Stocks That Eton Park Keeps Buying
Turning back to his hedge fund, up to 30% of it can be invested in private market transactions. Investors committed their capital for about three to five years – considerably longer than what is expected in hedge funds. Investors have to invest at least $5 million and pay an annual management fee of 2% plus 20% of all profits.
Now, let's see which Eric Mindich´s top picks are:
eBay Inc. (EBAY): eBay is the internationally known online trading platform for buyers and sellers that operates in nearly 40 markets within different industries, including used cards, electronics, clothing and books. Most of its customers come from developing markets, thus giving EBAY a great global opportunity.
Speaking about figures, eBay will garner $2.6 billion from its 30% stake in Skype. As regards quarter results, eBay earned, together with $1.9 billion in the proceeds from the sale of Silver Lake partners, $1.4 billion return.
Future expectations for the company are solid thanks to the spread of the international e-commerce and the growth rates. In addition, PayPal is now used by 60 top retailers in the US, such as Wal-Mart, HP and Home Depot.
Most importantly, eBay has adjacent platforms, for example, classified websites and advertising services that diversify the company. Investments in MercadoLibre, Tradeshift and FreshBooks (e-invoicing), BillFloat (deferred consumer payments), Magento (shopping cart software), and Appcelerator (mobile platform developer) also extend eBay's reach.
Eton Park thinks that EBAY at prices between $28 to $30 is an attractive buy and maybe they will keep accumulating to the position in the coming quarters if the stock keeps trading in the current tight range.
Comcast Corp (CMCSK): Comcast operates in the cable industry and also offers internet access and phone services. Comcast largest markets include Philadelphia, Chicago, San Francisco, Seattle and Boston.
Comcast is unique in its industry. Today, there is no company that can match CMCSK's ability to offer multiple services over one connection. Furthermore, customers are highly loyal.
In 2011, Comcast combined its cable networks with NBC Universal, thus expanding its reach. For the future, it is expecting to better meet customers’ demands. For such purpose, the firm has deployed DOCSIS 3.0, a technology that allows far faster Internet access speeds. The small and medium-sized business services market should also be a source of growth for Comcast for several years.
Comcast is a solid company and if the market correct again, Eton Park should start accumulating at levels between $22 and $20.
Williams Companies Inc. (WMB): WMB is an integrated gas firm. In terms of plans, it is working on a split off of its exploration and production unit into WPX Energy through an IPO and a tax-free spin-off of the rest in 2012. After the spins-off Williams will be able to realize asset values for its separate businesses.
The company´s pipelines have determined expansion projects and long-term sales contracts to boost earnings and return growth. Midstream assets are poised to capture growing gas gathering and processing demand in emerging fields.
I think investing in WMB is risky because the business has many things that the investor cannot control, such as gas prices and macro momentum. Eton experienced losses investing in YPF and I think the firm has not a superb track record investing in energy companies.
Mountain Inc. (IRM): IRM is involved in the document management industry and it is a dominant player therein. The firm has customers around the globe and its service line accounts for 95% of the revenue. The remainder derives from a new electronic/digital business line.
Iron Mountain is a very stable business thanks to its revenue stream. Most importantly, the increase in annual pricing will bring higher profit margins.
IRM is a solid business that even Warren Buffett looked at when the stock traded in the mid $20s. I will buy the stock if it comes down to that price. The business is solid and understandable.
Citigroup Inc. (C): Citi is a global financial services company that operates in more than 160 countries. It includes a regional consumer banking segment through which it serves commercial and consumer clients and also an institutional clients group by means of which it provides investment banking, treasury and securities services.
Furthermore, Citi is completing its participation in brokerage, asset management and consumer lending businesses that are part of its Holdings segment.
Citi will benefit from growth in Asia, Latin America and other emerging markets. In addition, with new management, Citi has been recapitalized and refocused.
Eton Park analyzed C and saw a bank that has a solid balance sheet and a franchise that could grow if U.S. housing recovers and emerging markets keep growing, which would increase the value of C's international business.