Over the past days hedge funds have been filing their form 13-F, which is a quarterly report of equity holdings by filed institutional investment managers with at least $100 million in equity assets under management, as required by the United States Securities and Exchange Commission (SEC). In this article, let´s concentrate in one particular hedge fund and try to see the principal holdings in its portfolio. I will look into Moore Capital Management LP from Louis Moore Bacon (Trades, Portfolio), the hedge fund manager and trader who uses a global macro strategy to invest in the markets. Bacon has been in the top 20 ranking of top 100 money earners since the 1990s.
Recently the fund reported its equity portfolio, as at the end of last year. The total value of the portfolio amounted to $4.1 billion, up from $2.48 billion disclosed at the end of the previous quarter. Consequently, the fund's total return was 67.4% in the last quarter. The filing revealed that at the end of last year, the fund added 137 new positions to its equity portfolio, and sold out of 120 other companies. The top ten portfolio holdings as of the end of the quarter represented 33.93%. The largest changes from previous 13-F´s fillings are in the industrials sector (2.9%) followed by financials and utilities stocks (around 1.5% each).
In this article, we have selected three companies, in which the fund holds the largest stakes, in terms of market value.
The first on the list is Cisco Systems Inc. (CSCO), in which Moore Capital disclosed a $57.75 million stake with over 2.58 million shares. Cisco is the world's largest supplier of high-performance computer networking systems. The firm continues strengthening its focus on corporate software and technology services, which we see as a main driver in the current years. In the last quarter of 2013, the firm reported a decline in earnings per share in the most recent quarter compared to the same quarter a year ago. Cisco increased its bottom line by earning $1.86 versus $1.49 in the prior year. It has a proven commitment to returning cash to investors, with a current dividend yield of 3.1% which is considered good to protect investor´s purchasing power.
Bank of America Corporation (BAC) comes in next, the fund owning over 1.53 million shares, worth $23.8 million. The company reported earnings per share increased in the most recent quarter compared to the same quarter a year ago. As we can see in the next chart, the bank has demonstrated a pattern of positive EPS growth over the past two years.
In JPMorgan Chase & Co. (JPM) Moore Capital disclosed ownership of over 308.880 shares, worth $18.06 million. The company reported earnings per share decreased by 0.5% compared to the same quarter one year prior, but beat the Zacks Consensus Estimate by 4.0%. The company returns cash to investors. It raised its quarterly dividend by 26.7% to $0.38 per share. The current dividend yield is 2.5%, which is considered quite enough to protect the purchasing power. In the recent past, a pact of $13 billion settlement with the U.S. government, resolved mortgage-related issues. Also, JPMorgan´s credit quality continues to normalize.
In the next chart we can appreciate the stock’s price movement. All of them have an upward trend for the five-year period.
The three stocks are certainly attractive for fundamental investors and make it a worthy investment for Moore Capital Management’s portfolio. In future articles we are going to calculate the intrinsic value of these stocks to determine if they are a good buy in terms of valuation.
Disclosure: Victor Selva holds no position in any stocks mentioned.