3 High-Conviction Stock Picks From a Legendary Fund Manager

#Morningstar  #FidelityContrafund #StockPicks

This winning manager invests nearly one third of his fund in these three stocks.

00:00 Introduction

00:57 Meta Platforms META

01:42 Berkshire Hathaway BRK.A BRK.B

02:20 Nvidia NVDA

Susan Dziubinski: I’m Susan Dziubinski with Morningstar. Morningstar recently handed out its annual Awards for Investing Excellence. This year’s award for outstanding equity portfolio manager goes to Fidelity Contrafund FCNTX manager Will Danoff. Morningstar thinks Danoff is an old-school stock-picker who’s still among the best in his class. He’s managed Contrafund for more than 35 years, turning it into the $167 billion giant it is today. Danoff invests in hundreds of companies, big and small. And even as the fund has gotten larger, Danoff has managed an edge over his competitors.

Despite the fund’s size and vast number of holdings, Danoff currently keeps about one-third of the fund’s assets in just three stocks. Given Danoff’s winning track record, these stocks are excellent ideas to put on your watchlist and research further.

So, what are the three stocks Danoff has high conviction in?

Danoff’s top holding at Contrafund is Meta Platforms META. Danoff initiated a position in Meta back in 2012, when the company was still called Facebook. Seventeen percent of the fund’s assets are invested in Meta. Morningstar thinks Meta has carved out a wide economic moat thanks to its Family of Apps business that includes Facebook, Instagram, WhatsApp, and Messenger. The company has built significant intangible assets with the customer data it collects and a potent network effect that has enabled Meta to be the most dominant social media platform in the world. Morningstar forecasts Meta’s sales to grow at a 12% compound annual growth rate for the next five years. We think the stock is worth $770 per share.

Berkshire Hathaway BRK.A BRK.B is Danoff’s second high-conviction stock. Contrafund currently dedicates 9% of its portfolio to Berkshire stock. Morningstar thinks Berkshire has built a narrow economic moat with its collection of businesses. Warren Buffett will be stepping down as Berkshire’s CEO at the end of this year but will stay on as chairman. Greg Abel will take on the CEO role, and over time, we expect Berkshire to evolve from what has been a reinvestment machine into one far more focused on returning capital to shareholders. We think Berkshire’s B shares are worth $487 each.

Danoff’s final high conviction pick is Nvidia NVDA, a stock the fund has owned since 2016. It takes up about 8% of Contrafund’s portfolio today. Morningstar thinks Nvidia has carved out a wide economic moat thanks to its market leadership and graphics processing units, hardware and software tools needed to enable the exponentially growing market around artificial intelligence. And although China export controls are expected to dampen growth, we expect Nvidia to remain at the center of AI for years to come. We think the stock is worth $140. For more stock ideas, be sure to tune into The Morning Filter each week, wherever you get your podcasts.

For more stock ideas, be sure to tune into The Morning Filter each week, wherever you get your podcasts. And don’t forget to visit Morningstar.com.

Morningstar associate director for equities strategies Tony Thomas, senior analysts Brian Colello and Gregg Warren, and analyst Malik Ahmed Khan contributed the research behind this segment.

Subscribe to The Morning Filter on Apple podcasts, or wherever you get your podcasts. https://podcasts.apple.com/us/podcast/the-morning-filter/id1792280057

What to watch from Morningstar.

2 Warren Buffett Stocks to Consider With Big Yields https://youtu.be/GICA8rDJxhU?si=GNORru5MEv7BJFSI

3 Companies to Invest in Benefiting from Multiple Growth Trends https://youtu.be/ntkmTrpjLJU?si=-xxLcJAdR0bKMbTO

The Best Stock to Buy Right Now: Alphabet vs Microsoft https://youtu.be/ZLj4RrGKpwo?si=SFaUBFHGkTZ31EUj

2 Cheap Wide-Moat Stocks for Patient Investors to Consider https://youtu.be/50wbKr28fIc?si=9uSDjd55ud0sZLWl

Read what our team is writing.

Susan Dziubinski https://www.morningstar.com/people/susan-dziubinski

Follow us on social.

Facebook: https://www.facebook.com/MorningstarInc/

X: https://twitter.com/MorningstarInc

Instagram: https://www.instagram.com/morningstar…

LinkedIn: https://www.linkedin.com/company/5161/