It is probably not a fair comparison because the hedge fund also invests in debt – mortgage bonds and stressed corporate credits, making his portfolio hard to mimic. Even in the equity investment, he employs merger arbitrage strategy, going both long and short with stocks.
Going forward, however, the hedge fund is rather optimistic. He thinks the low inflation and interest rate will be here to stay, government will be concentrated on stimulating the economy in order to reduce unemployment rate. This comes from his 3Q09 Letter to Shareholders:
In this environment, we expect anemic revenue growth but continued margin expansion, increased corporate restructuring activity (spin‐offs, mergers, and the like), and earnings that will frequently surprise to the upside. Thus, for equity investors, it is a stock picker’s market on both the long and short sides.
As of September 30, 2009, the firm reported an equity portfolio (long side) of $1.25 billion, slightly larger than half of the firm’s total Asset Under Management. Among them, there are the top holdings:
No. 1: Wyeth (WYE), Weightings: 15.23% - 3,910,000 Shares
Wyeth merged into Pfizer (PFE) in the middle of October. This is part of Loeb’s risk arbitrage strategy trade.
Wyeth was one of the world's largest research-driven pharmaceutical and health care products companies. On the day of the merger happened, Wyeth has a market cap of $64.32 billion; its shares were traded at around $0 with a P/E ratio of 13.57 and P/S ratio of 2.82. The dividend yield of Wyeth stocks is 2.49%. Wyeth had an annual average earning growth of 5.8% over the past 10 years.
No. 2: PHH Corp. (NYSE:PHH), Weightings: 7.13% - 4,480,000 Shares
PHH Corp is a leading outsource provider of mortgage and vehicle fleet management services. It is the sixth largest retail originator of residential mortgages in the United States and the second largest fleet management services provider in the United States and Canada. Phh Corp. has a market cap of $749.8 million; its shares were traded at around $13.75 with and P/S ratio of 0.4.
No. 3: CF Industries Holdings Inc. (NYSE:CF), Weightings: 5.53% - 800,000 Shares
CF Industries Holdings, Inc. is the holding company for the operations of CF Industries, Inc. CF Industries, Inc. is a major producer and distributor of nitrogen and phosphate fertilizer products. CF Industries operates world-scale nitrogen fertilizer plants in Louisiana and Alberta, Canada; conducts phosphate mining and manufacturing operations in Central Florida; and distributes fertilizer products through a system of terminals, warehouses, and associated transportation equipment located primarily in the midwestern United States. Cf Industries Holdings Inc. has a market cap of $4.07 billion; its shares were traded at around $83.94 with a P/E ratio of 8.2 and P/S ratio of 1. The dividend yield of Cf Industries Holdings Inc. stocks is 0.5%.
No. 4: Liberty Acquisition Holdings Corp. (LIA), Weightings: 5.27% - 6,914,000 Shares
Liberty Acquisition Holdings Corp. is a development-stage company. The Company was focused on acquiring one or more operating business through a merger, stock exchange, asset acquisition, reorganization or similar business combination. In September 2009, the Company completed the acquisition of Pearl Group Limited and Opal Reassurance Limited.
Liberty Acq Hgds Cp has a market cap of $1.22 billion; its shares were traded at around $9.46 with a P/E ratio of 94.6.
No. 5: Bank of America Corp. (NYSE:BAC), Weightings: 4.07% - 3,000,000 Shares
Bank of America Corp. is one of the world's leading financial services companies. Bank of America provides individuals, small businesses and commercial, corporate and institutional clients across the United States and around the world new and better ways to manage their financial lives. Bank Of America Corp. has a market cap of $133.84 billion; its shares were traded at around $15.47 with a P/E ratio of 103.1 and P/S ratio of 1.8. The dividend yield of Bank Of America Corp. stocks is 0.2%. Bank Of America Corp. had an annual average earning growth of 7.5% over the past 10 years.
No. 6: Popular Inc. (NASDAQ:BPOP), Weightings: 4.03% - 17,750,000 Shares
Popular, Inc. is a diversified, publicly owned bank holding company. The corporation's principal subsidiary, Banco Popular de Puerto Rico, has one of the largest retail franchise in Puerto Rico, operating numerous branches and automated teller machines. The Popular Inc. has a market cap of $708 million; its shares were traded at around $2.51 with and P/S ratio of 0.2. Popular Inc. had an annual average earning growth of 24.1% over the past 10 years. GuruFocus rated Popular Inc. the business predictability rank of 2-star.
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