Over the past days hedge funds have been filing their form 13-F, which is a quarterly report of equity holdings by filed 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 Gotham Asset Management LP, whose founder is the value investor Joel Greenblatt (Trades, Portfolio).
Recently, the fund reported its equity portfolio ended September. The total value of the portfolio amounted to $10.04 billion, up from $7.9 million disclosed at the end of the previous quarter. Consequently, the fund's equity market change value was 2.0 million in the last quarter. The filing revealed that at the end of September, the fund added one new position to its equity portfolio and sold out one position. The top ten portfolio holdings as of the end of the quarter represented 7.23%. The largest changes from previous 13-F´s fillings are in the Health Care and Industrial 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 Bunge Limited (BG, Financial), in which the fund disclosed a $82.18 million stake with 975.710 shares. This stake represents a 0.82% of the total portfolio. The company is a large, geographically diverse agribusiness and food company. Bunge principally generates its profits from agribusiness. In 2013, its agribusiness segment accounted for 74% of net sales. It is a leading oilseed processor and focuses on Brazil, the second-largest producer of soybeans. In 2010, it acquired five sugar cane mills in Brazil, which now account for more than a half of the production. Further, in 2013, the firm acquired the wheat milling business of Grupo Altex S.A. de C.V. We think the firm will benefit as the industry increases. It will benefit as emerging markets consume more meat.
During the past fiscal year, the company reported lower earnings of $0.89 versus $2.44 in the previous year. This year, Wall Street expects an improvement in earnings ($5.74 versus $0.89). As we can appreciate in the next chart, the company has demonstrated a pattern of positive earnings per share growth over the past five years.
Other hedge fund gurus have also been active in the company. Steven Cohen (Trades, Portfolio) and HOTCHKIS & WILEY have taken long positions.
Computer Sciences Corporation (CSC, Financial) comes in next; the fund owns more than 1.24 million shares, worth $75.8 million. It is a leading computer services company provides consulting, systems integration and outsourcing services. Although, barriers to entry are relatively high in this industry, the company faces strong competition. Some years ago, it completed its acquisition of Covansys Corporation, searching for more exposure in Asia, where this company had more than 70% of its assets there.
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John Burbank (Trades, Portfolio), Louis Moore Bacon (Trades, Portfolio), Ray Dalio (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio), Larry Robbins (Trades, Portfolio) and David Dreman (Trades, Portfolio) have taken long positions in the second quarter of 2014.
In Delta Air Lines, Inc. (DAL, Financial) the fund disclosed ownership of over 2.09 million shares, worth $75.6 million. It is one of the largest passenger airlines in the world due to its merger with Northwest Airlines. As of Jan. 2014, it served 318 destinations worldwide in 59 countries.
The crude oil reached a peak of $147 a barrel in July 2008 and now it is trading nearly $80 and this is very important for the company. Further, we think passenger demand is likely to strengthen due to a general improving global economy. Obviously that higher oil prices or a slower economic recovery could hurt the firm´s profits. We must mention that it has a good upward trend in the stock price last year, and we like its revenue growth and good valuation levels.
As we can see, it also demonstrated a pattern of positive EPS in most of the five-year period. Andreas Halvorsen (Trades, Portfolio), Ray Dalio (Trades, Portfolio), Jim Simons (Trades, Portfolio), George Soros (Trades, Portfolio), Jean-Marie Eveillard (Trades, Portfolio), Jim Chanos (Trades, Portfolio), Robert Olstein (Trades, Portfolio), Julian Robertson (Trades, Portfolio), David Tepper (Trades, Portfolio) and PRIMECAP Management (Trades, Portfolio) have taken long positions in the third quarter of 2014.
Final comment
Although competition in each of the industries is intense, we believe the three firms are going up against its rivals. We think that the three stocks are certainly attractive for fundamental investors. 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
