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One thing I do every quarter as part of my investment research is dive into the 13F filings of top British fund managers. These reveal the US stocks that the managers bought and sold in the previous quarter. Last week, I spent some time looking at the filings of Terry Smith, Nick Train, and Stephen Yiu to see where these highly-regarded managers deployed their capital in Q2. Here’s a look at three S&P 500 stocks the managers snapped up.
Terry Smith
Terry Smith – the manager of Fundsmith Equity – didn’t do a lot of trading in Q2. However, he did buy stock in accounting and tax software company Intuit (NASDAQ: INTU).
He’s owned this stock in the past but sold it a few years ago because of its valuation. The fact that he bought it back in Q2 suggests that he saw the valuation as more attractive.
Now, this stock had a volatile Q2. So, Smith may have paid a much lower price than the current share price of $660.
I still believe it’s worth considering at current levels, however. Recent Q4 earnings were good (revenue was up 20%) and the valuation (the price-to-earnings (P/E) ratio is about 29) isn’t excessive for a software company with a wide moat, recurring revenues, and a high level of profitability.
It’s worth pointing out that some investors see AI as a threat to Intuit. It’s hard to know how the AI story will play out though, and I think this company is likely to roll out plenty of AI features itself.
Stephen Yiu
Turning to Stephen Yiu, who runs the Blue Whale Growth fund, he was a little more active in Q2. Over the period, he added several new holdings, and topped up quite a few existing positions.
One new holding for the money manager was Uber (NYSE: UBER). It’s the world’s largest rideshare company.
Over the period, Yiu picked up 848,119 shares in the company. At the end of the quarter, the holding was 5.2% of his portfolio.
This stock has had a strong run in recent months. But I remain bullish on it (it’s one of my largest holdings) and believe it’s worth thinking about.
Profits and cash flows are rising rapidly and the valuation looks very reasonable. At today’s share price, the forward-looking P/E ratio is only 26.
Is competition from Tesla’s autonomous cars a risk? Potentially.
I think Uber will benefit from self-driving technology, however. Today, it has partnerships with around 15 autonomous vehicle companies.
Nick Train
Finally, turning to Nick Train, he bought shares in Alphabet (NASDAQ: GOOG) during Q2. It’s the owner of Google and YouTube.
Train and his team are a little late to the party here. This company has been having success for many years now and long-term investors (like myself) have been rewarded with big gains.
That said, I still like the stock today and believe it’s one to look at. In my view, it has the potential to deliver attractive returns from here.
Of course, generative AI is a threat to Google search. But this company is so much more than this now.
Today, YouTube and cloud computing are major growth drivers. Meanwhile, self-driving cars could be a growth driver in the future.
As for the valuation, it looks attractive. At today’s share price, the forward-looking P/E ratio is only 20.
