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Top 10 Stocks in Mason Hawkins’ Portfolio: MGM, Baidu, and More

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·15 min read
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In this article, we discuss the top 10 stocks in Mason Hawkins' portfolio. If you want to skip our detailed analysis of Hawkins' history, investment philosophy, and hedge fund performance, go directly to Top 5 Stocks in Mason Hawkins' Portfolio: MGM, Baidu, and More.

Renowned value investor Mason Hawkins is the founder, chairman, and chief executive officer of Tennessee-based investment fund, Southeastern Asset Management. After earning his B.A. in Finance from the University of Florida and his M.B.A in Finance from the University of Georgia, Mason Hawkins began his long career in investment management, earning over 49 years of valuable investment experience. Prior to founding Southeastern in 1975, Hawkins served as Director of Research at both, the Atlantic National Bank in Jacksonville and First Tennessee Investment Management in Memphis. Mason Hawkins also serves as co-portfolio manager of Longleaf Partners Small-cap Funds.

According to the most recent 13F filings, Southeastern Asset Management, as an investment firm, manages more than $4.97 billion in its investment portfolio. Southeastern Asset Management's portfolio is diversified across 8 key sectors, with the Communications Services sector being the largest one. A majority of the companies in the fund’s portfolio are large-cap companies with stocks scaling up to more than $10 billion in market capitalization, making up 21% of the fund’s total value.

Some of the top stocks present in the investment portfolio of Southeastern Asset Management at the end of the second quarter of 2021 include General Electric Co. (NASDAQ:GE), Baidu Inc. (NASDAQ:BIDU), Alibaba Group Holdings Limited (NASDAQ:BABA) and Comcast Corporation (NASDAQ:CMCSA), among others discussed in detail below.

Top 10 Stocks in Mason Hawkins' Portfolio: MGM, Baidu, and More
Top 10 Stocks in Mason Hawkins' Portfolio: MGM, Baidu, and More

Mason Hawkins of Southeastern Asset Management

Our Methodology

With this background in mind, let us now look towards some of the top stocks in Southeastern Asset Management's portfolio. We made use of Southeastern Asset Management's 13F portfolio for the second quarter for this analysis.

Why should we pay attention to Mason Hawkins' stock picks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

Mason Hawkins' Portfolio: MGM, Baidu and More

10. Lazard Ltd (NYSE:LAZ)

Hawkins' Stake Value: $224.7 million

Percentage of Mason Hawkins' 13F Portfolio: 4.51%

Number of Hedge Fund Holders: 18

Lazard Ltd (NYSE:LAZ) is a financial advisory and asset management company that operates in North America, Europe, Asia, Australia and South America. The company ranks tenth on our list of the top 10 stocks in Mason Hawkins' portfolio.

In the second quarter of 2021, Lazard Ltd (NYSE:LAZ) reported earnings per share of $1.28, beating estimates by $0.40. The company’s revenue was reported to be $821.45 million, an increase of 51.30% on a year-over-year basis, beating estimates by $163.27 million.

Mason Hawkins' Southeastern Asset Management currently holds over 4.96 million shares of Lazard Ltd (NYSE:LAZ), amounting to over $224.7 million in worth and representing 4.51% of the fund's portfolio. By the end of the second quarter of 2021, 18 hedge funds out of the 873 tracked by Insider Monkey held stakes in Lazard Ltd (NYSE: LAZ) worth roughly $785 million. This is compared to 19 hedge funds in the previous quarter with a total stake value of approximately $770 million.

On April 7, Morgan Stanley’s Manan Gosalia raised his price target on the Lazard Ltd (NYSE:LAZ) from $52 to $61, and upgraded the shares from Equal Weight to Overweight.

Just like General Electric Co. (NASDAQ:GE), Baidu Inc. (NASDAQ:BIDU), Alibaba Group Holdings Limited (NASDAQ:BABA) and Comcast Corporation (NASDAQ:CMCSA), Lazard Ltd (NYSE:LAZ) is one of the top stocks in Mason Hawkins' portfolio.

