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Bearish Investor John Hussman's 5 Top New Stock Buys

May 02, 2014 | About:
Holly LaFon

Holly LaFon

250 followers
John Hussman (Trades, Portfolio), a market analyst and founder of the Hussman Funds, has a dire outlook for the markets, largely owing to Fed interference in them. He warned in his most recent weekly commentary:

“The Federal Reserve has stomped on the gas pedal for years, inadvertently taking price/earnings ratios at face value, while attending to “equity risk premium” models that have a demonstrably poor relationship with subsequent market returns. As a result, the Fed has produced what is now the most generalized equity valuation bubble that investors are likely to observe in their lifetimes... The median price/revenue multiple for S&P 500 constituents is now higher than at the 2000 market peak. The average price/revenue multiple across S&P 500 constituents is now above every point in that bubble except the first and third quarters of 2000. The central message to investors with unhedged equity positions and investment horizons shorter than about 7 years: Prospective returns have reached zero. The value you seek from selling in the future is already on the table today. The future is now.”

Nonetheless, the bearish investor found 33 new stocks to add to his portfolio in the first quarter, which places his total holdings at 197% with 24% quarter-over-quarter turnover. Stocks in his portfolio are most highly weighted in the Technology sector at 27.8%, Health Care at 20.6% and Consumer Cyclical at 15.2%.

Hussman’s top new buys of the quarter were: Viacom Inc. (VIA.B), Wells Fargo & Co. (WFC), Check Point Software Technologies Ltd. (CHKP), Varian Medical Systems Inc. (VAR) and Scotts Miracle Gro Co. (SMG).

Viacom Inc. (VIAB)

John Hussman (Trades, Portfolio) purchased 250,000 shares of Viacom, for a 1.6% portfolio holding. The company’s share price averaged $85 during the first quarter.

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Viacom Inc. was organized in Delaware in 2005. The company is a entertainment content company that connects with audiences through compelling content across television, motion picture, online and mobile platforms in more than 160 countries and territories. Viacom Inc. has a market cap of $37.02 billion; its shares were traded at around $84.53 with a P/E ratio of 16.20 and P/S ratio of 3.00. The dividend yield of Viacom Inc stocks is 1.40%. Viacom Inc. had an annual average earnings growth of 23.20% over the past 10 years. GuruFocus rated Viacom Inc. the business predictability rank of 2.5-star.

Wells Fargo & Co. (WFC)

Hussman purchased 750,000 shares of Wells Fargo, a 1.5% portfolio holding. The company’s share price was $47 on average in quarter one.

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Wells Fargo & Co. is a corporation organized under the laws of Delaware and a financial holding company and a bank holding company registered under the Bank Holding Company Act of 1956, as amended. Wells Fargo & Co. has a market cap of $260.99 billion; its shares were traded at around $49.60 with a P/E ratio of 12.70 and P/S ratio of 3.20. The dividend yield of Wells Fargo & Co. stocks is 2.40%. Wells Fargo & Co. had an annual average earnings growth of 4.60% over the past 10 years.

Check Point Software Technologies Ltd. (CHKP)

Hussman purchased 200,000 shares of Check Point Software Technologies, for a 1% portfolio holding. The shares cost $66 on average during quarter one.

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Check Point Software Technologies Ltd. was incorporated as a company under the laws of the State of Israel in 1993. Check Point Software Technologies Ltd. has a market cap of $12.15 billion; its shares were traded at around $63.20 with a P/E ratio of 19.30 and P/S ratio of 9.0. Check Point Software Technologies Ltd had an annual average earnings growth of 16.40% over the past 10 years. GuruFocus rated Check Point Software Technologies Ltd. the business predictability rank of 4.5-star.

Varian Medical Systems Inc. (VAR)

Hussman purchased 150,000 shares of Varian Medical Systems, which comprises 0.94% of his portfolio. The stock’s average price per share was $82 in the first quarter.

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Varian Medical Systems Inc. is a Delaware corporation and was originally incorporated in 1948 as Varian Associates Inc. Varian Medical Systems Inc. has a market cap of $8.28 billion; its shares were traded at around $79.95 with a P/E ratio of 19.90 and P/S ratio of 2.90. Varian Medical Systems Inc. had an annual average earnings growth of 13.70% over the past 10 years. GuruFocus rated Varian Medical Systems Inc. the business predictability rank of 4.5-star.

Scotts Miracle Gro Co. (SMG)

Last, Hussman bought 205,000 shares of Scotts Miracle Gro Co., representing 0.94% of his portfolio. The stock’s price on average was $59 per share in the quarter.

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Scotts Miracle Gro Co. is a manufacturer and marketer of branded consumer lawn and garden products. Scotts Miracle Gro Co. has a market cap of $3.79 billion; its shares were traded at around $61.15 with a P/E ratio of 23.30 and P/S ratio of 1.40. The dividend yield of Scotts Miracle Gro Co. stocks is 2.70%. Scotts Miracle Gro Co. had an annual average earnings growth of 3.60% over the past 10 years.

For more of John Hussman (Trades, Portfolio)’s latest reported buys, sells and adds of stocks, see his portfolio here. Not a Premium Member of GuruFocus? Try it free for 7 days here!


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