December 3, 2021

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Top 10 Stock Picks of John D. Gillespie’s Prospector Partners

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John Gillespie has been the managing member at Prospector Partners since 1997, in addition to being the managing member at Prospector Partners Asset Management and the investment advisor to Prospector Funds. Gillespie manages a portfolio worth $778.7 million at Prospector Partners as of September this year, as well as assets under management valued at $780.2 million. 

Gillespie completed his Bachelor’s from Bates College in 1980, and received his MBA from the Graduate School of Business at Stanford University in 1986. He joined Geico Corporation in 1980 as a senior financial analyst, shifting to T. Rowe Price Associates, Inc. in 1986, after the completion of his MBA. At T. Rowe Price, Gillespie managed assets for institutional investors, mutual funds, and closed-end investment companies. He left T. Rowe Price Associates, Inc. in 1997, to join Prospector Partners as a managing member. 

Gillespie is also an experienced director, having served on the boards of several companies including White Mountains Insurance Group from 1999 until 2015, as well as Montpelier Re, Symetra Financial, Main Street America, Folksamerica, HG Global, Esurance, Tranzact, and One Beacon Insurance Group. 

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As of September this year, Gillespie’s investment portfolio is concentrated in the finance, energy, information technology, healthcare, consumer discretionary, and materials sectors, with a top ten holdings concentration of 28.76%. The largest holding in Prospector Partners’ Q3 portfolio is Berkshire Hathaway Inc. (NYSE:BRK-A), which accounts for 5.64% of the fund’s total 13F securities. 

The most notable stocks in John Gillespie’s Q3 portfolio include Berkshire Hathaway Inc. (NYSE:BRK-A), eBay Inc. (NASDAQ:EBAY), Microsoft Corporation (NASDAQ:MSFT), and Johnson & Johnson (NYSE:JNJ), among others discussed in detail below. 

Our Methodology

We used the Q3 portfolio of John D. Gillespie’s Prospector Partners to select their top 10 stock picks. Each stock is ranked according to Prospector Partners’ stake value in the holding. 

Top Stock Picks of John D. Gillespie’s Prospector Partners

10. RenaissanceRe Holdings Ltd. (NYSE:RNR)

Prospector Partners’ Stake Value: $18,245,000

Percentage of Prospector Partners’ 13F Portfolio: 2.34%

Number of Hedge Fund Holders: 31

RenaissanceRe Holdings Ltd. (NYSE:RNR) offers insurance and reinsurance services to clients, having an industry presence of over 25 years. The company also handles investments for its clients, via RenaissanceRe Capital Partners and RenaissanceRe Strategic Investments. Gillespie’s Prospector Partners owns 130,884 shares in RenaissanceRe Holdings Ltd. (NYSE:RNR) as of September this year, worth $18.2 million, representing 2.34% of the firm’s portfolio. 

RenaissanceRe Holdings Ltd. (NYSE:RNR) announced a quarterly cash dividend on November 11 of $0.36 per common share, payable on December 31 to shareholders of record on December 15. The company also declared a $500 million stock repurchase program. 

Q3 earnings were posted on October 25 by RenaissanceRe Holdings Ltd. (NYSE:RNR), with EPS in the period totaling -$8.98, missing estimates by -$0.21. Revenue for the quarter came in at $1.49 billion, up 65.27% year-over-year. At the end of Q2, 31 hedge funds tracked by Insider Monkey were long RenaissanceRe Holdings Ltd. (NYSE:RNR).

Joshua Shankar from BofA on November 8 upgraded RenaissanceRe Holdings Ltd. (NYSE:RNR) from Neutral to Buy, raising the price target from $163 to $218. He stated that the company fits his paradigm for increasingly positive reinsurance stocks, from an operations and valuation perspective. 

In addition to Berkshire Hathaway Inc. (NYSE:BRK-A), eBay Inc. (NASDAQ:EBAY), Microsoft Corporation (NASDAQ:MSFT), and Johnson & Johnson (NYSE:JNJ), RenaissanceRe Holdings Ltd. (NYSE:RNR) is a top stock pick from Gillespie’s Q3 portfolio. 

9. Pioneer Natural Resources Company (NYSE:PXD)

Prospector Partners’ Stake Value: $18,267,000

Percentage of Prospector Partners’ 13F Portfolio: 2.34%

Number of Hedge Fund Holders: 45

Pioneer Natural Resources Company (NYSE:PXD) is a hydrocarbon exploration company from Texas, producing petroleum, natural gas, and natural gas liquids. Gillespie’s Prospector Partners holds an $18.2 million stake in Pioneer Natural Resources Company (NYSE:PXD) as of the third quarter of 2021, which represents 2.34% of the fund’s total portfolio. 

Jonathan Dawson’s Southport Management is the leading stakeholder in Pioneer Natural Resources Company (NYSE:PXD), with a total stake value of $416.9 million. Overall, 45 hedge funds tracked by the database of Insider Monkey were bullish on Pioneer Natural Resources Company (NYSE:PXD) as of Q2. 

Citi analyst Scott Gruber resumed coverage of Pioneer Natural Resources Company (NYSE:PXD) with a Buy rating on November 8, setting a $216 price target. 

Pioneer Natural Resources Company (NYSE:PXD) posted its Q3 results on November 3. EPS in the quarter totaled $4.13, beating estimates by $0.28. Revenue for Q3 missed estimates, however, at $4.46 billion, it was up 145.9% year-over-year. 

