Paul Tudor Jones (Trades, Portfolio) might occasionally want to try out some of the strategies of Warren Buffett (Trades, Portfolio) but the macro trader definitely has his own ideas about stock-picking.
Jones initiated a position in Twenty-First Century Fox Inc. (FOXA, Financial) several months after the "Oracle of Omaha" sold out of 8.95 million shares for an average price of $30 a share.
Buffett dumped the stake for an estimated loss of 9%. But the Connecticut-based hedge fund manager, in roughly 90 days, reported an estimated gain of more than 20%. Today, Jones' 285,000 shares of Twenty-First Century Fox are worth almost $10 million.
Jones had good timing. He made his purchase in the final months of the year, notably around the time of discussions between Walt Disney Co. (DIS, Financial) CEO Robert Iger and Twenty-First Century Fox Executive Chairman Rupert Murdoch began. In mid-December, Disney announced it was buying a chunk of Twenty-First Century Fox for $52 billion in stock. Disney bought Murdock's television and film studios, cable networks, such as the National Geographic Channel, two dozen regional sports networks and the streaming video service, Hulu.
Shares of Twenty-First Century stock are up 38% since Sept. 30. The market cap of Twenty-First Century Fox is over $67 billion, compared to $52 billion in June. By week's end, shares stood at $36.69 a piece, just above the Peter Lynch chart's median of $32 a share.
Investors on board
Wallace Weitz (Trades, Portfolio) was one of the investors that gave an overwhelming thumbs up to the union between Disney and Twenty-First Century Fox.
In fact, Weitz saw it as an optimal arrangement. “Of the realistic homes for Fox’s assets, Disney would be our first choice among known suitors,’’ Weitz wrote late last year. “The agreed-upon deal price is a nice validation of our valuation work.”
Weitz Asset Management owned 1.65 million shares of Twenty-First Century stock, which sold for an average price of just over $33 a share in the final months of the year. The guru has posted an estimated gain of 7% on the investment held since 2014.
Jones' holding
Connecticut-based Tudor Investment Corp. acquired 285,000 shares in the fourth quarter for an average price of $29.81. Shares sit in about 0.08% of the portfolio and are valued at over $9.8 million. GuruFocus shows he’s made an estimated 23% on the deal.
Jones bought and sold the stock on roughly six separate occasions in the last four years. His first buy in the first quarter of 2014 was priced at an average of just under $33 a share.
Twenty-First Century Fox is the guru’s fourth-largest holding after health care giant Aetna Inc. (AET) and NXP Semiconductors (NXPI). In the final months of the year, Jonesl largest holding was in the exchange-traded fund, SPDR S&P 500 (SPY). A total of 70% of the guru’s portfolio is made up of exchange-traded funds. About 15% is in financials, health care and consumer cyclical stocks.
The portfolio is worth $3.9 billion.
Twenty-First Century Fox
The entertainment conglomerate has seen revenue per share growth of 4.20% over the last decade and about 6.2% in the last 12 months. Total revenue for 2017 was $28.5 billion compared to $27.3 billion in the prior year. Over the last 15 years, revenue peaked in 2008 at $32 billion.
In net income, the company reported $3.2 billion in 2017 compared to $3 billion in the prior-year. Net income reached a peak in 2015 at over $8.5 billion.
Free cash flow stood at $3.4 billion in 2017 compared to $2.78 billion in the prior year. Its situation was healthier in 2015 when it had free cash flow of over $3 billion.
In earnings before interest, taxes, depreciation and amortization, the company saw $3.83 a share in 2017. It got hit hard by the recession about a decade ago, but has seen EBITDA rise since 2009 when it reported a loss of $1.33 a share.
It had $19.5 billion in long-term debt in 2017. The debt has more than doubled in the last 15 years. Borrowing costs continue to climb for the company. Its interest expense reached $1.2 billion in 2017. It has been rising steadily and was at $672 million in 2003.
