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10 Best Stocks to Buy Now According to Tom Gayner’s Markel Gayner Asset Management

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·12 min read
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In this article, we discuss 10 best stocks to buy now according to Tom Gayner's Markel Gayner Asset Management. If you want to skip our detailed analysis of Gayner's history, investment philosophy, and hedge fund performance, go directly to 5 Best Stocks to Buy Now According to Tom Gayner's Markel Gayner Asset Management.

Markel Corporation's co-chief executive officer is Thomas "Tom" Gayner. He joined Markel in 1990 and founded Markel Gayner Asset Management, which offered equity investment advice to both Markel and outside customers. Gayner graduated from the University of Virginia with a bachelor's degree in commerce in 1983. Since 2004, Gayner has been the chairman of the board of Davis Series Mutual Funds. He also serves on the boards of Cable One, Inc. (NYSE: CABO), Graham Holdings Company (NYSE:GHC), and Colfax Corporation (NYSE:CFX).

Markel Gayner Asset Management is a large advisory firm. Between 2000 and 2009, Markel's equity portfolio returned 11.1% per year. Even though Thomas Gayner's fund lost 3.5% on its shares in 2018, it still outperformed the S&P 500, which lost 4.4%. Over the previous three decades, the fund has outpaced the S&P 500 index by more than 100 basis points.

Tom Gayner of Markel Gayner Asset Management manages an $8.39 billion Q1 portfolio with a top 10 holdings concentration of 43.72%. In the first quarter of 2022, the hedge fund invested in the finance, consumer discretionary, industrials, technology, information technology, services, consumer staples, consumer goods, health care, and materials sectors. Some of the most notable stocks in Markel Gayner Asset Management’s Q1 portfolio are Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Meta Platforms, Inc. (NASDAQ:FB).

Apple Inc. (NASDAQ:AAPL) is one of the large-cap stocks in Markel Gayner Asset Management’s portfolio. Shares of Apple Inc. (NASDAQ:AAPL) rallied 17.30% in the last 12 months as of May 17, resulting in a $2.381 trillion market capitalization.

10 Best Stocks to Buy Now According to Tom Gayner's Markel Gayner Asset Management
10 Best Stocks to Buy Now According to Tom Gayner's Markel Gayner Asset Management

Tom Gayner of Markel Gayner Asset Management

A notable company in Tom Gayner's portfolio is the tech giant Microsoft Corporation (NASDAQ:MSFT). On April 27, Wolfe Research analyst Alex Zukin boosted his price objective on Microsoft Corporation (NASDAQ:MSFT) from $330 to $350 and maintained an Outperform rating.

Markel Gayner Asset Management also owns 163,400 shares of the multinational technology conglomerate, Meta Platforms, Inc. (NASDAQ:FB). Following quarterly earnings, Oppenheimer analyst Jason Helfstein maintained an Outperform rating and a $305 price target on Meta Platforms, Inc. (NASDAQ:FB).

Our Methodology

For this analysis, the data used for the list was taken from Tom Gayner's 13F holdings as of Q1 2022. Using Insider Monkey's database of 900+ elite hedge funds, we obtained the hedge fund sentiment on the stocks in the fourth quarter of 2021.

Best Stocks to Buy Now According to Tom Gayner's Markel Gayner Asset Management

10. Visa Inc. (NYSE:V)

Markel Gayner Asset Management’s Stake Value: $213,144,000

Markel Gayner Asset Management’s 13F Portfolio: 2.53%

Number of Hedge Fund Holders: 142

Visa Inc. (NYSE:V) is a payments technology firm that works worldwide. As of Q4 2021, 142 hedge funds tracked by Insider Monkey reported owning stakes in Visa Inc. (NYSE:V), down from 143 in the previous quarter. The total value of these stakes was over $29.30 billion.

Securities filings for the first quarter of 2022 reveal that Tom Gayner's Markel Gayner Asset Management owned 961,105 shares of Visa Inc. (NYSE:V), worth $213.14 million, representing 2.53% of the total 13F portfolio. The hedge fund increased its Visa Inc. (NYSE:V) stake by 1% in the first quarter.

Christopher Donat of Piper Sandler lowered Visa Inc. (NYSE:V) from Overweight to Neutral on April 29, with a price objective of $239, down from $283. The analyst attributed the downgrading to macroeconomic problems, particularly in Europe. Donat expressed concern that Europe might enter a recession in 2023, which would be bad news for payment transactions that are a big source of revenue for both Mastercard Incorporated (NYSE:MA) and Visa Inc. (NYSE:V).

Like major large-cap companies such as Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Meta Platforms, Inc. (NASDAQ:FB), Tom Gayner's Markel Gayner Asset Management is also paying attention to Visa Inc. (NYSE:V).

