chilton Investment Company owns more than 1 million Microsoft Corporation (NASDAQ:MSFT) shares as of Q4 2021, worth $340.5 million, representing 7.15% of the total 13F holdings. The hedge fund first invested in Microsoft Corporation (NASDAQ:MSFT) back in Q4 2010, and has consistently held the position since Q3 2015.
On April 26, Microsoft Corporation (NASDAQ:MSFT) reported its Q1 2022 results, posting earnings per share of $2.22, beating market estimates by $0.02. Revenue for the period grew 18.35% year-over-year to $49.36 billion, above consensus by $311.18 million.
It was announced on April 28 that Activision Blizzard, Inc. (NASDAQ:ATVI)’s stockholders approved Microsoft Corporation (NASDAQ:MSFT)’s acquisition proposal. More than 98% of the shareholders voted in favor of the proposed transaction with Microsoft Corporation (NASDAQ:MSFT). It will be an all-cash transaction for $95.00 per share and it is expected to close in Microsoft Corporation (NASDAQ:MSFT)’s fiscal year ending June 30, 2023.
Morgan Stanley analyst Keith Weiss on April 27 maintained an Overweight rating and a $372 price target on Microsoft Corporation (NASDAQ:MSFT) shares after the company’s fiscal Q1 results. According to the analyst, Microsoft Corporation (NASDAQ:MSFT) has strong commercial bookings growth, accelerating Azure growth, and “robust” guidance for Q4 and FY23. Given what he sees as an “attractive multiple,” he remains a buyer at present levels.
Among the hedge funds tracked by Insider Monkey, 262 funds were bullish on Microsoft Corporation (NASDAQ:MSFT) at the end of December 2021, compared to 250 funds in the preceding quarter. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is a prominent shareholder of the company, with a position worth $5.7 billion.
Here is what Baron Opportunity Fund has to say about Microsoft Corporation (NASDAQ:MSFT) in its Q4 2021 investor letter:
“Shares of Microsoft Corporation, a cloud-software leader and provider of software productivity tools and infrastructure, rose during the quarter, following a strong earnings report highlighting solid demand for its broad product stack and continued momentum migrating its business to the cloud. Microsoft’s results continued to be strong across the board, with total revenue growing 20% in constant currency, beating Street estimates by 3%; an acceleration in Commercial Cloud revenue to 34% constant-currency growth; operating margins expanding to just under 45%; earnings growth of 23%; and free cash flow growth of 30%. We believe the company is positioned to deliver 13% to 15% organic growth over the next three years, underpinned by total addressable market expansion and continued market share gains across its disruptive cloud product portfolio.”
2. Ball Corporation (NYSE:BLL)
Chilton Investment Company’s Stake Value: $346,597,000
Percentage of Chilton Investment Company’s 13F Portfolio: 7.28%
Number of Hedge Fund Holders: 32
Ball Corporation (NYSE:BLL) was founded in 1880 and is headquartered in Westminster, Colorado. The company offers aluminum packaging to the beverage, personal care, and household products industries. Richard Chilton held 3.60 million shares of Ball Corporation (NYSE:BLL) in the fourth quarter of 2021, worth $346.5 million, representing 7.28% of the total 13F portfolio.
On April 27, Ball Corporation (NYSE:BLL) declared a $0.20 per share quarterly dividend, in line with previous. The dividend is payable on June 15, to shareholders of record on June 1.
Deutsche Bank analyst Kyle White on April 18 maintained a Buy recommendation on Ball Corporation (NYSE:BLL) but lowered the firm’s price target on the shares to $98 from $102.
According to Insider Monkey’s Q4 data, 32 hedge funds were bullish on Ball Corporation (NYSE:BLL), up from 27 funds in the prior quarter. The total stakes held in the fourth quarter amounted to $956 million, compared to $1.45 billion in the earlier quarter. Greg Poole’s Echo Street Capital Management held a prominent position in the company, with more than 1 million shares worth $100.2 million.
Here is what ClearBridge Investments has to say about Ball Corporation (NYSE:BALL) in its Q1 2021 investor letter:
“Aluminum beverage and food container manufacturer Ball Corp, meanwhile, delivered fourth-quarter operating income slightly lower than consensus, though this was mainly attributable to higher startup costs for large new facilities coming online in North America. These investments and additional capacity projects will contribute to strong volume growth globally, however. Aluminum cans are infinitely recyclable and offer the best replacement product for single-use plastic beverage containers, in our view. They are more likely to be recycled than single-use plastic and are more energy efficient in production as well.”
1. The Sherwin-Williams Company (NYSE:SHW)
Chilton Investment Company’s Stake Value: $412,046,000
Percentage of Chilton Investment Company’s 13F Portfolio: 8.65%
Number of Hedge Fund Holders: 53
The Sherwin-Williams Company (NYSE:SHW) is an Ohio-based company that manufactures and distributes paints and coatings to professional, industrial, commercial, and retail customers. Richard Chilton’s hedge fund boosted its stake in The Sherwin-Williams Company (NYSE:SHW) by 2% in Q4 2021, holding 1.17 million shares worth $412 million. The stock represents 8.65% of the total 13F portfolio and it is the biggest position of the billionaire.
On April 28, Deutsche Bank analyst David Begleiter reiterated a Buy recommendation on The Sherwin-Williams Company (NYSE:SHW) but lowered the firm’s price target on the stock to $315 from $330 following the “solid” Q1 results.
The Sherwin-Williams Company (NYSE:SHW) reported Q1 earnings on April 26, posting an EPS of $1.61, beating market estimates by $0.08. The $5 billion revenue grew 7.36% year-over-year and surpassed analysts’ forecasts by $81 million.
According to Insider Monkey’s fourth quarter database, 53 hedge funds were bullish on The Sherwin-Williams Company (NYSE:SHW), up from 44 funds in the preceding quarter. Thomas Steyer’s Farallon Capital is a significant shareholder of the company, with 951,068 shares worth approximately $335 million.
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Disclosure: None. Top 10 Stock Picks of Billionaire Richard Chilton is originally published on Insider Monkey.
