Robert Pitts’ Steadfast Capital Portfolio: 10 Dividend Stock Picks

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In this article, we discuss 10 dividend stocks in Robert Pitts’ portfolio. You can skip our detailed analysis of Steadfast Capital’s investment strategy and its past performance, and go directly to read Robert Pitts’ Steadfast Capital’s Portfolio: 5 Dividend Stock Picks

Robert Pitts Jr. is one of the Tiger Cubs who started working with Julian Robertson’s Tiger Management before launching his independent hedge fund. In 1997, he founded Steadfast Capital Management, a New York-based privately owned investment management firm. It is a long-short equity firm that focuses on fundamental bottom-up research to create value for investors. The hedge fund invests in both public and private markets and provides services in venture capital and financial management.

Working under Robertson’s tutelage, Pitts inherited his philosophies and strategies for creating a top-scoring hedge fund. Over the years, his fund generated stable returns for the shareholders, maintaining the tiger cub tradition. From 1997 to 2019, the firm’s average annual return stood at 12.04%.

Robert Pitts always keeps his portfolio diverse, with his investments scattered around various sectors. As of the end of the first quarter, the fund has a 13F portfolio valued at $5.8 billion, down from $5.9 billion in the previous quarter. As tech stocks are tumbling in 2022 and NASDAQ is down 32.7% year-to-date as of June 16, the fund reduced its position in major tech stocks, such as Microsoft Corporation (NASDAQ:MSFT) and Amazon.com, Inc. (NASDAQ:AMZN) by 1% and 35%, respectively.

Photo by Dan Dennis on Unsplash

Our Methodology: 

In this article, we discuss 10 dividend stocks in Robert Pitts’ portfolio. For this list, we considered data from Steadfast Capital’s 13F portfolio as of Q1 2022.

10. The Mosaic Company (NYSE:MOS)

Steadfast Capital’s Stake Value: $38,426,000

Dividend Yield as of June 16: 1.17%

Number of Hedge Fund Holders: 66

The Mosaic Company (NYSE:MOS) is a Florida-based agricultural company that mines phosphate and potash and collects urea for fertilizer. The company is one of America’s largest producers of potash and phosphate fertilizers. Though the company reported earnings miss on various accounts in Q1, its quarterly revenue showed a 71.2% year-over-year growth at $3.92 billion. Moreover, potash and phosphate operating earnings stood at $563 million and $493 million, respectively.

On May 19, The Mosaic Company (NYSE:MOS) announced a quarterly dividend of $0.15 per share, up 33.3% from the previous dividend. The stock’s dividend yield came in at 1.17%, as of the close of June 16. In its May investors’ note, Piper Sandler mentioned that The Mosaic Company (NYSE:MOS) can benefit from elevated grain prices and lifted its price target on the stock to $85, with an Overweight rating on the shares.

The Mosaic Company (NYSE:MOS) is one of the latest acquisitions of Steadfast Capital. The hedge fund started building its position in the company with 577,840 shares, valued at over $38.4 million. The company represented 0.65% of Robert Pitts’ portfolio.

At the end of March 2022, the number of hedge funds tracked by Insider Monkey holding stakes in The Mosaic Company (NYSE:MOS) jumped to 66, from 46 in the previous quarter. The consolidated value of these stakes is over $1.53 billion. Soroban Capital Partners held the largest stake in the company, worth $328.3 million.

Unlike blue-chip tech stocks, such as Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN), The Mosaic Company (NYSE:MOS) is up 26.7% year-to-date due to the growing demands for fertilizers.

Ariel Investments mentioned The Mosaic Company (NYSE:MOS) in its Q4 2021 investor letter. Here is what the firm has to say:

“We continue to believe recent aggressive fiscal and monetary policy will drive high levels of intransient (rather than transitory) inflation. Recent inflation numbers have exceeded our hawkish predictions. While we believed the Consumer Price Index might rise +4% in 2021, double the Fed target of +2%; it rose +7%, the highest level in forty years. Ariel Focus Fund has been well positioned for this environment as natural resource and material companies such as The Mosaic Company (MOS) which returned +72.15% for the year. This was one of our two largest holdings at year-end and have performed well very early into 2022.”

9. Baker Hughes Company (NASDAQ:BKR)

Steadfast Capital’s Stake Value: $61,981,000

Dividend Yield as of June 16: 2.40%

Number of Hedge Fund Holders: 39

Baker Hughes Company (NASDAQ:BKR) is one of the world’s largest oil field services companies, deploying technological advancements in its operations to provide energy and industry-related services to its consumers. In the first quarter of 2022, the company reported a 51% year-over-year growth in its orders at $6.8 billion. However, its EPS of $0.15 missed market estimates by $0.05.

