Over the past few days, hedge funds have been filing their form 13-F, which is a quarterly report of equity holdings by 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 Abner Herrman & Brock LLC, which provides portfolio management for high net worth individuals, endowments, and corporate retirement plans.
Recently the fund reported its equity portfolio at the end of September. The total value of the portfolio amounted to $339.4 million, up from $331.2 million disclosed at the end of the previous quarter. Consequently, the fund's total return was 2.5% in the last quarter. The filing revealed that at the end of September, the fund added five new positions to its equity portfolio, and sold out of five other companies. The top 10 portfolio holdings as of the end of the quarter represented 30.62%. The largest changes from previous 13-F´s fillings are in the health care sector (3.3%) followed by the energy sector.
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 Merck & Co. (MRK, Financial), in which the fund disclosed a $15.7 million stake with over 265,640 shares. The company is a leading global drugmaker, producing a wide range of prescription drugs in many therapeutic classes in the U.S. and abroad.
It has improved earnings per share by 126.66% in the most recent quarter compared to the same quarter a year ago. With respect to price performance, this stock has enjoyed a rise of 25.25% which was in line with the performance of the market. It has a proven commitment to returning cash to investors, with a current dividend yield of 3.3% which is considered good to protect investor´s purchasing power.
Other hedge fund gurus have also been active in the company. George Soros (Trades, Portfolio) bought in it in the second quarter of 2014.
The Walt Disney Company (DIS, Financial) comes in next; the fund owns more than 120,650 shares, worth $10.74 million. This media and entertainment conglomerate has diversified global operations in theme parks, filmed entertainment, television broadcasting and consumer products.
It has reported strong earnings growth of about 26.73% and the stock has surged by 34.78% over the past year. During the past fiscal year, the company increased its bottom line. It earned $3.38 versus $3.12 in the previous year. This year, Wall Street expects an improvement in earnings ($4.32 versus $3.38).
Other hedge fund gurus have also been active in the company. Ken Heebner (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio) and Ray Dalio (Trades, Portfolio) have bought it in the second quarter of 2014.
In The Boeing Company (BA, Financial) the fund disclosed ownership of over 119,540 shares, worth $10.25 million. The company is the world's largest manufacturer of commercial jets and the second largest military weapons maker.
It has reported strong earnings growth of about 58.86% and the stock has surged by 7.24% over the past year. The current dividend yield is 2.2%, which is considered quite good enough to protect the purchasing power. Other hedge fund gurus have also been active in the company. Ruane Cunniff (Trades, Portfolio) bought it, while Joel Greenblatt (Trades, Portfolio), Ken Fisher (Trades, Portfolio), Bill Frels (Trades, Portfolio), Manning & Napier Advisors, Inc. and Murray Stahl (Trades, Portfolio) have taken long positions in it in the second quarter of 2014.
Final Comment
In the next chart we can appreciate the stock’s price movements. Since 2009, the three stocks have an upward trend.
All of the stocks still have good upside potential despite the fact that they have already risen in the past year. The three stocks are certainly attractive for fundamental investors and make it a worthy investment for Abner’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: Omar Venerio holds no position in any stocks or funds mentioned.
