Over the past few days, hedge funds have been filing their form 13-F, which is a quarterly report of equity holdings filed 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 GAMCO Asset Management Inc. (GBL) in which Mario Gabelli (Trades, Portfolio) is the founder, chairman, and CEO of the firm.
Recently, the fund reported its equity portfolio ended September. The total value of the portfolio amounted to $18,577 million, down from $18,996 million disclosed at the end of the previous quarter. Consequently, the fund's equity market change value was negative 419,546 million in the last quarter. The filing revealed that at the end of September, the fund added 48 new positions to its equity portfolio and sold out 40 positions. The top ten portfolio holdings as of the end of the quarter represented 13.92%. The largest changes from previous 13-F´s fillings are in the energy and consumer staples sectors.
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 DirecTVÂ (DTV, Financial), in which the fund disclosed a $339 billion stake with over 3.92 million shares. The company focuses on better negotiation with the content providers. Further, it plans to introduce online video streaming services. We believe the firm will extend the brand leadership as the premium pay-TV provider. In Latin American markets, DirecTV plans to penetrate in the pay-TV market; as well as amplifying the need of customers to download and stream OnDemand video. Investments in these regions are very important for achieving growth. It will launch a new satellite (called Intelsat DLA-2, also known as Intelsat 31) for its Panamericana division (Latin America, except Mexico and Brazil).
During the past fiscal year, the company increased its bottom line. It earned $5.19 versus $4.61 in the previous year. For the next year, Wall Street expects an improvement in earnings ($5.89 versus $5.19). Earnings per share have increased by 34.7% in the most recent quarter compared to the same quarter a year ago. As we can appreciate in the next chart, the company has demonstrated a pattern of positive earnings per share growth over the last years.
This trend suggests that the business is doing well.
Other hedge fund gurus have also been active in the company. Jeremy Grantham (Trades, Portfolio), John Paulson (Trades, Portfolio), John Burbank (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), James Barrow (Trades, Portfolio), Ruane Cunniff (Trades, Portfolio), Jim Simons (Trades, Portfolio), David Dreman (Trades, Portfolio), Lou Simpson (Trades, Portfolio), and Pioneer Investments (Trades, Portfolio) and Caxton Associates (Trades, Portfolio) have taken long positions.
American Express Company (AXP, Financial) comes in next; the fund owns more than 3.27 million shares, worth $286.3 billion. The company focuses on acquiring and retaining cardmembers, as well as designing products to attract new ones.
The company has improved earnings per share by 12% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the last years.
During the past fiscal year, American Express increased its bottom line by earning $4.88 versus $3.87 in the prior year. This year, the market expects an improvement in earnings ($5.54 versus $4.88).
Other hedge fund gurus have also been active in the company. Robert Olstein (Trades, Portfolio), Ken Fisher (Trades, Portfolio), James Barrow (Trades, Portfolio), Jean-Marie Eveillard (Trades, Portfolio) and Tom Russo (Trades, Portfolio) have taken long positions in the second quarter of 2014, as well as Pioneer Investments (Trades, Portfolio).
In National Fuel Gas Company (NFG, Financial) the fund disclosed ownership of over 3.88 million shares, worth $271.4 billion. This energy holding company is focusing on investment in natural gas transmission pipelines and unregulated businesses. The company has improved earnings per share by 10.1% in the most recent quarter compared to the same quarter a year ago. During the past fiscal year, the company increased its bottom line. It earned $3.09 versus $2.64 in the previous year. This year, Wall Street expects an improvement in earnings ($3.44 versus $3.09).
As we can see, it also demonstrated a pattern of positive EPS growth over the last year.
Other hedge fund gurus have also been active in the company. Ray Dalio (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio) sold out the stock, while Mario Gabelli (Trades, Portfolio), John Keeley (Trades, Portfolio) and Chuck Royce (Trades, Portfolio) have reduced their positions, as well as Private Capital (Trades, Portfolio) and Pioneer Investments (Trades, Portfolio).
Final Comment
The three stocks are certainly attractive for fundamental investors and make it a worthy investment for GAMCO’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.
