Shira Gonen

About the Author Shira Gonen

Shira Gonen holds a Bachelor's degree in International Business from the Temple University in Philadelphia. Ms. Gonen joined the editorial team at TipRanks in November of 2015.

Joel Greenblatt’s 4Q Investment Spotlight: Apple Inc. (AAPL), Gilead Sciences, Inc. (GILD), Wal-Mart Stores, Inc. (WMT)

Joel Greenblatt is a billionaire top hedge fund manager and founder of Gotham Capital. His holdings are comprised mainly of the service, technology, consumer goods, industrial goods, and healthcare sectors. Greenblatt has hundreds of stocks in his portfolio, and therefore each represents less than 1% of his total holdings. Greenblatt’s $9.21 billion fund generated a 1.6% return to investors in the fourth quarter, and is ranked #19 out of 212 hedge funds on TipRanks. Let’s take a look at some of Greenblatt’s fourth quarter activity, including Apple Inc. (NASDAQ:AAPL), Gilead Sciences, Inc. (NASDAQ:GILD), and Wal-Mart Stores, Inc. (NYSE:WMT).

joel greenblatt performance

Apple Inc.

In the fourth quarter, Greenblatt increased his stake in Apple by close to 40%, now accounting for 0.53% of his total holdings with 464,102 shares. In the fourth quarter, the company experienced robust holiday sales due to major retailers such as Target and BestBuy offering promotions on its products, without directly discounting the products themselves. Most notably, analysts expressed concern during the fourth quarter of slowing iPhone growth, as major Apple suppliers issued weak guidance, indicating falling demand for the flagship product. This concern manifested into reality when in their Q1 earnings report for the fiscal fourth quarter, released late last month, issuing weak Q2 iPhone unit guidance.

Like Greenblatt, analysts are bullish on the tech giant. Out of the 38 analysts who have rated the company in the past 3 months, 31 gave a Buy rating on TipRanks.

Gilead Sciences, Inc.

Greenblatt reduced his shares of Gilead in the fourth quarter by 6.7%, now owning 874, 246 shares representing 0.96% of his total holdings. In the fourth quarter, the company received FDA approval both Letaris and Genvoya, which treat pulmonary arterial hypertension and HIV, respectively. A possible explanation for his reduction could have been the congressional probe into price gauging, announced in November, due to the prices of Hep C drugs Harvoni and Sovaldi, which cost more than $80,000 for one regimen. As a result of these unaffordable drug prices, congress accused the company of putting profits before patients, purposefully limiting access to those who need the drugs most. Accusations also included unfairly passing these high costs to federal and state healthcare programs.

Greenblatt and analysts disagree on Gilead, as 15 out of the 17 who have rated the stock in the past 3 months gave a Buy rating on TipRanks.

Wal-Mart Stores, Inc.

The hedge fund manager increased his stake in Walmart by close to 55% in the fourth quarter, now accounting for 0.58% of his total holdings with 867,518 shares. In the fourth quarter, the company announced restructuring efforts, closing all of its Walmart Express stores in the U.S., as well as some weaker stores in Brazil, in an effort to focus more attention on its core business, Megacenters. Despite a few closures which represent an insignificant percentage of their total stores, the company announced plans to open over 300 new stores in FY2017. Recently, the company invested in various growth initiatives, such as higher wages, training expenses, and Wal-Mart Pay, its new e-payment system designed to compete with PayPal and Apple Pay, among others.

Despite Greenblatt’s increased investments, analysts remain on the sidelines on Wal-Mart, as 5 out of the 7 analysts who have rated the stock in the past 3 months gave a neutral rating on TipRanks.


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