2 Stocks Top Managers Are Buying

Each quarter, we take a look at the recent transactions of some of the top money managers around today--who we call our Ultimate Stock-Pickers.

Last quarter, two stocks in particular were popular new-money buys among the group. Who are new-money buys? Stocks that managers purchased that weren’t in their portfolios the prior quarter.

Seven our Ultimate Stock-Pickers bought Otis Worldwide OTIS, while five managers picked up Carrier Global CARR.

Otis is the largest global elevator and escalator supplier by revenue. Morningstar assigns the company a wide economic moat rating and a stable moat trend. Morningstar director Denise Molina notes that Otis benefits from high revenue visibility and a large portfolio of elevators under maintenance that provides a high degree of security of future orders. The business is also asset-light, with few parts manufactured by the firm directly and assembly of equipment on the customer site. This model allows the company to generate high returns. We think shares have a fair value of $57 and think they’re overvalued today.

Carrier Global, meanwhile, is a leading supplier of climate control and fire and security solutions; it was spun off from United Technologies in April 2020. We assign Carrier a narrow economic moat rating and a stable moat trend. Despite its debt burden, Carrier now has a narrowed strategic focus and no longer must fight for capital from an increasingly aerospace-focused parent company. Morningstar director Brian Bernard says Carrier is well-positioned to benefit from expanding market opportunities related to the coronavirus--for example, demand for air filtration and touchless security access products. We think shares are worth $33 and are about fairly valued today.