Value investor Mason Hawkins switched to General Electric in the second quarter and also took a stake in the growth name Alphabet. Hawkins’ Southeastern Asset Management, which manages a series of mutual funds called Longleaf Partners Funds, increased its General Electric shares by 12% in the past quarter, according to InsiderScore. In the three-month period ended June 30, the fund held 3.28 million shares worth $208.5 million. Hawkins also bought a stake in Google parent company Alphabet for the first time since leaving stock in 2020; the investor bought 1.5 million shares for a total of $165.7 million. The company said it is “finding some exciting new opportunities this year in the fallen growth enthusiasts,” according to the fund’s second quarter commentary. The classic value investor built his stake in General Electric, which underperformed the S&P 500’s 12% drop this year, as Wall Street CEO Larry Culp doesn’t give enough credit for the “material improvements” he’s made during his tenure. applied. “Today’s balance sheet is stronger than it has been in a very long time, and each of the three primary business segments each has a strong path to increase earnings regardless of the economic environment,” read second-quarter commentary, citing General Electric’s three segments in aviation, healthcare and energy. Shares of General Electric are down 19% this year, but have since risen 22% in the current quarter after a positive second-quarter earnings report. Southeastern Asset Management has also opened a position in Alphabet, a growing name that gave the value investor “a lot of surprised looks and quite a few questions from customers” when the company first bought the stock in 2015. At the time, the fund said it was protecting the competitive advantage of the company. The company exited its shares in the third quarter of 2020 after reducing its stake in the company for at least four consecutive quarters. Shares of its parent company Google are down 18% this year and are in the up just 9% in the third quarter, underperforming the broader market index. Meanwhile, Southeastern expressed skepticism about whether large pharmaceutical and integrated oil companies “can sustain relative outperformance over the longer term.” Hawkins’ Longleaf Partners Fund outperformed the benchmark for 20 years. Major Financial Crisis, underperforming since investors favored large equities over value stocks, according to Morningstar mutual fund research. Still, Longleaf Partners fell 15.56% in the second quarter, outperforming the S&P 500 by 16.10%, in a quarter in which “value saw growth’s relative outperformance continue,” a possible sign that value stocks may be coming back into vogue, according to Southeast’s latest letter to shareholders. Other top positions in the fund were telecommunications stocks Lumen Technologies, toy company Mattel and transportation company FedEx.
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