Steven Cohen (Trades, Portfolio), the billionaire hedge fund manager, has achieved annual average returns of 30% in the last two decades. The top fund manager buys and holds a stock for relatively short-term periods.
In the last round of 13F filings, Point72 Asset Management reported an equity portfolio valued at $17.94 billion and a top 10 holdings concentration of 14.41%. The portfolio is mainly invested in Consumer Discretionary (21.52%), Energy (17.14%) and Health Care (18.59%) stocks. Point72 Asset Management's last 13F filing showed that the fund raised its exposure toward consumer discretionary and health care stocks, but Cohen reduced his holdings in the energy sector.
During the first trimester, he opened positions in 389 new stocks, made additional purchases of 218 stocks, eliminated 262 stocks and reduced holdings in 181 stocks. Let's now concentrate on one of his latest new purchase: Becton, Dickinson and Co.Ă‚ (BDX, Financial). Point72 bought 556,000 shares in the first quarter, with the position valued at just under $102 million. Since the time of purchase, the stock gained 5.3%; on a year-to-date basis, the stock returns 17.4% which is appealing.
The company has a “reiterated rating” of buy and hold by Jefferies Group and Royal Bank of Canada (RY, Financial). Its price target is $177 and $200. The med company is currently trading at $192.36. Yahoo (YHOO, Financial) Finance estimates a one-year target share price at $199.96.
Investors will be paid a dividend of $2.92 at the end of the year. Dividends have been paid since 1926, and during the past 13 years, the highest trailing annual dividend yield was 2.44%, the lowest was 1.12%, and the median was 1.77%. The current dividend yield is 1.53%, which makes me think the company may increase dividends in the near term to maintain the ratio.
The company's acquisition of CareFusion has provided it with splendid intangible assets and what matters most is the ability to grow faster in the future due to the opportunities it will provide with the synergies all around the world, particularly in emerging markets. A significant portion of Becton's business is focused on those markets so it is positive to continue expanding on them.
The risk of commodities prices and competition in bioscience segments from strong rivals, such as Abbott (ABT, Financial), demonstrates the firm's concern in boosting operating margins. Net operating cash flow has increased to $725 million, about 30% when compared to the same quarter of last year. Moreover, the return on equity exceeded its ROE from the same quarter one year ago, showing a sign of strength. Further, it exceeds the ratio of both the industry average and the Standard & Poor's 500.
Health care equipment remained relatively stable in the past; the company is well positioned to face the competition, and CareFusion's acquisition will provide long-term growth.
Disclosure: Author holds no position in any stocks mentioned.