On June 8, Barclays lifted its price target on Baker Hughes Company (NASDAQ:BKR) to $47, with an Overweight rating on the shares, noting that the global energy demands are expected to increase. The firm further mentioned that the company can face supply chain issues due to the ongoing geopolitical situation. On May 17, Baker Hughes Company (NASDAQ:BKR) declared a quarterly payout of $0.18 per share, with a dividend yield of 2.40%, as of June 16’s close. The company hasn’t been able to increase its dividend for quite some time now but managed to sustain its payouts over the years.

Steadfast Capital initiated its position in Baker Hughes Company (NASDAQ:BKR) during Q1 2022, purchasing over 1.7 million shares, worth roughly $62 million. The company represented 1.06% of Robert Pitts’ portfolio.

According to Insider Monkey’s Q1 2022 database, 39 hedge funds reported owning stakes in Baker Hughes Company (NASDAQ:BKR), valued at $936.1 million. In the previous quarter, 35 hedge funds held a $747.8 million worth of stake in the Texas-based company.

Sound Shore Management mentioned Baker Hughes Company (NASDAQ:BKR) in its recently published investor letter. Here is what the firm has to say:

“Energy was the best performing sector which was reflected in our top contributors. Energy technology provider Baker Hughes finished higher, driven by stronger than expected order growth in its liquid natural gas (LNG) turbo-machinery segment and increasing global rig count. Both companies have strong balance sheets with little debt and are returning capital via dividends and stock repurchases. Soaring energy prices and Europe’s unfortunate reliance on Russian supply reinforced our belief that low cost natural gas is both a strategic and economic advantage for the United States. Over the last several years, the pandemic, supply disruptions and lack of investment, along with extreme weather conditions had already driven prices higher. Still, natural gas is expected to play a critical role in the transition to renewable energy sources and these two investments benefit from the increased demand.

Baker is the dominant player in LNG projects and its growing backlog is a positive indicator of how this business may drive future earnings. They are also a leader in carbon capture technology and the development of hydrogen as a clean, alternative fuel source. Carbon capture technology is considered critical to delivering CO2 reductions needed to meet global climate and net-zero emissions targets. Applicable to both the energy and industrial sectors, carbon capture is among the most promising de-carbonization solutions for both existing facilities and new greenfield projects. We were able to purchase the stock at a below normal valuation and an attractive 8% free cash flow yield and we remain positive on its future prospects.”

8. CSX Corporation (NASDAQ:CSX)

Steadfast Capital’s Stake Value: $67,647,000

Dividend Yield as of June 16: 1.38%

Number of Hedge Fund Holders: 72

CSX Corporation (NASDAQ:CSX) is an American rail transportation company that provides rail, intermodal, and rail-to-truck services and solutions to its consumers. On May 10, the company announced a quarterly dividend of $0.10 per share, increasing it by 7.5% in February. In the past 10 years, the company has raised its dividend at a CAGR of 11%. As of June 16, the stock’s dividend yield was 1.38%.

In the first quarter of 2022, CSX Corporation (NASDAQ:CSX) remained popular among elite funds, as 72 hedge funds tracked by Insider Monkey were bullish on the company, up from 56 in the previous quarter. The consolidated value of these stakes is nearly $6.3 billion. Ken Griffin, Ken Fisher, and Dan Loeb were some of the prominent stakeholders of the company in Q1.

In its Q1 results, CSX Corporation (NASDAQ:CSX) reported solid growth post-pandemic, posting an EPS of $0.39, which surpassed estimates by $0.02. The company’s revenue also showed a 21.4% year-over-year growth at $3.4 billion and also beat consensus by $100 million. In view of its earnings beat, Argus raised its price target on CSX Corporation (NASDAQ:CSX) in April, maintaining a Buy rating on the shares. The firm further mentioned that the company’s recovering profits should continue to improve in 2022-2023 due to its strong pricing power.

Steadfast Capital started reinvesting in CSX Corporation (NASDAQ:CSX) during the first quarter of 2022, after selling off its entire shares in the company a year ago. The hedge fund owned over 1.8 million CSX shares at the end of March 31, valued at $67.6 million. The company represented 1.16% of Robert Pitts’ portfolio.

