We recently published a list of 10 safe stocks to buy according to billionaire Chilton. In this article, we take a look at how Costco Wholesale Corporation (NASDAQ:COST) compares to the other safe-haven stocks recommended by billionaire Richard Chilton.

Founded in 1992 by Richard L. Chilton, Jr., Chilton Investment Company seeks to achieve attractive long-term returns with minimal volatility. Since its inception, the firm has consistently followed a fundamental, bottom-up investment approach driven by an ownership mentality. Its primary objective is to acquire partial ownership of outstanding companies rather than engaging in short-term stock trading.

Richard L. Chilton Jr. is chairman, CEO and chief investment officer of Chilton Investment Co. He has been a hedge fund manager for 18 years, a notable tenure in the demanding hedge fund industry. Chilton began his career in 1983 as an analyst at Alliance Capital Management, where he worked with small-cap equity managers Frank Burr and Paul Jenkel. In 1990, he founded an asset management firm for the private bank Allen & Co., but left after two years to start his own hedge fund firm.

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Chilton built his firm in a small one-room office in New York, leveraging the experience of Julian Robertson of Tiger Management Corp. in shorting stocks. He managed and founded a classic long/short equity hedge fund. Chilton’s decision to start his own hedge fund was influenced by Art Samberg, a board member of the mutual fund he co-managed. After he expressed his desire to leave Allen & Co., where he had founded an asset management firm, Samberg, recognizing his talent, encouraged him to start his own fund. In January 1992, Chilton left Allen & Co., turning down an offer from CEO Herbert Allen to buy a stake in his new company, and instead accepted a $1 million investment from Allen, which he combined with his family’s money to start his hedge fund with $5 million.

When Chilton founded his hedge fund in July 1992, he wanted to create a classic long/short equity hedge fund inspired by Alfred Winslow Jones’ first hedge fund model. His strategy was to always stay both long and short without trying to time the market. Chilton’s reputation grew by word of mouth, attracting prominent investors, foundations and funds. Pension funds later followed.

Chilton Investment’s appeal to institutional investors lies in its client-focused approach and strong performance. The firm is a leader in transparency and SEC registration. During the 2008 financial crisis, Chilton allowed clients to withdraw money that later flew back. Chilton’s background in managing pension funds at Alliance Capital gave him important experience in transparency and accountability, making his firm attractive to investors looking for long/short strategies. Chilton currently sees opportunities in blue-chip companies with strong financials, solid dividend yields and steady earnings growth. He expects these “dividend aristocrats” to outperform in a stagnant S&P environment and provide stability and consistent returns through rising dividends. Today, Chilton’s firm has grown significantly and has offices worldwide, a team of industry analysts and manages $7 billion in various strategies across global markets.

The story continues

Richard L. Chilton Jr. graduated from Alfred University with a bachelor’s degree in finance and economics. Known for his business acumen, Forbes ranks Richard Chilton as the 773rd richest person in the world. His net worth is estimated at $1.3 billion. Chilton Investment Company serves 9 clients and has discretionary assets under management totaling $1,266,939,000, according to its March 2024 Form ADV. Its 13F filing for the first quarter of 2024 reported $3.6 billion worth of 13F securities under management.

Our methodology

This article highlights the 10 safe stocks to buy according to billionaire Chilton. It includes analyst ratings and key details about each company, as well as the number of hedge funds invested in them.

Why focus on the stocks hedge funds invest in? Our research shows that if you follow the top picks of leading hedge funds, you can generate returns that beat the market. We use this strategy in our quarterly newsletter, where we select 14 small-cap and large-cap stocks each quarter. Since May 2014, this approach has produced a return of 275%, beating the benchmark by 150 percentage points. (Further details can be found here)

A customer browses the aisles of a warehouse through the large range of branded and private label products.

Costco Wholesale Corporation (NASDAQ:COST)

Chilton Investment Company share value: USD 282,887,492

Number of hedge fund owners: 65

Costco Wholesale Corporation (NASDAQ:COST) ranks 3rd on our list of safe stocks to buy, according to billionaire Chilton. Costco Wholesale Corporation (NASDAQ:COST) is a leading global retailer known for its membership-based warehouse stores, offering a wide range of high-quality products in bulk at competitive prices to both individual and business customers. The primary appeal of Costco Wholesale Corporation (NASDAQ:COST) is its ability to offer bulk goods at discounted prices, which is particularly attractive to groups such as students or households that share costs. This model remains popular, especially during tough economic times, as it provides a low-cost shopping option for low- and middle-income U.S. consumers.

Costco Wholesale Corporation’s (NASDAQ:COST) strategy not only helps maintain strong customer traffic but also increases shareholder value. Costco Wholesale Corporation’s (NASDAQ:COST) investor metrics show a remarkable return on equity of 31.64% over the last twelve months, significantly higher than the industry median of 10.70%. As of the end of the first quarter of 2024, Chilton Investment Company held 386,126 shares of Costco Wholesale Corporation (NASDAQ:COST) valued at $282,887,492, making it one of the safest stocks according to billionaire Chilton. This investment represented 7.75% of Chilton’s total portfolio, according to regulatory filings.

ClearBridge Sustainability Leaders Strategy stated the following about Costco Wholesale Corporation (NASDAQ:COST) in its second quarter 2024 investor letter:

Total costs 3rd place on our list of safe stocks to buy according to billionaire Chilton. While we recognize COST’s potential as an investment, our conviction lies in the belief that AI stocks that fly under the radar promise higher returns and do so in a shorter time frame. If you’re looking for an AI stock that shows more promise than COST but trades at less than 5x earnings, read our report on the cheapest AI stock.

READ MORE: Analyst sees a new $25 billion “opportunity” for NVIDIA And Jim Cramer recommends these 10 stocks in June.

Disclosure: None. This article was originally published on Insider Monkey.