Third Avenue Management, an investment management firm, mentioned Lazard Ltd (NYSE: LAZ) in its Q4 2020 investor letter. Here is what the fund said:

Lazard Ltd. (“Lazard”) – During the quarter, the Fund initiated a position in Lazard, which houses two distinct businesses – financial advisory and asset management. Lazard is one of the formidable competitors in the global financial advisory industry, though Lazard is not involved in investment banking lines of business which are balance sheet-intensive or those which take on credit risk. Lazard’s advisory business is the world’s fifth largest by revenues, putting the company’s advisory business on par with those of far larger companies, such as Bank of America and Citi. Meanwhile, Lazard’s advisory revenues are meaningfully larger than the likes of Credit Suisse and UBS. While advisory revenues represent a low single-digit percentage of revenues for those peers, the figure is slightly more than 50% for Lazard. One further point of attraction for Lazard’s advisory business is its sterling reputation in restructuring advisory, which often shines in challenging environments in which insolvencies and near-insolvencies rise. The remaining portion of Lazard’s revenue is derived from the company’s asset management business, which operates completely independent of the advisory business and at last report had approximately $248 billion of assets under management. Lazard’s assets under management are focused on several niches in active management commanding management fees at the higher end of the industry, and the performance of its strategies has been sufficiently strong to have generated inflows of late, an unusual accomplishment for an active manager. The company in total is very well-capitalized and has a long history of controlling the relationship between compensation, its primary expense, and revenue. We believe that our purchase price implies a modest multiple of current operating earnings and that the operating environment can certainly improve, most likely as M&A activity continues to accelerate, but from other sources as well. External to the company however, it is clear that there are a number of companies that would almost certainly be very eager to purchase one or both of Lazard’s businesses. Consolidation is rampant in the asset management industry and several purchases of asset management companies of similar size to Lazard, though arguably of lower quality, have been announced recently. Separately, several European investment banks, including ones named earlier in this paragraph, have publicly declared a desire to grow their advisory businesses, especially in cross-border M&A capabilities, which is a core competency within Lazard. Using conservative estimates of prices we believe could be realized in the sale of Lazard’s businesses, the current share price appears to meaningfully undervalue the company.”

9. Affiliated Managers Group, Inc. (NYSE:AMG)

Hawkins' Stake Value: $233 million

Percentage of Mason Hawkins' 13F Portfolio: 4.68%

Number of Hedge Fund Holders: 30

Affiliated Managers Group, Inc. (NYSE:AMG) operates as an international investment management company. Based in Florida, the firm provides investment management and counseling services to individuals with a high net worth and charitable foundations. The investment company is ranked ninth on the list of the top 10 stocks in Mason Hawkins' portfolio.

On July 28, Affiliated Managers Group, Inc. (NYSE:AMG) issued its quarterly earnings report for the second quarter of 2021, with reported earnings per share at $4.03, beating market estimates by $0.18. The company also generated revenues amounting to over $586.30 million, surpassing estimated revenues by $20.22 million.

At present, Southeastern Asset Management holds more than 1.5 million shares of Affiliated Managers Group, Inc. (NYSE:AMG), worth $233 million and accounting for 4.68% of the fund's total portfolio value. By the end of the second quarter of 2021, 30 hedge funds out of the 873 tracked by Insider Monkey held stakes in Affiliated Managers Group, Inc. (NYSE:AMG) worth roughly $784.7 million, up from 26 hedge funds in the previous quarter with a total stake value of approximately $725 million.

On July 12, Deutsche Bank analyst Brian Bedell upgraded Affiliated Managers Group, Inc. (NYSE:AMG) to Buy from Hold with a price target of $202, up from $167.

Just like General Electric Co. (NASDAQ:GE), Baidu Inc. (NASDAQ:BIDU), Alibaba Group Holdings Limited (NASDAQ:BABA) and Comcast Corporation (NASDAQ:CMCSA), Affiliated Managers Group, Inc. (NYSE:AMG) is a notable stock in Mason Hawkins' portfolio.

In their Q1 2021 Investor Letter, Longleaf Partners Fund highlighted a few stocks and Affiliated Managers Group Inc. (NYSE:AMG) was one of them. Here is what the fund said:

“Affiliated Managers Group (46%, 2.68%), the diversified asset management holding company, was also a top contributor. Our appraised value increased nicely, driven by a 10% growth in AUM to $716 billion and a massive share repurchase (22% of shares outstanding annualized) to take advantage of the stock’s depressed FCF multiple. The market fixated on AMG’s net outflows last year, but 95% of flows came from quantitative strategies that only contribute around 3% of AMG’s proportionate EBITDA due to their lower average fees and ownership interest. The other 97% of AMG is performing very well, particularly the company’s private market strategies, wealth management and specialty fixed income. AMG also added two new opportunistic acquisitions with Boston Common Asset Management and Jackson Square Partners.”

