We recently compiled a list of the Top 10 Stocks to Buy According to Eagle Capital Management. In this article, we are going to take a look at where Aon plc (NYSE:AON) stands against the other stocks.

Eagle Capital Management, a New York-based hedge fund, was founded in 1988 by Beth and Ravenel Curry. Their son, Ravenel Boykin Curry IV, joined the firm around the early 2000s after managing a portfolio at Kingdon Capital and is currently a key partner. A Yale University graduate with an Economics degree and an MBA from Harvard Business School, he plays a pivotal role in the firm’s strategy. Historically, Eagle has outperformed major benchmarks, including the broader market and the Russell Value Index. Over five years, Eagle delivered a 5.7% return versus the market's 2.4%, and since its inception, it has generated a cumulative return of 2,031%, significantly surpassing both indices.

Eagle Capital Management adheres to a disciplined investment philosophy centered on identifying undervalued companies with unrecognized long-term growth potential. The firm employs a fundamental, bottom-up research approach, focusing on the key drivers of long-term value creation. By maintaining an extended investment horizon, Eagle Capital is able to take a distinctive perspective on industry and company trends. The firm’s investment strategy prioritizes businesses with two essential characteristics: strong underlying assets capable of generating cash flow and sustaining value even in challenging market conditions, and transformative changes within the company that remain unrecognized by the broader market yet are likely to drive future growth. This approach aims to provide downside protection during market downturns while positioning the portfolio for enhanced returns as these changes materialize. These core principles have been integral to Eagle Capital’s strategy since its founding, forming the foundation of its competitive advantage and contributing to its consistent market outperformance since 1988.

Moreover, Eagle Capital Management follows a value-oriented investment strategy with a long-term perspective, assessing price in relation to intrinsic value rather than relying solely on traditional valuation metrics like price-to-earnings or price-to-book ratios. The firm’s investment team focuses on long-term prospects, particularly beyond five years, analyzing business growth, industry dynamics, and margin potential while identifying opportunities that the broader market may overlook. A key component of Eagle’s strategy is maintaining a “Margin of Safety,” achieved through valuation discounts, business resilience, growth potential, and strong, experienced leadership.

The firm concentrates its portfolio on high-conviction investments, typically holding 25-35 stocks. As of Q4 2024, it holds over $27.4 billion in 13F securities, and its top ten positions account for 57.62% of its portfolio. This approach allows Eagle to focus on asymmetric risk opportunities, ensuring that its top positions offer significant upside potential while maintaining strong downside protection. Adopting a private equity-style approach to public equity investing, Eagle builds positions in high-quality businesses with sustainable returns and durability. A rigorous due diligence process precedes any investment decision, and the firm leverages direct access to senior management at portfolio companies to gain deeper insights into long-term strategies, enabling decisive action when the right opportunities emerge. Since its inception, Eagle has consistently applied the same investment philosophy, aiming to generate superior returns through rigorous valuation analysis and a long-term perspective. The firm’s long-term investment horizon allows it to take a differentiated approach to market trends, focusing on businesses undervalued relative to their intrinsic earnings power.

Our Methodology

The stocks discussed below were picked from Eagle Capital Management’s Q4 2024 13F filings. They are compiled in the ascending order of the hedge fund’s stake in them as of December 31, 2024. To assist readers with more context, we have included the hedge fund sentiment regarding each stock using data from 1,008 hedge funds tracked by Insider Monkey in the fourth quarter of 2024.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

A group of multi-cultural professionals discussing the future of insurance services in a modern office.

Aon plc (NYSE:AON)

Number of Hedge Fund Holders as of Q4: 59

Eagle Capital Management’s Equity Stake: $1.43 Billion 

Aon plc (NYSE:AON), a British-American professional services firm specializing in risk mitigation, delivered strong financial performance in 2024, reflecting consistent execution of its strategic initiatives. The company achieved a 6% organic revenue growth for both the fourth quarter and the full year, with steady expansion across all solution lines. Aon’s profitability saw a significant boost in the fourth quarter, with net income attributable to shareholders rising 44% year over year. Diluted earnings per share climbed to $3.28, up from $2.47 in the prior-year period, while adjusted net income per share increased 14% to $4.42. These results underscore the company's ability to enhance shareholder value through strong operational efficiency and disciplined cost management, further solidifying its market leadership.

In the fourth quarter, Aon plc (NYSE:AON) transitioned from a single reporting segment to two distinct units: Risk Capital and Human Capital, aligning its structure with client needs to enhance its Aon United strategy. Risk Capital, which includes Commercial Risk and Reinsurance Solutions, generated $2.5 billion in revenue, a 13% increase, while Human Capital, encompassing Health and Wealth Solutions, saw a 41% surge to $1.6 billion. Overall, total revenue rose 23% year-over-year to $4.1 billion, driven by 6% organic growth and contributions from the NFP acquisition, partially offset by a 1% negative foreign currency impact. Operating expenses climbed 18% to $3.1 billion due to ongoing costs from NFP, increased intangible asset amortization, and investments in long-term expansion, though restructuring savings of $40 million helped mitigate some expenses.

In the fourth quarter of 2024, Eagle Capital Management held over 3.98 million shares in Aon plc (NYSE:AON), which were valued at $1.43 billion and represented 5.21% of the fund’s portfolio.

Diamond Hill Large Cap Strategy stated the following regarding Aon plc (NYSE:AON) in its Q3 2024 investor letter:

“We continue finding compelling new ideas, even as the bull market proceeds. In Q3, we initiated three new positions in Aon plc (NYSE:AON), Accenture and Builders FirstSource. Aon, one of the world’s leading insurance brokers and consultants, has an excellent track record of growing free cash flow per share. Looking forward, as it fully integrates its acquisition of NFP, which had been a leading middle market broker and consultant, we believe Aon has an attractive opportunity to accelerate its growth rate. With shares trading at an attractive discount to our estimate of intrinsic value, we capitalized on the opportunity to initiate a position in this high-quality company.”

Overall AON ranks 5th on our list of the stocks to buy according to Eagle Capital Management. While we acknowledge the potential of AON as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AON but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stock To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap

Disclosure: None. This article is originally published at Insider Monkey.