Best Power and Utilities Stocks Recommended by Barclays

Barclays Capital published a report entitled “Go with the Flow” on January 03, 2012. Daniel Ford, Gregg Orrill, Theodore W. Brooks, Ross A. Fowler, M. Beth Straka and Noah Hauser have identified their most preferred power and utilities stocks for investment in 2012. Here are the five stocks Barclays Capital is bullish about:

American Electric Power (AEP) has been given an over-weight rating by Barclays Capital (BCS). The company received a final judgment on its Ohio generation and distribution cases on December 14, 2011. The Ohio jurisdiction has substantial impact of 30-40% on American Electric Power’s earnings, indicating a material future earnings growth. Even though both cases were settled, the stock was still trading at a 12% discount through the day of the ruling two weeks ago. However in the two weeks after the ruling, the stock outperformed the regulated group by 1.1% i.e. it was up by 7.6% versus the 6.5% regulated group increase. Barclays Capital expects the outperformance to continue in 2012. Moreover, American Electric Power, along with other partners, announced a plan to build a gas pipeline in Ohio for the purpose of transporting Utica shale gas to the Eastern marketplace. Barclays Capital believes that American Electric Power will earn $3.10, $3.17 and $3.28 in 2011, 2012 and 2013 respectively. Although the stock has performed well recently, it still trades at an 11% discount to its peers. This is despite the new earnings visibility and a 4.5% yield indicating a 10% premium to the average dividend yield for regulated utilities. Barclays Capital has given a price target of $45 per share, indicating a regulated group utility multiple of 13.3x their 2013 EPS estimate of $3.28, plus $1/share of cash. Jim Simons’ Renaissance Technologies had the largest stake in AEP among the 350+ hedge funds we are tracking.

Northeast Utilities (NU)/NSTAR (NST) has been given an over-weight rating by Barclays Capital. In view of Barclays Capital, once the company’s merger with NSTAR (NST) is finalized, it should create one of the best positioned large cap regulated utilities in Barclays Capital’s coverage universe. NSTAR shareholders will receive 1.312 Northeast Utilities shares under the merger agreement. All currently required regulatory approvals have been granted, except for those from the Massachusetts Department of Public Utilities (DPU) and the Nuclear Regulatory Commission (NRC). It is expected that the merger will be completed in early 2012. Merger Agreement requirements expire April 16, 2012. Upon merger completion, Northeast Utilities shareholders will see their dividends to be in par with NSTAR’s shareholders. Barclays Capital believes the combination of an attractive 3.8% dividend yield, and dividend growth aspirations in line with earnings growth of 6-9% will continue to be a convincing investment feature. Barclays Capital’s $39 per share price target for Northeast Utilities shares is based on the ‘13E EPS of $2.63. This includes a $1.27E transmission on a 16.4X comparable multiple equivalent to $21, and $18 for the distribution business. This is based on the ‘13E of 41.36 on a 13.5X regulated group multiple. A large-cap premium is offset by current regulatory uncertainty. Barclays Capital’s $49 per share price target for NSTAR is based on Northeast Utilities ‘13E EPS of $2.63. This includes a $1.27E transmission on a 16.4X comparable multiple equivalent to $21, and $18 for the distribution business. This is based on the ‘13E of 41.36 on a 13.5X regulated group multiple. The resulting $39 per share is multiplied by 1.312 Northeast Utilities shares. Barclays Capital then applies a 5% discount for regulatory uncertainty. D. E. Shaw had the largest stake in NU among the hedge funds we are tracking.

OGE Energy Corp. (OGE) has been given an over-weight rating by Barclays Capital. OGE energy Corp. combines a top-performing regulated electric utility with a rapidly expanding mid-stream gas pipeline business, Enogex. Enogex operates in the most profitable basin in the U.S. and contributes approximately 25% to the overall business net income. OGE is exclusively positioned to achieve top-quartile long-term EPS growth and consistent steady dividend growth. Barclay’s capital is forecasting a consolidated five-year (2009-2013) earnings per share growth of 9.5% from a utility rate base growth and expansions in Enogex’s gathering and processing. Barclays Capital value OGE on a forward price-to-earnings multiple for the utility component, and a forward EV/EBITDA for Enogex. Barclays Capital has given a $59 per share price target based on a consolidated 2013E EPS of $3.95. This consists of a $2.86E for the utility, taking out $0.04 for the Holding Co. base on a 13.6x regulated group P/E multiple. This is also discounted by 5% for the regulatory risk associated with its pending rate case. This results in $36 to which $23 for Enogex is added. This is estimated based on an assumed 81% ownership on an EV/EBITDA of $2,911 million and a 9.5X comparable multiple. Adage Capital Management had $37 million invested in OGE at the end of September.