8. MGM Resorts International (NYSE:MGM)

Hawkins' Stake Value: $239.7 million

Percentage of Mason Hawkins' 13F Portfolio: 4.81%

Number of Hedge Fund Holders: 59

MGM Resorts International (NYSE:MGM) is an entertainment company based in Nevada that owns and operates destination hotel resorts and casinos. Ranked eighth on the list of the top 10 stocks in Mason Hawkins' portfolio, MGM Resorts International (NYSE:MGM) has a market capitalization of $20.91 billion.

According to the recent 13F Filings, Mason Hawkins' Southeastern Asset Management holds over 5.62 million shares of MGM Resorts International (NYSE:MGM), amounting to $239.7 million and representing 4.81% of the fund's total investment portfolio. By the end of the second quarter of 2021, 59 hedge funds out of the 873 tracked by Insider Monkey held stakes in MGM Resorts International (NYSE:MGM) worth roughly $2.88 billion, up from 57 hedge funds in the preceding quarter with a total stake value of over $2.7 billion.

By the end of the second quarter of 2021, MGM Resorts International (NYSE:MGM) reported EPS of -$0.13, beating estimates by $0.24. The company’s revenue was reported to be $2.27 billion, an increase of 682.57% on a year-over-year basis, beating estimates by $99.02 million.

On September 28, investment advisory Bank of America kept a Neutral rating on MGM Resorts International (NYSE:MGM) stock but raised the price target to $48 from $46.

In its Q2 2021 investor letter, Oakmark Funds, an asset management firm, highlighted a few stocks and MGM Resorts International (NYSE:MGM) was one of them. Here is what the fund said:

“We originally established our position in MGM during 2016. At that time, we believed its valuation did not reflect the improving fundamentals of the Las Vegas Strip, which was recovering from years of overbuilding. The market had also failed to recognize the quality of MGM’s assets and its potential to dramatically reduce a bloated cost structure. A long history of private market transaction activity further supported our view that the stock was materially undervalued. However, choppy execution by former management and a profit growth plan that failed to live up to expectations made this a bumpy (yet rewarding!) investment for Oakmark. Perhaps the biggest surprise relative to our initial thesis is the momentum and excitement surrounding the online sports gambling market. The company’s BetMGM platform has quickly staked the third-largest market position in online sports betting with plans to capture up to 25% of this $30+ billion market, which continues to grow rapidly. The exuberance surrounding digital gaming, coupled with expectations for a strong post-pandemic recovery in Las Vegas, has lifted the stock price to our estimate of intrinsic value. Therefore, we sold our shares in favor of more attractively priced alternatives.”

FedEx Corporation (NYSE:FDX)

Hawkins' Stake Value: $252.4 million

Percentage of Mason Hawkins' 13F Portfolio: 5.07%

Number of Hedge Fund Holders: 61

FedEx Corporation (NYSE:FDX) is an American multinational conglomerate holding company which focuses on transportation, e-commerce and business services. Based in Memphis, Tennessee, the company is ranked seventh on the list of the top 10 stocks in Mason Hawkins' portfolio.

Mason Hawkins' hedge fund presently holds 846,047 shares of FedEx Corporation (NYSE:FDX), worth $252.4 million and representing 5.07% of the fund's total investment portfolio. At the end of the second quarter of 2021, 61 hedge funds in the database of Insider Monkey held stakes worth $2.17 billion in FedEx Corporation (NYSE:FDX), down from 63 in the previous quarter worth $2.26 billion.

For the second quarter of 2021, FedEx Corporation (NYSE:FDX) reported earnings per share at $4.83, crossing estimates by $0.82. Additionally, the company also reported generating revenues at $20.56 billion, an increase of 18.70% on a year-over-year basis, and beating market predictions by $1.12 billion.

On September 23, Argus analyst John Eade lowered the his price target on FedEx Corporation(NYSE:FDX) to $270 from $330 but kept a Buy rating on the shares.