Wedgewood Partners talked about Visa Inc. (NYSE:V) in its Q1 2022 investor letter. Here’s what the fund said:

“Visa continued to benefit from strong consumer spending as well as a recovery in crossborder payment volumes, more recently driven by the return of travelers. While the emergence of the “Omicron” variant of COVID early in the quarter posed a risk to this travel recovery, it proved short-lived, with most of Europe, North America, and Latin American reengaging in cross-border travel. Visa continues to extend its network to all comers. By processing over $10 trillion in volume per year, Visa has unparalleled scale and, as a result, can sell this scale to its customers at very attractive economics. For example, “FinTech” businesses will often charge customers upwards of 3-5% to transact, while Visa takes mere basis points on most transactions, despite enabling service levels historically reserved for only the largest financial institutions. After adding to Visa late last year, we are most pleased that Visa is back to one of our top 5 holdings.”

9. The Walt Disney Company (NYSE:DIS)

Markel Gayner Asset Management’s Stake Value: $263,713,000

Markel Gayner Asset Management’s 13F Portfolio: 3.14%

Number of Hedge Fund Holders: 111

In the first quarter earnings published on May 11 by The Walt Disney Company (NYSE:DIS), a global entertainment conglomerate, the EPS totaled $1.08, missing the analysts’ forecasts by $0.11. The $19.24 billion revenue jumped 23.3% year-over-year, missing estimated revenue by $800 million.

On May 13, Barclays analyst Kannan Venkateshwar cut his price objective on The Walt Disney Company (NYSE:DIS) from $168 to $130 while maintaining an Equal Weight rating. The unpredictability of quarterly patterns across businesses, the economic situation, and high benchmarks, according to Venkateshwar, may continue to push down The Walt Disney Company (NYSE:DIS)'s "value floor."

According to Insider Monkey’s Q4 data, 111 hedge funds were bullish on The Walt Disney Company (NYSE:DIS), compared to 101 funds in the prior quarter. Ric Dillon’s Diamond Hill Capital is a prominent stakeholder of The Walt Disney Company (NYSE:DIS), with a position worth $571.75 million.

Markel Gayner Asset Management elevated its position in The Walt Disney Company (NYSE:DIS) by 3% in Q1 2022, holding more than 1.92 million shares worth over $263.71 million. The stock accounted for 3.14% of the fund’s total 13F portfolio.

ClearBridge Investments, in its Q4 2021 investor letter, mentioned The Walt Disney Company (NYSE:DIS). Here is what the fund said:

“The communication services sector was a weak spot in both the benchmark and the portfolio in the fourth quarter. Disney announced lower than expected streaming subscriber growth to the company’s Disney+ offering, attributable primarily to the content release schedule. Disney has been ramping up content spending given strong global response to Disney+, although production capability was temporarily impacted by COVID-19. We still believe Disney is on track to reach the subscriber outlook outlined at its December 2020 analyst day, driven by a very robust slate of content releases, particularly in the 2022–2024 time period.”

8. Diageo plc (NYSE:DEO)

Markel Gayner Asset Management’s Stake Value: $274,281,000

Markel Gayner Asset Management’s 13F Portfolio: 3.26%

Number of Hedge Fund Holders: 19

Diageo plc (NYSE:DEO) is a company that manufactures and distributes alcoholic drinks. Tom Gayner first began investing in Diageo plc (NYSE:DEO) in the fourth quarter of 2010. Tom Gayner's Markel Gayner Asset Management held 1.35 million shares of Diageo plc (NYSE:DEO) in the first quarter of 2022, which amounted to $274.28 million. Diageo plc (NYSE:DEO) occupied 3.26% of the hedge fund’s total portfolio.

Diageo plc (NYSE:DEO) was downgraded to Hold from Buy by Deutsche Bank analyst Mitch Collett on April 27, with a price objective of 3,900 GBp, down from 4,650 GBp. According to the researcher, beer producers are less vulnerable to wider economic issues, whereas spirits producers are more vulnerable.

Overall, hedge funds are loading up on Diageo plc (NYSE:DEO), as 19 out of the 924 funds tracked by Insider Monkey held stakes in the company in Q4, up from 18 funds a quarter earlier. Nicolai Tangen’s Ako Capital is one of the most significant stakeholders of Diageo plc (NYSE:DEO) as of Q1 2022, holding 1.68 million shares worth almost $341.62 million.