8. Arthur J. Gallagher & Co. (NYSE:AJG)

Prospector Partners’ Stake Value: $18,700,000

Percentage of Prospector Partners’ 13F Portfolio: 2.40%

Number of Hedge Fund Holders: 40

Arthur J. Gallagher & Co. (NYSE:AJG) is one of the largest global insurance brokers in the world. Headquartered in Illinois, Arthur J. Gallagher & Co. (NYSE:AJG) offers insurance, reinsurance, human capital consultancy, and risk management services to its clients that are spread across 150 countries. Gillespie, via Prospector Partners, holds 125,800 shares in Arthur J. Gallagher & Co. (NYSE:AJG), as of the third quarter. This stock accounts for 2.40% of the firm’s Q3 investment portfolio. 

As of the second quarter of 2021, of the 873 elite funds monitored by Insider Monkey, 40 hedge funds reported owning stakes in Arthur J. Gallagher & Co. (NYSE:AJG), worth $501.3 million. This represents a significant increase as compared to the preceding quarter, when 24 funds were long Arthur J. Gallagher & Co. (NYSE:AJG), with a total stake value of $283.9 million. 

On October 28, Arthur J. Gallagher & Co. (NYSE:AJG) announced Q3 results. EPS for the quarter equaled $1.33, beating estimates by $0.12. The revenue came in at $2.11 billion, exceeding estimated revenue by $153.80 million. 

Mark Hughes from Truist raised his FY21 EPS view by $0.14 to $5.52, following the solid Q3 performance. He kept a Buy rating on Arthur J. Gallagher & Co. (NYSE:AJG) on October 29, raising the price target from $170 to $200. 

7. Globe Life Inc. (NYSE:GL)

Prospector Partners’ Stake Value: $19,547,000

Percentage of Prospector Partners’ 13F Portfolio: 2.51%

Number of Hedge Fund Holders: 28

Globe Life Inc. (NYSE:GL) is a Texas-based holding company offering financial services including life insurance, annuity, and health insurance. Globe Life Inc. (NYSE:GL) was known as the Torchmark Corporation until 2019, when it underwent a corporate rebranding. Gillespie’s Prospector Partners’ owns 219,560 shares in Globe Life Inc. (NYSE:GL) as of September 2021, worth $19.5 million, representing 2.51% of the fund’s total investments. 

Credit Suisse analyst Andrew Kligerman on October 19 kept an Outperform rating on Globe Life Inc. (NYSE:GL), lowering the price target from $135 to $130. There were concerns that continuing COVID-19 mortality might impact Globe Life Inc. (NYSE:GL), however, the analyst believes that the heightened mortality will not impact the EPS to a large extent. 

Globe Life Inc. (NYSE:GL) posted its Q3 results on October 20. The EPS for Q3 equaled $1.78, missing estimates by -$0.11. Revenue, however, exceeded expectations at $1.28 billion, beating estimates by $15.97 million. 

Of the 873 hedge funds in the database of Insider Monkey as of June this year, 28 funds were bullish on Globe Life Inc. (NYSE:GL), with stakes worth over $795 million. This is compared to 33 hedge funds in the preceding quarter, with a total stake value of approximately $844 million. 

6. Brown & Brown, Inc. (NYSE:BRO)

Prospector Partners’ Stake Value: $19,709,000

Percentage of Prospector Partners’ 13F Portfolio: 2.53%

Number of Hedge Fund Holders: 26

Brown & Brown, Inc. (NYSE:BRO) is a top stock pick of John Gillespie’s Prospector Partners, with the investment firm owning 355,430 shares in Brown & Brown, Inc. (NYSE:BRO) as of Q3, worth $19.7 million, representing 2.53% of the firm’s stock portfolio. Brown & Brown, Inc. (NYSE:BRO) offers insurance, reinsurance, and federal programs services to customers. Brown & Brown, Inc. (NYSE:BRO) serves business, corporate, institutional, and government clients. 

As of the second quarter of 2021, 26 hedge funds reported owning stakes in Brown & Brown, Inc. (NYSE:BRO), worth $1.2 billion, up from 25 funds in the preceding quarter, with an approximate stake value of $915.4 million. 

Brown & Brown, Inc. (NYSE:BRO) posted its Q3 results on October 25. The EPS came in at $0.58, beating estimates by $0.05. Revenue for the quarter totaled $770.30 million, exceeding estimates by $9.71 million. 

Elyse Greenspan from Wells Fargo on October 29 raised the price target on Brown & Brown, Inc. (NYSE:BRO) from $57 to $64 and kept an Equal Weight rating on the stock after the Q3 earnings. She also raised the company’s EPS estimates for 2021 through 2023. 

In addition to Berkshire Hathaway Inc. (NYSE:BRK-A), eBay Inc. (NASDAQ:EBAY), Microsoft Corporation (NASDAQ:MSFT), and Johnson & Johnson (NYSE:JNJ), Brown & Brown, Inc. (NYSE:BRO) is a notable stock in Gillespie’s Q3 portfolio. 

Click to continue reading and see Top 5 Stock Picks of John D. Gillespie’s Prospector Partners

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Disclosure: None. Top 10 Stock Picks of John D. Gillespie’s Prospector Partners is originally published on Insider Monkey.

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