John Hussman’s top buys: Ltd. Brands Inc., ADTRAN Inc., Johnson & Johnson, Humana Inc., and Broadcom Corp.
John Hussman ， the professor turned money manager has been very successful in managing money. Through May 31,2009, his Hussman Strategic Growth Fund (HSGFX) fund has averaged: -4.12, 0.27, 2.18, and 8.89% for the past 1, 3 , 5 Years and Since Inception on July 24, 2000, respectively. Especially during the disastrous 2008, the fund returned -9.02% while S&P 500 returned a miserable -37%.
John Hussman achieved the outstanding investment by deploying a long/short strategy. For most of the past 9 years since he started the fund, he primary concern has been the market overvaluation and hedge his portfolio to at least some degree against the down side slide. GuruFocus reviewed his investment strategy in detail in this article: Hussman Strategic Growth Fund --- A Hedge Fund For The Masses.
Currently, after the market rebounded strongly from the March 9 2009 lows, John Hussman is again concerned about the market over valuation and again fully hedged his entire portfolio. When he fully hedge his portfolio, Hussman essentially is relying on the outperformance of the stock he bought against the general market to deliver the gain. Even the unhedged portfolio has delivered superior performance against the S&P 500 index during the past nine years.
With outperforming the general market in mind, Hussman’s stock are very carefully chosen that represents discounts from intrinsic values. During the first quarter of 2009, here are his top buys: Ltd. Brands Inc. (LTD), ADTRAN Inc. (NASDAQ:ADTN), Johnson & Johnson (NYSE:JNJ), Humana Inc. (NYSE:HUM), and Broadcom Corp. (NASDAQ:BRCM),
No. 1: Ltd. Brands Inc. (LTD) - Total: 4,000,000 Shares
The Limited Inc. is principally engaged in the purchase, distribution and sale of women's, men's and children's apparel, women's intimate apparel, personal care products and a wide variety of sporting goods. Ltd. Brands Inc. has a market cap of $4.15 billion; its shares were traded at around $12.92 with a P/E ratio of 13.32 and P/S ratio of 0.46. The dividend yield of Ltd. Brands Inc. stocks is 4.64%. Ltd. Brands Inc. had an annual average earning growth of 6.5% over the past 10 years.
John Hussman first bought the clothing distributor in 3Q06 with 1.15 million shares, but then sold down to 0.75 million shares in 4Q06 when the stock price rose. He maintained that shares until 1Q09 when he increased his shares to 4 million shares when the stock price is much depressed.
No. 2: ADTRAN Inc. (NASDAQ:ADTN) - Total: 2,000,000 Shares
Adtran Inc. is a leading global provider of networking & communications equipment specialized in last mile solution. The last mile is that segment of the network that connects end-user subscribers to a service provider. ADTRAN Inc. has a market cap of $1.31 billion; its shares were traded at around $20.94 with a P/E ratio of 17.16 and P/S ratio of 2.61. The dividend yield of ADTRAN Inc. stocks is 1.72%. ADTRAN Inc. had an annual average earning growth of 9% over the past 10 years.
This is a new position for John Hussman, as he initiated a position of 2 million shares in 1Q09.
No. 3: Johnson & Johnson (NYSE:JNJ), Add: 3% - Total: 2,650,000 Shares
Johnson & Johnson is engaged in the manufacture and sale of a broad range of products in the health care field in many countries of the world. Johnson & Johnson has a market cap of $154.12 billion; its shares were traded at around $55.93 with a P/E ratio of 12.29 and P/S ratio of 2.42. The dividend yield of Johnson & Johnson stocks is 3.5%. Johnson & Johnson had an annual average earning growth of 12.5% over the past 10 years. GuruFocus rated Johnson & Johnson the business predictability rank of 4.5-star.
Hussman started to own a position in the company in 2Q06 and has been trading in and out of the stock. His ownership has been increasing since 2Q07 when he owned 0.5 million shares, today he owns 2.65 million shares, making JNJ one of the largest holdings.
No. 4: Humana Inc. (NYSE:HUM), Total: 1,600,000 Shares
Humana Inc. is a health services company that facilitates the delivery of health care services through networks of providers to its medical members.
Humana Inc. has a market cap of $5.25 billion; its shares were traded at around $30.96 with a P/E ratio of 6.18 and P/S ratio of 0.18. Humana Inc. had an annual average earning growth of 18.7% over the past 10 years. GuruFocus rated Humana Inc. the business predictability rank of 2-star.
Hussman owned a small position (260,200 shares) in HUM since 2Q07 and maintained that position until 1Q09, when he increased it to 1.6 million shares.
No. 5: Broadcom Corp. (NASDAQ:BRCM), Total: 2,500,000 Shares
Broadcom Corporation is a leading developer of highly integrated silicon solutions that enable broadband digital data transmission to the home and within the business enterprise. Broadcom Corp. has a market cap of $12.51 billion; its shares were traded at around $25.46 with a P/E ratio of 54.17 and P/S ratio of 2.69.
Hussman first bought 1.0 million shares of BRCM in 3Q07. I gradually increased into 1.5 million shares through 4Q08. In 1Q09, he bought 1.0 million shares and brought the total to 2.5 million shares.
If anything, 1Q09 saw John Hussman increased his investment in hight tech companies such as ADTN and BRCM and health care companies such as JNJ and HUM.
GuruFocus also reviewed the top holdings of John Hussman earlier in May 2009.