Here is what Lindsell Train has to say about Diageo plc (NYSE:DEO) in its Q4 2021 investor letter:

“A very important aspect of the rationale for investing in this smaller and more rarefied category is the fact that alcohol brands with a premium or luxury positioning tend to be highly differentiated, with a greater ability to increase prices over time than a “value” or mass market brand – even in downturns or periods of turbulence. Over time, these inflation-busting protective qualities usually result in considerable value creation: in January this year, against a backdrop of a sharp increase in input cost prices, Diageo reported increased operating profit margins – crucially, driven by price increases rather than cost savings – and indicated an expectation of operating profit growth of between 6 and 9% to 2025. Such an outlook would not be possible without a portfolio of beverages enjoying substantial pricing power.” (Click here to see the full text)

7. The Home Depot, Inc. (NYSE:HD)

Markel Gayner Asset Management’s Stake Value: $275,384,000

Markel Gayner Asset Management’s 13F Portfolio: 3.28%

Number of Hedge Fund Holders: 68

The Home Depot, Inc. (NYSE:HD) is a retailer of home improvement products. Citi analyst Steven Zaccone decreased his price objective on The Home Depot, Inc. (NYSE:HD) to $327 from $377 on May 13 and maintained a Buy rating on the stock ahead of the first-quarter earnings. The analyst modified his “Bear Case scenarios” to account for increasing recession risk at nine retailers and issued a proactive first drop at fiscal 2023 profit forecasts.

Markel Gayner Asset Management started investing in The Home Depot, Inc. (NYSE:HD) during the fourth quarter of 2010. In Q1 2022, the hedge fund held 920,000 shares in The Home Depot, Inc. (NYSE:HD) worth over $275.38 million, representing 3.28% of its portfolio.

By the end of Q4 2021, 68 hedge funds tracked by Insider Monkey were bullish on The Home Depot, Inc. (NYSE:HD), holding stakes worth $6.09 billion. In the previous quarter, 58 hedge funds held stakes in the company worth $4.38 billion. Billionaire Ken Fisher of Fisher Asset Management is the most prominent stakeholder of The Home Depot, Inc. (NYSE:HD) as of Q1 2022, with more than 8.13 million shares worth $2.44 billion.

Ensemble Capital, an investment management firm, in its Q1 2022 investor letter mentioned The Home Depot, Inc. (NYSE:HD). Here is what the fund said:

"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.”

6. Deere & Company (NYSE:DE)

Markel Gayner Asset Management’s Stake Value: $314,005,000

Markel Gayner Asset Management’s 13F Portfolio: 3.74%

Number of Hedge Fund Holders: 61

Deere & Company (NYSE:DE) is a global manufacturer and distributor of different equipment. Production and Precision Agriculture, Small Agriculture and Turf, Construction and Forestry, and Financial Services are the company's four segments. Jean-Marie Eveillard’s First Eagle Investment Management is one of the leading shareholders of Deere & Company (NYSE:DE) as of Q1, with 984,517 shares amounting to $409.03 million.

According to Insider Monkey, Deere & Company (NYSE:DE) was found in the public stock portfolios of 61 hedge funds at the end of December 2021, compared to 54 funds the previous quarter. Securities filings for Q1 2022 reveal that Tom Gayner's Markel Gayner Asset Management held 755,800 shares of Deere & Company (NYSE:DE), worth $314.01 million, representing 3.74% of the total 13F securities.

BofA analyst Ross Gilardi lowered Deere & Company (NYSE:DE) to Neutral from Buy on April 25, with a $450 price target, down from $475. While dealer sentiment was positive in Gilardi's bi-annual farm equipment survey, he noted some concern regarding order patterns owing to fertilizer shortages.

Along with Deere & Company (NYSE:DE), Tom Gayner's Markel Gayner Asset Management is also paying attention to stocks such as Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Meta Platforms, Inc. (NASDAQ:FB).

Here is what ClearBridge Investments has to say about Deere & Company (NYSE:DE) in its first quarter 2021 investor letter:

“Industrials holding Deere (NYSE:DE) was also a strong contributor to performance during the quarter. Through its unmatched 5,000 dealer network across 160 countries, Deere is a major global player in agricultural, construction and forestry equipment, with a particularly dominant position in U.S. agriculture. Deere’s moat around its core equipment capabilities, coupled with years of substantial investments in technology and innovation, further extends its competitive advantage into precision agriculture, which allows for higher farm yields with lower use of fertilizers, pesticides and water, thereby improving farmers’ bottom lines while reducing their environmental footprint. In addition to drought conditions in Latin America, the war between Russia and Ukraine, two major exporters of corn and wheat, is further disrupting the global agricultural commodities market and pushing prices even higher. This should mean higher farmer revenues and greater demand for Deere’s equipment, which is further supported by some of the lowest levels of inventory of new and used equipment on record.”

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Disclosure: None. 10 Best Stocks to Buy Now According to Tom Gayner's Markel Gayner Asset Management is originally published on Insider Monkey.