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Tortoise Portfolio. The objective of Morningstar, Inc.’s Tortoise Portfolio is to focus on “high-quality” businesses, defined as having both durable competitive advantages and strong balance sheets. These are often well-established market leaders with economic moats (preferably wide). Morningstar’s aim for the portfolio is to generate risk-adjusted returns that outperform the S&P 500 over a full market cycle. Hare Portfolio. The objective of Morningstar, Inc.’s Hare Portfolio is to seek long-term capital appreciation ahead of the S&P 500 Index, focusing on companies with strong and growing competitive advantages. Morningstar is willing for the Hare to accept greater risk in exchange for higher total return potential. David Harrell is the editor of the Morningstar StockInvestor, a monthly newsletter that focuses on a wide-moat stock investing strategy. For illustration purposes, issues highlight activities pertaining to Morningstar, Inc. portfolios invested in accordance with a strategy that seeks to focus on companies with stable or growing competitive advantages. David served in several senior research and product development roles and was part of the editorial team that created and launched Morningstar.com. He was the co-inventor of Morningstar's first investment advice software. David joined Morningstar in 1994. He holds a bachelor's degree in biology from Skidmore College and a master's degree in biology from the University of Illinois at Springfield. Matthew Coffina, CFA, is the portfolio manager for Morningstar Investment Management LLC’s Hare strategy. Matt was previously a senior healthcare analyst, covering managed care and pharmaceutical services companies. Matt also developed the discounted cash flow model used by Morningstar analysts to assign fair value estimates to most of the companies in its global coverage universe. Matt joined Morningstar in 2007. He holds a bachelor's degree in economics from Oberlin College and also holds the Chartered Financial Analyst (CFA) designation. Michael Corty, CFA, is the portfolio manager for Morningstar Investment Management LLC’s Tortoise strategy. Before focusing his attention on the Tortoise, Michael co-managed five equity strategies offered by Morningstar Investment Management LLC and Morningstar Investment Services LLC since December 2013. Michael was previously a senior equity analyst on Morningstar Inc.’s equity research team covering companies in the media, business services, and consumer industries. Michael also spent several years on Morningstar’s moat committee, which assigns economic moat and moat trend ratings to their global coverage. Prior to joining Morningstar in 2004, Michael worked at a public accounting firm and in the business lending arm of a major commercial bank. He has an undergraduate accounting degree from Loyola Marymount University, an MBA from Cornell University and is a CFA charterholder. Register E-mail alerts Manage Account Home Commentary Tortoise Portfolio Hare Portfolio Tortoise & Hare Watchlist Newsletters Purchase David Harrell Editor, Morningstar StockInvestor David Harrell is the editor of the Morningstar StockInvestor, a monthly newsletter that focuses on a wide-moat stock investing strategy. For illustration purposes, issues highlight activities pertaining to Morningstar, Inc. portfolios More... Current Issue Past Issues Investment Strategy Fair Value Increases for Mastercard, Visa, and More StockInvestor SM focuses on the activities of portfolios of Morningstar, Inc. that are invested in accordance with the Tortoise and Hare strategies. These portfolios are managed by Morningstar Investment Management LLC, a registered investment adviser, which manages other client portfolios using these strategies. Please see new analyst notes and updates below from Morningstar Research Services for AmerisourceBergen ABC, Enbridge ENB, Mastercard MA, Netflix NFLX, and Visa V. Two general notes about the impact of Democratic control of both houses of Congress and the White House on drug and health policies also included below. Best wishes, David Harrell, Editor, Morningstar StockInvestor Walgreens and AmerisourceBergen Expand Strategic Alliance by Soo Romanoff | Morningstar Research Services LLC | 01-06-21 Narrow-moat Walgreens and AmerisourceBergen (ABC) expanded their strategic alliance, and ABC is purchasing Walgreens' international wholesale distribution business (excluding operations in China, Italy, and Germany) for $6.5 billion ($6.275 billion in cash and 2 million ABC shares). Strategically, this is a sound acquisition for ABC, as it would quickly grant the company leading positions in new international markets while enhancing the company’s margins. Conversely, the proposed acquisition would give Walgreens funding to focus on its core strategic initiatives around wellness. In conjunction with the announced acquisition, Walgreens also extended its U.S. distribution contract with ABC through 2029. Typically, these contracts have average durations of three years, so the longer term provides the wholesaler with stability from its largest client. Netting the various components of the announcement, we view this as a positive for AmerisourceBergen and as a result have raised our fair value estimate to $130 from $110 to reflect the anticipated boost in revenue and slight benefit to long-term margins. Increasing Our Fair Value Estimate for Wide-Moat Enbridge by Joe Gemino, CPA | Morningstar Research Services LLC | 01-06-21 We are increasing our fair value estimate for wide-moat Enbridge to $45 (CAD 58) from $43 (CAD 57), driven by our increased Mainline utilization forecasts resulting from the absence of the Keystone XL pipeline, which we no longer believe will be built. As a reminder, our fair value includes the probability that Line 3 is built and fully operational at 80% and that the pipeline is protected by its integrity replacement status at 20%. Despite a recent rally, the stock remains highly undervalued. Enbridge is trading in 4-star territory and remains one of our top picks in the Canadian energy sector. We think the market is mistaken to price Enbridge as if oil prices will remain weak forever. However, we do not expect the market's concerns will be fully addressed for some time, which can lead to volatile swings in the stock. We advise investors to stay the course while getting paid a handsome 7.9% dividend. In the end, we believe Enbridge's long and winding road will lead to 40% upside. Increasing Mastercard's Fair Value Estimate by Brett Horn, CFA | Morningstar Research Services LLC | 01-06-21 We are increasing our fair value estimate for Mastercard to $312 from $291 per share, due to time value since our last update and changes to our long-term growth assumptions. Our fair value estimate equates to 37.9 times projected 2021 earnings, adjusted for one-time expenses. While revenue will likely see material declines in the very near term due to the coronavirus, secular trends and improving share should allow Mastercard to maintain recent growth rates over the next five years, and we project net revenue to grow at a 12% CAGR. We think growth will be increasingly fueled by international markets, and Mastercard's mix leaves it relatively well-positioned. While margins have held roughly level recently and will be pressured this year, we think the company can achieve some modest margin expansion in future, and we project operating margins (based on gross revenue) to improve from 39% in 2019 to 41% by 2024. On a net revenue basis, we assume operating margins improve at an annual average rate of about 90 basis points. We assume the increase in client incentives as a percentage over revenue slows a bit in future, following fairly strong increases in recent years. Netflix Faces Increasing Competition With Cash Burn Set to Resume in 2021 by Neil Macker, CFA | Morningstar Research Services LLC | 01-08-21 From its origins as a DVD rental by mail service, Netflix ha...