Key Takeaways
- • John Dorfman's prior hedge-fund-favorites column picks returned 23.6% in the first year and 23.3% in the second, versus 15.3% and 15.9% for the S&P 500 Total Return Index over the same two periods, according to his hypothetical results.
- • Dorfman's new column selects stocks from a Gurufocus.com screen of hedge-fund-popular names, with CNX Resources, Raymond James, Plains All American Pipeline, Nvidia and Goodheart-Willcox as this year's picks.
- • Renaissance Technologies and Bridgewater Associates were both reported to have bought CNX Resources in the second quarter and to have owned Raymond James during the year, per government filings cited by Dorfman.
- • Dorfman sets a bar of 18% or better as delightful and 23% as thrilling for the new picks, and explicitly stresses that his column results are hypothetical and not client results.
- • Last year's standouts were Taiwan Semiconductor (up 46%) and Caterpillar (up 42%), with Berkshire Hathaway up 7%, Walmart up 9% and JPMorgan Chase up 13%.
Summary
John Dorfman, a columnist and portfolio manager, published his third annual column of hedge-fund favorites, drawing on a Gurufocus.com screen of stocks popular with hedge funds. In the column, which ran in the Pittsburgh TribLIVE outlet and was syndicated through Maple Hill Syndicate, Dorfman reported that his first two years of picks returned 23.6% and 23.3%, outperforming the S&P 500 Total Return Index, which gained 15.3% and 15.9% over the same periods. He cautioned that these are hypothetical results that should not be confused with client performance and that past performance does not predict future results.
For the new list, Dorfman highlighted CNX Resources (CNX), a Canonsburg-based natural gas producer in Ohio, West Virginia and Pennsylvania. Government filings show Renaissance Technologies and Bridgewater Associates bought CNX shares in the second quarter, though Dorfman noted he does not know whether they still hold the position. He acknowledged CNX lost money in six of the past 10 years but cited a 21% return on stockholders' equity, against his benchmarks of 15% as good and 20% as excellent, and noted natural gas demand from data centers.
Other picks include Raymond James Financial (RJF), a St. Petersburg brokerage and investment manager that has been profitable 38 consecutive years, trading at about 14 times earnings versus a typical 15 times, with revenue growth averaging over 12% annually in the past decade. Plains All American Pipeline (PAA), a Houston-based master limited partnership operating about 19,000 miles of pipeline, trades at seven times trailing earnings and 0.34 times revenue with a 27% return on equity, though Dorfman noted the partnership structure may complicate tax filings. He also included Nvidia (NVDA), which he said trades at 27 times trailing earnings and 14 times analysts' next-four-quarter estimates, and Goodheart-Willcox (GWOX), a Tinley Park textbook publisher trading at about 11 times earnings with a 31% return on equity.
Dorfman reviewed last year's selections, noting Taiwan Semiconductor Manufacturing (TSM) rose 46% and Caterpillar (CAT) rose 42%, with Caterpillar's gain driven by its gas turbines and generators for data centers rather than the weak-dollar export thesis he had cited. Berkshire Hathaway (BRK.B) gained 7%, Walmart (WMT) 9% and JPMorgan Chase 13%. Dorfman disclosed personal and client holdings in Taiwan Semiconductor, JPMorgan Chase, Berkshire Hathaway and Nvidia, the latter held by his wife and firm portfolio manager Katharine Davidge.
For the new list, Dorfman highlighted CNX Resources (CNX), a Canonsburg-based natural gas producer in Ohio, West Virginia and Pennsylvania. Government filings show Renaissance Technologies and Bridgewater Associates bought CNX shares in the second quarter, though Dorfman noted he does not know whether they still hold the position. He acknowledged CNX lost money in six of the past 10 years but cited a 21% return on stockholders' equity, against his benchmarks of 15% as good and 20% as excellent, and noted natural gas demand from data centers.
Other picks include Raymond James Financial (RJF), a St. Petersburg brokerage and investment manager that has been profitable 38 consecutive years, trading at about 14 times earnings versus a typical 15 times, with revenue growth averaging over 12% annually in the past decade. Plains All American Pipeline (PAA), a Houston-based master limited partnership operating about 19,000 miles of pipeline, trades at seven times trailing earnings and 0.34 times revenue with a 27% return on equity, though Dorfman noted the partnership structure may complicate tax filings. He also included Nvidia (NVDA), which he said trades at 27 times trailing earnings and 14 times analysts' next-four-quarter estimates, and Goodheart-Willcox (GWOX), a Tinley Park textbook publisher trading at about 11 times earnings with a 31% return on equity.
Dorfman reviewed last year's selections, noting Taiwan Semiconductor Manufacturing (TSM) rose 46% and Caterpillar (CAT) rose 42%, with Caterpillar's gain driven by its gas turbines and generators for data centers rather than the weak-dollar export thesis he had cited. Berkshire Hathaway (BRK.B) gained 7%, Walmart (WMT) 9% and JPMorgan Chase 13%. Dorfman disclosed personal and client holdings in Taiwan Semiconductor, JPMorgan Chase, Berkshire Hathaway and Nvidia, the latter held by his wife and firm portfolio manager Katharine Davidge.
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