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An Aggregated Top Yield Portfolio of Warren Buffett, Wilbur Ross, Seth Klarman and George Soros

November 16, 2011 | About:
Federico Flom

Federico Flom

6 followers
Today I am providing a brief description of the portfolio I made of the five top dividend stocks of the market's Gurus: Warren Buffett, Wilbur Ross, Steve Mandel, Seth Klarman and George Soros

I chose the five companies I will mention below because of their high dividend yield.

Let's take a look at each of them. I will then explain why I turned to them.

GlaxoSmithKline: (GSK) This is one of the largest pharmaceutical companies in the world. Its record in the industry as well as the good results in the third quarter that highly matched my expectations called my attention. Furthermore, Glaxo is a well positioned company in the development of orphan drugs and has a strong position in the vaccine market and pricing power in a lupus drug.

I'm also particularly interested because it has gained a good position in emerging markets. Indeed, one of its drugs, Cervarix, is selling very well in Japan.

Glaxo generates about GBP6 billion in operating cash flow on an annual basis and closed 2010 with just under GBP6 billion in cash. It is definitely on a solid ground.

Glaxo's size ranks in the top tier of the pharmaceutical industry. This enormous bulk creates economies of scale in developing new drugs. In the highly uncertain race to drug development, the company's vast resources have created multiple opportunities for new blockbuster drugs. Glaxo's deep pockets have funded close to 20 major drugs in Phase III development. Further, the company has compiled more than 100 early-stage compounds in its pipeline. Recently approved lupus drug Benlysta should go on to develop into a blockbuster.

Warren Buffett kept the position unchanged in the last quarter.

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Cooper Tire & Rubber (CTB) is a low-cost replacement tire supplier that works through small independent tire dealers. It can be placed between the strong tire providers, such as Michelin and Firestone, and small ones. Despite it is not a low-cost producer and the consolidation among retailers may affect its pricing power, CTB is in an upward trend due to an increasing demand and constrained production capacity.

I think it became the Wilbur Ross top stock not only because of its $413 million cash in the balance sheet but also because CTB is taking steps to grow in emerging markets such as China, where it is making important investments to start manufacturing there.

I like the ability the company has to consistently earn returns above its capital cost in the future. Regarding CTB, at least 2010 is very decent. With $413 million in cash and a total $327 million in debt, it has been able to meet its net interest expenses. Furthermore, the operating income increased more than six times. Why wouldn't I think this situation can be enhanced in a future time?

Wilbur Ross reduced the position 40% in the last quarter

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PDL BioPharma (PDLI) is involved in antibody humanization patents and royalty assets. It is Seth Klarman's top dividend stock and I have no doubt why. Its cash position is $248 million, shares provide a nice return and the company is committed to return money to shareholders through dividends and convertible note buybacks.

Seth Klarman added to his position 68% from last quarter

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YPF S.A (YPF) is a Dividend Superstar and George Soros noticed that. It has good prospects to increase earnings. YPF is Argentina’s largest energy company. It produces and owns approximately 50% of Argentina’s oil and gas supplies, and also owns significant downstream assets.

The company currently pays approximately a 10% dividend (which is up significantly in recent days on a stock sell-off), has a forward P/E ratio of 9.13 and an EV/EBITDA ratio of only 4.86.

George Soros added to his position 144% in the last quarter

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Rating: 4.1/5 (8 votes)

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