Just like General Electric Co. (NASDAQ:GE), Baidu Inc. (NASDAQ:BIDU), Alibaba Group Holdings Limited (NASDAQ:BABA) and Comcast Corporation (NASDAQ:CMCSA), FedEx Corporation (NYSE:FDX) is one of the top stocks present in Mason Hawkins' portfolio.

Artisan Partners, in its Q1 2021 investor letter, mentioned FedEx Corporation (NYSE: FDX). Here is what the fund had to say:

“Whatever products did make it off the line met a constrained logistics infrastructure, with commercial air capacity cut and ship cargo space at a premium. Then, in the event your dishwasher part actually made it to US waters, our ports were congested due to manpower shortages and COVID-19 protocols. When the goods were finally unloaded, it turns out trucking shortages caused a spike in ground rates! All this might be bad for your dinner parties, home décor or exercise goals, but it can be great for the middlemen. Middlemen like logistics expert FedEx.

FedEx provides global logistics services. It gets your dishwasher part on a truck, or that semiconductor chip on a plane. Surging demand for at-home deliveries during the pandemic boosted volumes and allowed management to push through price increases, keeping competitive with industry peers. The industry’s renewed pricing discipline was a welcome change, reflecting a broader commitment to earn better returns on invested capital. Despite a significant re-rating of the business over the last 12 months, FedEx remains attractive based on our margin of safety criteria.”

6. Comcast Corporation (NASDAQ:CMCSA)

Hawkins' Stake Value: $265 million

Percentage of Mason Hawkins' 13F Portfolio: 5.32%

Number of Hedge Fund Holders: 84

Comcast Corporation (NASDAQ:CMCSA) is a multinational entertainment company based in Philadelphia that provides Cable TV, high-speed internet and home phone services to its customers. The telecommunications conglomerate has a market capitalization of $257.48 billion, and is ranked sixth on the list of the top 10 stocks in Mason Hawkins' portfolio.

The company released its quarterly earnings report for the second quarter of 2021 on July 29, with reported earnings per share at $0.84, surpassing estimates by $0.17. The reported revenues for the quarter came in at $28.55 billion, beating estimated revenues by $1.37 billion.

Mason Hawkins' Southeastern Asset Management currently holds over 4.64 million shares of Comcast Corporation (NASDAQ:CMCSA), amounting to over $265 million in worth and representing 5.32% of the fund's portfolio. By the end of the second quarter of 2021, 84 hedge funds out of the 873 tracked by Insider Monkey held stakes in Comcast Corporation (NASDAQ:CMCSA) worth roughly $9.3 billion. This is compared to 88 hedge funds in the previous quarter with a total stake value of approximately $9.76 billion.

On September 29, Pivotal Research analyst Jeffrey Wlodarczak raised the his price target on Comcast Corporation (NASDAQ:CMCSA) to $75 from $72 and kept a Buy rating on the shares.

In the Q2 2021 investor letter of ClearBridge Investments, the fund mentioned Comcast Corporation (NASDAQ:CMCSA). Here is what they said:

“We funded the shift primarily with trims in Comcast following big gains in this name. Comcast is a long-term holding that have been and remain core holdings. During the quarter, however, we took gains and resized the positions to reflect their current risk-reward post strong increases in the stocks.

Comcast, like Blackstone, has been a meaningful long-term holding whose stock performance has at times lagged its robust fundamental performance. Over the last nine months the stock price caught up some with the fundamentals and looked like it had more room to run. Our thesis on the name evolved, however, following the May 17 announcement that competitor Discovery was merging its operations with Time Warner. This deal positions the new company as a credible competitor to Netflix, Amazon Prime, Hulu and Disney, and results in Comcast being left without the proverbial dance partner in the evolving pay TV/DTC landscape. While we continue to believe Comcast’s cable systems business is well-positioned and that NBCUniversal remains valuable, the competitive dynamic for NBCUniversal has stiffened. Our reduced position size reflects both our continued enthusiasm for many parts of the franchise and emerging concerns given the evolving pay TV/DTC landscape.”

Click to continue reading and see Top 5 Stocks in Mason Hawkins' Portfolio: MGM, Baidu and More.

Disclosure: None. Top 10 Stocks in Mason Hawkins' Portfolio: MGM, Baidu and More is originally published on Insider Monkey.