Hedge fund guru Richard Chilton is the face behind Chilton Investment Company, the man who took his B.S. in Finance from Alfred University all the way to becoming founder, Chairman, CEO, and CIO of his own long-short equities-based hedge fund since 1992. Thanks to his Flagship Strategy, the whiz of evaluating long-term capital upside has learned to navigate gains when the sun smiles upon markets just as he knows how to protect his capital when markets take a sharp dip.
How did this Flagship Strategy play out during the first quarter of the year? Well, Chilton saw cause to initiate in three key players, suddenly bullish on the opportunity to invest in Valeant Pharmaceuticals Intl Inc (NYSE:VRX), Amazon.com, Inc. (NASDAQ:AMZN), and SPDR S&P 500 ETF Trust (NYSEARCA:SPY). Let’s take a closer glimpse:
Valeant Pharmaceuticals Intl Inc
Valeant certainly has endurance on its side. After facing a great deal of unfavorable volatility, the giant finally rose 36% last week on back of a 2017 adjusted EBITDA guidance boost. Not only was there not the anticipated outlook chops investors had been bracing themselves for to be a challenge, but the giant delivered earnings that outclassed expectation.
Clearly Chilton joins the optimistic parade, having initiated a holding in Valeant, adding $1.32 million in shares that have since gained 28% in value since the last filing.
However, can the giant’s revenue stand the test of time? There lies skepticism as to whether Valeant knows how to play the numbers game, considering its debt shackles and the question of finding a way to diminish costs. Currently, the VRX team intends to have $5 billion of its debt settled by the first quarter of next year, and can already check $3.6 billion of its tab. The rumor mill believes the giant’s iNOVA segment could be circling over $1 billion in value, which would certainly be advantageous for Valeant’s hopes for a resurgence.
Overall, most analysts remain on the sidelines waiting to see if this is a full-fledged comeback, or a glimmer amongst the fray of the giant’s struggles. TipRanks analytics indicate VRX as a Hold. Out of 14 analysts polled by TipRanks in the last 3 months, 2 are bullish on Valeant stock, 9 remain sidelined, and 3 are bearish on the stock. With a return potential of nearly 4%, the stock’s consensus target price stands at $14.60.
Amazon has brilliantly build a worldwide reputation, a leader in the online auction and e-commerce universe, and this hedge fund guru is taking notice, with Chilton initiating a stake in Amazon, adding $890.09K in shares, which have since gained 8% in value since the last filing. When considering the giant’s greatest assets, one could easily point to Alexa, Amazon Web Services (AWS), Amazon Prime, and a new foray into online grocery shopping.
Amazon hopes to outlast competitors, constantly innovating its roster, setting up its prospects for long-term success. Amazon’s grocery segment could be a multi-billion dollar business opportunity and Amazon’s Alexa could soon gain an upper hand over Apple’s Siri and Google’s Assistant with new developer tools brought to the table that will allow Alexa to read aloud notifications just as long as the device has an Alexa installation. Alexa Voice Service and Alexa Skills Kit will soon be out for Amazon consumers to enjoy. Meanwhile, in a day and age where tech enthusiasts love the idea of simplifying life’s daily tasks, perhaps Amazon’s online grocery shopping serve to the e-commerce world could be a welcome step forward for the giant.
Wall Street sentiment seems to back Chilton’s vote of confidence in the giant, as TipRanks analytics show AMZN as a Strong Buy. Based on 31 analysts polled by TipRanks in the last 3 months, 28 rate a Buy on Amazon stock while 3 maintain a Hold. The 12-month average price target stands at $1,089.96, marking a nearly 13% upside from where the stock is currently trading.
SPDR S&P 500 ETF Trust
How does the economic picture look like for the S&P 500? Some analysts might argue of a post-Brexit apocalyptic sense of perspective, but clearly the hedge fund guru sees real promise in this index, choosing to bank on the large cap players. Therefore, Chilton has claimed a new holding in SPY, adding $1.24 million in shares that have since gained nearly 2% in value since the last filing.
GDP looks strong globally, bolstering the argument that now is an excellent time to invest in S&P, which should hopefully soar even further.
A lot of the SPY’s success looks to see how tax reform looks in a Trump-led America, as the President has goals to pull back on the seven tax brackets, chopping them down to three, with respective 10%, 25%, and 35% rates. With Trump’s promises to hand out larger tax cuts than ever before, it will be a matter of whether investors trust his general tax reform ideas, or if the peak the S&P 500 approaches once again could stand to fall back again.
Most finance experts tend to support the SPY these days. According to TipRanks, 80% of Wall Street analyst consensus is Positive on SPY. The annual average trailing return stands at 6.83%.