Comcast is Eagle Capital’s third largest position. While the company has been consistently criticized by its customers, it remains a cash cow that averages $ 2-3 billion in net income per quarter. The business is also largely recession-proof, which helps increase investor safety margins.

The company also trades at a reasonable valuation, roughly 19.8 times its net income, and currently has a modest return of 1.78%. The stock could be an ideal choice for dividend growth investors. Management’s most recent dividend increase was a confident 9%, while the low payout ratio of 34% should enable a significant increase in the dividend per share going forward.

Eagle Capital has held Comcast since late 2015 with an average purchase price of $ 52. The position was reduced slightly in the quarter., Inc. (AMZN):

Amazon’s fast delivery services have played an important role in ensuring households get their essentials during the ongoing pandemic. At the same time, the company’s internet infrastructure services operated by Amazon Web Services have helped keep the world’s most complex websites running smoothly in an era of high internet traffic.

While Amazon has continued its “perpetual reinvestment of all profits” strategy, the company has also begun generating significant net income, which last quarter was $ 7.22 billion. Despite its relatively high P / E of 65, the company has proven it deserves a high premium, positively surprising investors and analysts alike.

Eagle Capital has held Comcast positions since late 2014. The position was reduced by 5% in the quarter.

Berkshire Hathaway Inc. (BRK-B):

Berkshire, led by legendary investor Warren Buffet, has been known for market returns for several decades. The company’s portfolio has lagged behind the overall market in recent years. However, Berkshire remains an attractive choice for conservative investors looking for asset preservation and low volatility returns.

The company has more than $ 138 billion in cash, which provides a great margin of safety for investors and a great war chest for Mr. Buffet and his team to get any type of elephant deal as well. While the Berkshire portfolio has been unable to produce exceptional returns over the medium term, it should make a compelling investment case for value-minded investors who are not looking to pay dividends.

Since Berkshire is a holding company, a clever way to get additional profits on the stock is to buy it when it trades below book value, much like the March madness last year. Mr Buffet allegedly mentioned that if the stock is trading at a P / E ratio below 1, he will do buybacks, which should bring some additional gains for investors on the way up.

Eagle Capital has held Berkshire since late 2006, which indicates its confidence in Mr. Buffet’s ability to generate superior returns over the long term.

The Goldman Sachs Group, Inc. (GS):

The Goldman Sachs Group is Eagle Capital’s largest pure finance company with a share of around 5% of the total stake. The global wealth manager’s net income has stagnated relatively over the past decade. However, management has given back large chunks of its operating results in the form of buybacks, which has recently boosted EPS, and therefore the stock. Goldman has also been a decent dividend payer, having never cut its payouts since its inception in 1999.

The stock is currently trading at 9.3 times its future earnings and generating a return of 1.5%. Eagle Capital first bought the stock in mid-2011 and has since increased its position at an average price of $ 157. The position was reduced by 3% compared to the previous quarter.

Aon Plc (AON):

Aon provides advice and solutions to clients focused on risk, retirement and health worldwide. The UK-based company is growing slowly but gradually, with annual sales of around $ 11 billion. The company has a long history of consistently paying dividends.

However, management prefers to maintain a comfortable payout ratio. Despite the constant dividend hikes, the payout is quite low and currently assigns a yield below 1%. The stock also trades at around 20 P / E, which is a reasonable metric for its industry.

Aon is one of Eagle Capital’s oldest holdings and initially bought shares in 2010. The fund trimmed its position by 6% in the last quarter. It now owns 3.12% of the entire company.

Marriott International, Inc. (MAR):

Marriott International is Eagle Capital’s eighth largest holding and the largest in the consumer discretionary space. The hospitality industry has suffered tremendously from the ongoing pandemic, but Marriott’s franchise-focused business model is capital-efficient. Therefore, the company does not have to bear any of the actual costs that hotel operators cause, which results in manageable losses.

As a result, stocks have rallied relatively quickly from their previous lows, which also indicates investor confidence in a quick rebound in the tourism and travel industries as well. It is important to note, however, that the company’s dividend is still on hold.

Eagle initially acquired shares in Marriott in 2016. The fact that the stock continues to rank in the top positions despite the ongoing challenges in the industry shows strong conviction about its investment case. The fund owns nearly 4% of the total outstanding shares of Marriott.

UnitedHealth Group Incorporated (UNH):

UnitedHealth Group is America’s second largest healthcare company by market capitalization, with annual sales of nearly $ 250 billion. The company’s health plans are inherently low-margin. However, the company’s massive economies of scale have steadily increased profitability. The company is a solid health care company with a growing dividend and a robust business model.

It is noteworthy that Eagle Capital’s position in the UNH dates back to 2001. During this time, the share has achieved market returns.

Wells Fargo & Company (WFC):

The banking giant Wells Fargo accounts for just under 5% of Eagle Capital’s stakes and is the ninth largest holding. The company recorded severe damage to its financial data in the past year, significantly undercutting its competitors.

Wells Fargo is also caught up in numerous scandals that have not helped either consumer or investor relations. Due to recent pressures, Wells Fargo cut its quarterly dividend by 80% in 2020. The stock trades at a relatively reasonable valuation, but at 15 times its future earnings.

Eagle opened a position in Wells Fargo in 2017 and accumulated its position at an average price of $ 40, meaning the fund is still sitting on unrealized gains despite the stock’s decline. The position was reduced by 3% in the quarter.

Facebook is Eagle Capital’s tenth largest holding. The $ 1.5 billion position represents 4.6% of the total portfolio. Despite the company’s unique ability to build a negative reputation, its financials are world class, with hefty margins and positive catalysts. The company has no long-term debt on its balance sheet and $ 62 billion in cash to fuel its future endeavors.

The ongoing pandemic has improved social media metrics and user engagement, which has attracted more advertisers and increased Facebook’s sales. The company hit all-time highs of $ 28.07 billion and $ 11.2 billion, respectively. Facebook continues to be one of the cheapest-rated growth stocks that still has over 20% revenue growth but trades at a forward P / E of just 25.

Facebook has been part of the Eagle Capital portfolio since 2018. The position was trimmed 4% from the previous quarter, similar to most of Eagle’s positions during the period.

Final thoughts

Eagle Capital’s philosophy and investment strategy are not revolutionary, but they provide the blueprint for long-term sustainable returns. With strong stocks among its top positions, the fund should continue to perform well over time. You can take advantage of the 13F filings, access the fund’s well-researched positions, and possibly consider some of them for yourself after additional due diligence.

Additional resources:

35 Appaloosa Management’s equity portfolio: Top 10 of the analyzed investments

75 Viking Global Stock Portfolio: Top 10 stocks analyzed

37 Lone Pine Capital’s equity portfolio: Top 10 of the analyzed investments

20 Slate Path Capital Stock Portfolio: Top 10 stocks analyzed

26 Akre Capital’s equity portfolio: Top 10 holdings analyzed


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