Five Stock Picks from Long-Term Value Investor
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Murray Stahl founded Horizon Kinetics, the parent company of Horizon Asset Management, in 1985. Prior to that he spent 16 years at Bankers Trust Company as a senior portfolio manager and research analyst. Murray Stahl holds a B.A. and an M.A. from Brooklyn College and an M.B.A. from Pace University.
Horizon Asset Management LLC, a subsidiary of Horizon Kinetics LLC, is an investment firm that was formed in 2011 by the merger of Horizon Asset Management, Inc. (founded in 1994) and Kinetics Asset Management, Inc. (founded in 1996). Horizon Kinetics adheres to a research-based, long-term contrarian fundamental-value investment philosophy.
Murray Stahl and Horizon Asset Management’s top five 2Q 13F holdings are unique finds. Stahl’s top five holdings make up around 30% of the entire 2Q 13F portfolio, and there were no shakeups in the second quarter, with no new additions, and only modest declines in ownership percentages with no ownership increases; see all of Horizon’s holdings.
Liberty Media (NASDAQ: STRZA) owns subsidiaries that are engaged in the media, communications and entertainment industry. The company has affiliates including Sirius XM Radio and Live Nation Entertainment. In 2011 the company acquired 17% of Barnes & Noble. Liberty has made sacrifices to make bets on Sirius, and announced intentions to acquire more than 50% of the company to take full control of the Board. Sirius’s 2Q results showed all-time highs in revenue, EBITDA, free cash flow and net subscriber addition. Horizon keeps very good company with its Liberty ownership, as Warren Buffet owns the most shares of any of the hedge funds we track, owning 5.5 million shares or around 4.6% of Liberty. Liberty has been Horizon’s top holding since 4Q 2011 and currently makes up 8.8% of the firm’s 13F portfolio. However, as the company’s stock has showed strong performance over the last three months, up over 17%, five insiders have chosen to get out.
Howard Hughes (NYSE: HHC), a developer and operator of master planned communities and mixed-use properties, makes up 6.5% of Horizon’s 13F portfolio. The company trades at a trailing P/E of 177 and a forward P/E of 182. The company’s P/E appears high, and when comparing it to its top peers, who have posted recent negative EPS, the prospects are even less appealing. Howard Hughes has showed strong price performance year to date, up almost 65%; however, other key funds have taken this as opportunity to take profits. Whitney Tilson of T2 partners reduced his position by 95% and John Paulson of Paulson & Co reduced his by 51% in the second quarter.
Horizon’s third largest holding is Jarden Corporation (NYSE: JAH). At 5.34% of Horizon’s 13F portfolio, Jarden is a global consumer products company, with such products as CrockPot, FoodSaver, Mr. Coffee, Oster and Sunbeam. Jarden also calls Ken Fisher of Fisher Asset Management a shareholder, and the second largest hedge fund owner at 1.2 million shares, behind only Murray Stahl. Jarden is up big on the year, over 75% year to date on 2Q results that showed net income up 27% for the first half of the year. The company trades at a trailing P/E of 19, while the forward P/E is 11.
Brookfield Asset Management (NYSE: BAM) is a global alternative asset manager with around $150 billion of AUM at the end of 2011. Brookfield is Horizon’s fourth largest 13F holding. Brookfield reported 2Q 2012 funds from operations of $0.34, missing the consensus estimate of $0.44, but FFO from the asset management showed a positive increase, reporting FFO of $108 million versus $99 million in 2Q 2011. The weakness of 2Q appeared to be a result of foreign exchange moves and anomalous issues related to water flow to its power business. The company’s peers do not have a measurable P/E given negative EPS, but Brookfield trades at a trailing P/E of 18.
AutoNation (NYSE: AN) is the largest U.S. retail auto detailer and during 3Q 2011 was Horizon’s top holding for its 13F portfolio, but has since fallen to fifth and now makes up 4.4% of their 13F holdings. AutoNation had very strong 2Q numbers, with EPS up 35% year over year, and EBIT up 16% year over year. However, global economic headwinds have limited the company, whose stock is up only 11% year to date, versus the S&P 500, which is up 16% year to date. AutoNation has a beta of 1.2. Nonetheless, Bill Gates continues to be a buyer, having made several purchases throughout the first half of the year through his investment company, Cascade Investment LLC. Additionally, Edward Lambert’s ESL Investments still owns over 40% of Autonation, which makes up 30% of ESL Investments’ 2Q 13F portfolio.
For a longer look at Murray Stahl’s holdings, continue reading here.
This article is written by Marshall Hargrave and edited by Jake Mann. They don't own shares in any of the stocks mentioned in this article. The Motley Fool owns shares of Howard Hughes. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.