ClearBridge Investments mentioned CSX Corporation (NASDAQ:CSX) in its Q4 2021 investor letter. Here is what the firm has to say:

“On a regional basis, the U.S. and Canada was the top contributor to quarterly performance, of which U.S. rail operators CSX was among the lead performers. CSX is one of five leading North American rail companies, with over 21,000 miles of rail, covering 23 states and 40+ ports. CSX is engaged in the transportation of rail freight in the Southeast, East, and Midwest via interchange with other rail carriers, to and from the rest of the U.S. and Canada. CSX performed well during the quarter after the company beats market expectations on its third-quarter results. The beats were largely driven by strong pricing, which could be hitting record highs, and healthy commodity/coal volume driven by the current energy crisis.”

7. Union Pacific Corporation (NYSE:UNP)

Steadfast Capital’s Stake Value: $68,201,000

Dividend Yield as of June 16: 2.51%

Number of Hedge Fund Holders: 89

Union Pacific Corporation (NYSE:UNP) is a railroad holding company that provides freight transportation services in 23 US states. After delivering solid Q1 results, the company expects to achieve an improvement in its operating ratio in FY22 as compared to 2021 but also showed concerns due to higher fuel prices and other cost inflation.

In Q1 2022, Union Pacific Corporation (NYSE:UNP) reported a 17% year-over-year growth in its operating revenue to $5.9 billion. Moreover, the company’s business volumes were up 4% from a year-ago period. On May 10, Union Pacific Corporation (NYSE:UNP) announced a 10% hike in its quarterly dividend to $1.30 per share. The company has been a dividend payer for the past 123 years. As of June 16, the stock’s dividend yield was recorded at 2.51%.

In April, Goldman Sachs gave a positive stance on Union Pacific Corporation (NYSE:UNP), expecting a second-half volume recovery as the company showed improvement in its services. The firm lifted its price target on the stock to $276, with a Buy rating on the shares.

Steadfast Capital first invested in Union Pacific Corporation (NYSE:UNP) during the fourth quarter of 2019 and dumped off its entire stake in the company at the end of FY20. The hedge fund resumed its position in the business in Q1 2022, with shares worth over $68.2 million. The company made up 1.17% of Robert Pitts’ portfolio.

Of the 912 elite funds tracked by Insider Monkey, 89 hedge funds owned stakes in Union Pacific Corporation (NYSE:UNP), up from 59 in the previous quarter. The total value of these stakes is over $7 billion. Chris Hohn’s TCI Fund Management was the company’s leading shareholder in Q1, owning stakes worth over $1.4 billion.

ClearBridge Investments mentioned Union Pacific Corporation (NYSE:UNP) in its Q4 2021 investor letter. Here is what the firm has to say:

“Despite these mixed emerging growth results, the ClearBridge Global Growth Strategy outperformed the benchmark due to resilience among our secular and structural growth holdings. These consistent growers were complemented by solid contributions from structural holdings including Union Pacific.”

6. CF Industries Holdings, Inc. (NYSE:CF)

Steadfast Capital’s Stake Value: $82,182,000

Dividend Yield as of June 16: 1.77%

Number of Hedge Fund Holders: 67

CF Industries Holdings, Inc. (NYSE:CF) is a North American agricultural company that manufactures and distributes agricultural fertilizers and also operates nitrogen plants. Earlier this year, the company said that nitrogen fertilizer is expected to remain expensive for at least two more years as the war in Ukraine put a strain on nitrogen production. However, the company does not see a decline in the product’s demand, which bodes well for its future earnings.

On April 27, CF Industries Holdings, Inc. (NYSE:CF) announced a 33.3% increase in its quarterly dividend to $0.40 per share. This was the company’s first quarterly growth since 2014, however, it has been paying stable dividends to shareholders for over a decade. As of June 16, the stock’s dividend yield stood at 1.77%.

CF Industries Holdings, Inc. (NYSE:CF) is one of the latest holdings of Steadfast Capital as the hedge fund started its position with 797,420 CF shares, worth over $82 million. The company constituted 1.41% of Robert Pitts’ portfolio. In June, Barclays initiated its coverage on CF Industries Holdings, Inc. (NYSE:CF) with an Equal Weight rating and a $103 price target, raising concerns about supply chain issues that can continue for another year.

In addition to CF, analysts are also hopeful about the recovery of tech stocks, such as Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN).

As per Insider Monkey’s data, 67 hedge funds presented a bullish stance on CF Industries Holdings, Inc. (NYSE:CF) in Q1 2022, up from 58 in the previous quarter. These stakes hold a consolidated value of over $1.53 billion.

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Disclosure. None. Robert Pitts’ Steadfast Capital’s Portfolio: 10 Dividend Stock Picks is originally published on Insider Monkey.