Skip to Content
Investing Specialists

Ten High-Conviction Buys from Our Ultimate Stock-Pickers

"Old tech" and "fortress balance sheets" are drawing our top managers' interest.

Mentioned: , , , , , , ,

Brett Horn | Associate Director of Equity Research

Over the years, we've learned that successful investing requires that investors have their own point of view, which often means acting against the crowd. That said, completely ignoring the opinion of others is myopic, and often leads to disaster. While we at Morningstar benefit from the work of a large staff of stock analysts who evaluate companies under a consistent framework and methodology, we're not averse to learning from the insights of some of the best portfolio managers in the business. Through our Ultimate Stock-Pickers concept, we sift through the holdings, purchases, and sales of these top managers, hoping to not only uncover new investment ideas, but to gain further conviction in the recommendations of our own analysts through the real-world actions of some of the top minds in the industry.

With more than 80% of our top managers having reported their stock holdings for the most recent period, it is a good time to look at where they've been putting money to work by looking at both high-conviction purchases, and new-money buys. As you may recall, we believe that managers send signals about the level of conviction they have in a position by how much of their portfolio (on a percentage basis) they're willing to commit to a given name at any point in time. For example, we can probably safely assume that the managers at the  Yacktman (YACKX) fund, which had 12.7% of its stock portfolio invested in  News Corporation (NWSA) at the end of the first quarter, compared to 1.3% in  Colgate-Palmolive (CL), have a higher degree of conviction in News Corp than they do in Colgate. That said, position size can sometimes be influenced by the amount of the portfolio a manager wants committed to a particular sector (especially when there are only a few truly investable ideas in the sector). It can also be influenced by large positions that might be difficult to unwind. For instance, Bruce Berkowitz holds a very large position in  St. Joe (JOE) though his  Fairholme (FAIRX) fund, which he might find difficult to either increase or decrease in size given that his fund holds about one quarter of all shares outstanding, and has effectively taken over leadership of the firm by capturing a majority of the company's board seats.

The Morningstar Ultimate Stock-Pickers Team does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.