Top Commercial Services Picks by Fund Gurus Concentrated in the Sector

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 |  Includes: AXP, CTAS, FDS, FISV, LAMR, MA, OMC, UNF, V
by: GuruFundPicks
What do the top hedge fund and mutual fund Gurus like in the commercial services group? This article, the forty-first in a series, identifies, through research of the latest available institutional 13-F filings, the Gurus who are most invested in the commercial services group, and the specific stocks within that group that they prefer to hold in their portfolios. The group includes advertising and marketing, market research, printing, security services, leasing, and financial payments processing companies.

Furthermore, please note that this article will be among the last in this series, as the latest March 2011 quarter 13-F Institutional filings are now almost complete. Later this week, I will bring to you the ‘Top New and Added Picks’ of Guru Funds by industry/sector detailing this time not the top holdings, but more importantly what ‘New’ positions they took and what existing positions they added to in the latest March 2011 quarter. Please check my article page for previous articles in this series.
A Guru is defined as someone who is regarded as having great knowledge, wisdom, and authority in a certain area. When it comes to hedge funds, there are a number of ways to anoint leading managers as Gurus, including long-term performance, low portfolio volatility and an elite reputation in the investment community.
Many of us are familiar with leading investors and hedge fund managers such as Warren Buffet, George Soros, Carl Icahn and Julian Robertson, but the hedge fund community alone includes over 9,000 funds; add in mutual funds, ETFs, and other investment entities and the number is likely to be at least two to three times that number. While there is no official list of Gurus, less than one percent or between 100 to 200 fund managers are commonly believed by the larger investment community to have earned the distinction of being called Gurus.
The study of the investing habits of Gurus can be informative as these are very savvy, well-respected investors with a high personal net worth deploying large sums of capital from their funds regularly. They have a long-term track record of success, and while one can easily just ride their coattails, the savvy investor may want to use these lists as a starting point to conduct their own due diligence.
The total capitalization of the US Equity markets is somewhere in the $15 trillion range, and the total market capitalization of leading companies in the commercial services group is $435 billion or 2.9% of the overall market. The table lists the top five investment Gurus whose funds have invested more than two-and-a-half times that average or 7.3% in the group. The following are their leading picks in that group:
  • Fiserv Inc. (NASDAQ:FISV) provides integrated information and electronic commerce systems and services to about 16,000 clients worldwide.
  • Mastercard Inc. CL A (NYSE:MA) provides global payment solutions in support of the credit and debit payment programs of 23,000 financial institutions.
  • Lamar Advertising Co. (NASDAQ:LAMR) operates over 285,200 billboard, logo signs, and transit advertising displays in the U.S., Puerto Rico and Canada.
  • Factset Research Systems Inc. (NYSE:FDS) provides financial data from stock markets, newswires and data suppliers to investment professionals.
  • Visa Inc CL A (NYSE:V) provides global payment solutions in support of the credit and debit payment programs of financial systems.
  • American Express Co. (NYSE:AXP) provides charge and credit payment card products and travel-related services to consumers and businesses worldwide.
  • Cintas Corp. (NASDAQ:CTAS) provides corporate identity uniform programs which are rented and sold to 800,000 clients in the U.S. and Canada.
  • Omnicom Group (NYSE:OMC) provides advertising, customer relationship management, public relations and communications services worldwide.
  • Unifirst Corp. (NYSE:UNF) provides workplace uniforms, protective clothing, industrial wiping products, floor-mats and non-garment items.

Table
Fund and Guru
Type of Fund
Assets Under Management
Percent Equity Portfolio invested in Commercial Services Companies
Major Commercial Services company positions in Portfolio
Brave Warrior Capital, Inc. (Glenn Greenberg)
Hedge Fund
$ 1.2 billion
21.1%
FISV, MA
Akre Capital Management, LLC (Chuck Akre)
Mutual Fund - Growth at a Reasonable Price
$ 477 million
18.8%
LAMR, MA, FDS
Childrens Investment Fund Management UK LLP (Chris Hohn)
Hedge Fund - Long/short Equity
$ 6.9 billion including $2.4 billion in Equity
13.8%
V
Tiger Global Management LLC (Chase Coleman)
Hedge Fund - Technology Focused
$ 3.7 billion
8.1%
MA, V
First Eagle Investment Management, LLC (Jean-Marie Eveillard)
Mutual Fund
$ 19.7 billion
7.5%
AXP, CTAS, OMC, MA, UNF
Click to enlarge
Brave Warrior Capital, a hedge fund co-founded in 1984 by Guru Glenn Greenberg and John Shapiro, maintains a highly concentrated portfolio of 11 holdings. Mr. Greenberg describes that as a defense against ignorance, and maintains that the more companies you own the less you know about each, and the less you know about a business the more you are likely to make a mistake out of fear or greed.
Chuck Akre, Managing Member and CEO of Akre Capital Management LLC, has been named to Barron's "Top 100 Mutual Fund Managers" list from 2003-2006, one of only two small cap growth managers to make the list four consecutive years. He has been in the securities business since 1968, first as Director and CEO of Asset Management Division and Director of Research at Johnston, Lemon & Co. until 1989, and later as the sole sub-advisor to the $ 1 billion FBR Focus Fund from which he resigned in 2009. While he was managing the FBR Focus Fund, the fund performed in the top 1% of small/mid-cap growth funds in 2002, 2004, and 2006, as well as the 2nd percentile in 2001 and the 6th percentile in 2008. As of the latest filing, Akre Capital Management had $477 million holdings in equities and was relatively concentrated with less than 35 positions in the portfolio. His focus seems to be in the small- and mid-capitalization portion of the equities markets, and his investment style seems to be selecting equities based on a Growth at a Reasonable Price (GARP) approach.
The Children's Investment Fund Management (TCI) a hedge fund manager founded by Chris Hohn in 2003 is based out of London, and manages the Children's Investment Master Fund. The firm has a Value investment style and is a shareholder activist, meaning that meaning that they take large stakes in target investments and then use their influence resulting from the ownership to effect change at these companies, with the objective that these changes will result in more value for the shareholders.
New York-based Hedge Fund Tiger Global Management is managed by Chase Coleman, a former analyst and partner at legendary Julian Roberson's Tiger Management. It invests in the public and private equity markets across the world, with a focus on technology stocks and also employing fundamental analysis to make its investment decisions.
Jean-Marie Eveillard is Senior Investment Adviser for First Eagle Investment Management, a $19.7 billion Mutual Fund company. He served for more than a quarter century as a portfolio manager, and was co-honored in 2001 by Morningstar, Inc. as "Stock Manager of the Year." He invests using a bottom-up value-oriented approach.
Credit: Historical fundamentals, including operating metrics and stock ownership information were derived using I-Metrix® by Edgar Online®, Zacks Investment Research, DailyGraphs®, Thomson Reuters and Briefing.com. Fund data, including assets under management and firm profiles are sourced mostly from Hedgetracker.com. The information and data are believed to be accurate, but no guarantees or representations are made.
Disclaimer: Material presented here is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. Further, these are my opinions and I may be wrong. I may have positions in securities mentioned in this article. You should take this into consideration before acting on any advice given in this article. If this makes you uncomfortable, then do not listen to my thoughts and opinions. The contents of this article do not consider your individual investment objectives so consult with your own financial adviser before making an investment decision. Investing includes certain risks, including loss of principal.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.