We recently published a list of Billionaire David Abrams’ 10 Stock Picks with Huge Upside Potential. In this article, we are going to take a look at where Willis Towers Watson Public Limited Company (NASDAQ:WTW) stands against other stock picks with huge upside potential.
David Abrams founded Abrams Capital Management in 1999. Before forming the Boston-based investment firm, Abrams worked at Seth Klarman’s Baupost Group for 10 years. He graduated from the University of Pennsylvania with a BA degree in History, where he also served on the Board of Advisors of the College of Arts and Sciences. Abrams didn’t have a finance background when he got his first job in New York in the early 1980s. He learned all about investing under Seth Klarman before setting out independently after a decade. He is a value investor, and in the ~12 years of his fund, he has achieved an annualized return of around 20%. His firm is like a one-man shop, which employs a small staff. Abrams Capital has 9 clients and discretionary assets under management (AUM) of $10.05 billion, as reported in the firm’s Form ADV dated 13 January 2025. The last reported 13F filing for Q4 2024 included $6.22 billion in managed 13F securities and a top 10 holdings concentration of 98.7%.
Abrams is known for maintaining a low public profile, but in a conversation on Columbia Business School’s ‘Value Investing with Legends’ Podcast series, he discussed the surface of his foundational principles when it comes to his investment philosophy. He starts by looking at the risks first and foremost, without any consideration of prospective gains. This is a reminder that the future remains unpredictable, which Abrams puts in the following words:
“When you look back, there’s one path that happened, but that doesn’t mean that going forward there’s only one path. In the future, there’s multiple paths.”
Abrams’ portfolio reflects a balanced approach with exposure to growth sectors like Industrials and Consumer Cyclical, while also maintaining moderate allocations in established industries such as Communication Services. He also believes that declining industries can present stability because they attract limited new entrants. This also implies that high-growth sectors are, on the contrary, characterized by intense competition, which necessitates a more detailed analysis of potential competitive threats. Here’s what Abrams had to say about this:
“If you have a shrinking industry and it’s dying, it’s like, people are not dying to get into that.”
Abrams serves as a director of several private companies. He is currently on the board of MITMCO, which manages the MIT endowment. Previously, he was a trustee of Berklee College of Music for 15 years, where he chaired the investment committee. He was also the trustee of Milton Academy.
Our Methodology
To compile the list of billionaire David Abrams’ 10 stock picks with huge upside potential, we sifted through Q4 2024 13F filings of Abrams Capital Management from Insider Monkey. From these filings, we checked each stock’s upside potential from CNN and ranked the stocks in ascending order of this upside potential. We have also added Abrams Capital Management’s stake in each stock as well as the broader hedge fund sentiment for it.
Note: All data was sourced on May 8.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A well-dressed insurance broker presenting a portfolio of investment and risk advice services to a client.
Willis Towers Watson Public Limited Company (NASDAQ:WTW)
Abrams Capital Management’s Stake: $225.78 million
Number of Hedge Fund Holders: 48
Average Upside Potential as of May 8: 20.91%
Willis Towers Watson Public Limited Company (NASDAQ:WTW) is an advisory, broking, and solutions company. It offers a range of services, such as strategy & design consulting and plan management service & support. Some of its group benefit programs include medical, dental, disability, life, voluntary benefits, and other coverages. It also provides advice, data, software, and products to address different client concerns.
The company’s Risk and Broking (R&B) segment showed a 7% organic growth in Q1 2025, which also marked its 9th consecutive quarter of high single-digit to double-digit growth. This was fueled by R&B’s specialization strategy and ongoing investments in talent, tech, and innovation. Within R&B, the Corporate Risk and Broking business also grew by 8%.
Willis anticipates mid to high single-digit growth for the full year 2025 for R&B alone. On March 18, UBS analyst Brian Meredith upgraded the stock’s rating from Neutral to Buy, while also increasing the price target from $344 to $395 per share. The analyst expects Willis Towers Watson Public Limited Company (NASDAQ:WTW) to sustain an organic revenue growth of 5.9% in 2025, compared to a consensus estimate of 5.2%.
Heartland Mid Cap Value Fund has expectations for further margin and cash flow improvement at the company and stated the following regarding Willis Towers Watson Public Limited Company (NASDAQ:WTW) in its Q4 2024 investor letter:
“Another example of a successful self-help story is Willis Towers Watson Public Limited Company (NASDAQ:WTW). This insurance brokerage and consulting firm operates two segments: Health, Wealth, and Career (HWC) accounts for 58% of revenues and includes services such as retirement plan administration, health care plan outsourcing, and executive compensation consulting. The other segment, Risk & Broking (R&B), includes global insurance brokerage and risk management consulting services.
In 2020, competitor Aon Plc attempted to acquire WTW in an all-stock merger that would have created the world’s largest insurance brokerage. However, the Justice Department sued to block the merger, which was called off in July 2021. The turmoil from the split caused WTW to significantly underperform its peers on critical metrics including organic revenue, earnings growth, margins, and free cash flow conversion.
In 2022, CEO Carl Hess was brought in to turn the business around. He implemented a restructuring plan to transition the business from a roll-up with disparate systems into a streamlined operating company. Since then, organic growth has accelerated to peer-like performance. We expect WTW’s operating margin and free cash flow, which still trails that of its peers, to narrow driven by the sale of its underperforming Medicare brokers business along with continued operational streamlining efforts.
WTW currently trades at 17.1X consensus 2025 earnings and 13.1X EV/EBITDA, well below its peers, who are trading at a median PE of greater than 23X and 15.4X EV/EBITDA.”
Overall, WTW ranks 7th on our list of billionaire David Abrams’ stock picks with huge upside potential. While we acknowledge the potential of WTW as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than WTW but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
