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 Paulson & Co Inc.
Recently the fund reported its equity portfolio, as at the end of June. The total value of the portfolio amounted to $20.43 billion, up from $19.88 billion disclosed at the end of the previous quarter. Consequently, the fund's total return was 2.8% in the last quarter. The filing revealed that at the end of June, the fund added 8 new positions to its equity portfolio and sold out 15 positions. The top ten portfolio holdings as of the end of the quarter represented 40.67%. The largest changes from previous 13-F´s fillings are in the health care and consumer discretionary sectors.
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 Extended Stay America, Inc. (STAY), in which the fund disclosed a $1.269 billion stake with over 55.71 million shares.
Extended Stay America is the largest mid-price extended stay hotel operator in the U.S. Almost 700 hotels in 44 states, offers friendly features such as in-room kitchens, unlimited local phone services, on-site guest laundry services, and free breakfast. With an occupancy rate that surpasses the industry average (74% vs 61%), the company currently holds a Zacks Rank #3 (Hold), which I think is a good signal.
It will release its second quarter results on Thursday, July 31, 2014, before the opening bell, and if it continues with the strong performance of the past months, I think we can see a good price movement on that day.
Other hedge fund gurus have also been active in the company. George Soros (Trades, Portfolio), Ron Baron (Trades, Portfolio) and Steven Cohen (Trades, Portfolio) have taken long positions too in the first quarter of 2014.
The SPDR Gold Shares (GLD) comes in next, the fund owning over 10.23 million shares, worth $1.265 billion.
The SPDR Gold Shares is an investment fund incorporated in the U.S. and is managed by a team at SSgA Funds Management Inc. This fund is one of 126 SSgA Funds Management Inc. exchange-traded funds launched since 12/16/1998. The investment objective of the Trust is to reflect the performance of the price of gold bullion, (less the trust´s expenses). It is the largest and most liquid physically backed gold offering.
The attractiveness of gold is that it works as a currency hedge, an inflation hedge, and a diversification tool in your portfolio. Further, Investing in gold is not a priority for every investor, but it has some valuable uses in a dollar-based portfolio as well.
The SPDR Gold Shares has returned an annual rate of about 11% since inception. More recently, on a year to date basis, the ETF has returned 6.49%.
Other hedge fund gurus have also been active in the company. Jean-Marie Eveillard (Trades, Portfolio), John Burbank (Trades, Portfolio) and Steven Cohen (Trades, Portfolio) have taken long positions too in the first quarter of 2014.
In Vodafone Group Public Limited Company (VOD) the fund disclosed ownership of over 28.52 billion shares, worth $1.05 billion.
This company is the leading global provider of international wireless telecommunications services, with assets in Western Europe and in emerging markets such as India and Africa. With more than 400 million proportionate customers, it has networks across the world and in places where it doesn't have its own operations, it has formed strategic partnerships.
In Europe, the company has 127.1 million subscribers and the majority of its clients' calls on its own network, reducing roaming charges, which lowers costs to subscribers and increases profits for the firm. Further, its scale gives it advantage over competitors.
In the next chart we can appreciate the stock’s price movements in the last year.
As we have seen, all of the stocks still have good upside potential despite the fact that they have no risen in the past year. The three stocks are certainly attractive for fundamental investors and make it a worthy investment for Paulson’s portfolio.
Disclosure: Omar Venerio holds no position in any stocks or funds mentioned.
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