Calpine Corp. (CPN) has been given an over-weight rating by Barclays Capital. Calpine Corp is the only spark spread generator in power. The company is most exposed to tighter power markets while being least sensitive among its peers to gas prices. Barclays Capital likes Calpine Corp for its primary exposure to Texas and California power markets, for the company’s discipline is to use excess cash flow to repurchase stock, and for CEO Jack Fusco who has a history of outperformance in the sector. Barclays Capital believes that the company has the best fleet of combined cycle gas plants in the industry. The company should strengthen its portfolio by looking at areas like the Southeast or the North for expansion and then repurchase stock with the proceeds. The company also expects to bring on-line the 75% owned 619 MW Russell City project in 2013 along with the 120 MW Los Esteros expansion/conversion to combined cycle in California. Barclays Capital has given a price target of $18 per share. This estimate is based on $18 for Open EBITDA at 7.1x $1.64 Billion for the gas assets and $436 Million at 9.6x for geothermal. The Price Target is also based on $17 for the asset value which includes enterprise value of $14.5 Billion and is $520/kw. Billionaire Phil Falcone’s Harbinger initiated a new position in CPN during the third quarter.  

AES Corporation (AES) has been given an over-weight rating by Barclays Capital. The new CEO Andres Gluski aims to initiate a quarterly dividend yielding 1.3% annually and take it to 2-3%. Gluski also aims to reduce geographic spread from 28 to 20 countries and cut costs aggressively. The company would raise $2 Billion over the next few years through asset sales. The 2012 EPS guidance is $1.27-$1.37, with AES focusing on the midpoint of the range. Looking from a base as per Barclays Capital forecast of $0.98 in 2011, drivers are new projects and the DPL merger accretion, the absence of DPL merger costs, cost cuts, and free cash flow. Downsides to this would be the Eletropaulo rate case in Brazil and currency sensitivities. Barclays Capital’s price target of $16 per share is estimated by averaging results of three valuation methods independent estimates of which are $18, $13 and $15. $18 is from a sum of parts valuation which includes $3.24 Billion in EBITDA from unlisted subs applied to 6.7x, $314 Million for a renewable EBITDA applied to a 8x multiple, $6/share for listed subs, and $15.5 Billion in proportional net debt and 797M shares. $13 is estimated from 6.7x $3.7 Billion in 2012 proportional EBITDA less proportional net debt of $15.5 Billion and 797M shares. And $15 is derived from 11.6x the 2012 EPS of $1.38. All multiples use International Power as a comparable. Steven Cohen’s SAC Capital boosted its stake in AES by 13% during the third quarter.

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6 Airline Stocks to Buy, 2 To Avoid by UBS

UBS Research Analyst Kevin Crissey and Associate Analyst Kevin Grasmick published a report titled “US Airline Sector Note: That was ugly” on January 03, 2012. The analysts have analyzed the US Airline sector’s performance during 2011 and concluded that it was disappointing. Although the airline sector witnessed a strong revenue growth over the last year, their final results have been dismal (excluding Alaska and Allegiant). Hence, on average, airline stocks lost 25%. Revenue estimates for the airline sector were increased to 10% from 7%, while the estimates for growth in fuel cost were also 20% higher. Moreover, analysts believe that managements of these companies were not able to pass on the fuel price increase entirely to the consumer, generating a negative impact on the bottom-line. Given that the revenue outlook for the sector remains strong in the US, analysts are bullish on selected stocks like DAL and LCC.

Delta Air Lines, Inc. (DAL) is UBS’s top pick from the sector with a buy rating and a price target of $12.0 per share. Delta Airlines provides passenger and cargo air transportation services globally. It also provides services related to aircraft maintenance, repair, and overhaul. Other services offered by the company include staffing services, professional security, vacation packages, and aircraft charters. The company employs 700 aircrafts and its operations span over 357 destinations in 66 countries. Due to its strong FCF profile in 2012 and a low susceptibility to an increase in labor costs, the stock has been rated as an attractive buy by the analysts. On a forward P/E basis, the stock is trading at a hefty discount at 3.9x compared to its peer average of 9.9x. However, on a 12M trailing EV/EBITDA basis, the stock trades at 5.3x which is at par with its peer average of 5.2x. Ken Heebner’s Capital Growth Management is very bullish about Delta. Heebner initiated a brand new $135 million position during the third quarter.

US Airways Group, Inc. (LCC) has also been given a buy rating by UBS with a price target of $10.0 per share. This is mainly on account of a concentrated domestic route network, where analysts foresee that outperformance in pricing will favor the company’s fundamentals for 2012. The US Airways Group, through its subsidiaries, provides air transportation for passengers and cargo with 3,200 flights daily to 200 destinations worldwide. The Company operates through a fleet of 339 mainline jets along with its regional airline subsidiaries, adding another 231 regional jets and 50 turboprops to the total fleet size. On a forward P/E and a 12M trailing EV/EBITDA basis, the stock is trading at a hefty discount at 3.7x and 4.7x compared to its peer average of 9.9x and 5.2x respectively. Moreover, the stock is also trading cheap at 4.0x the P/FCF basis compared to its regional peer average of 10.0x. Billionaire David Tepper had $51 million in US Airways. He trimmed his positions in DAL and LCC during the third quarter.

Alaska Air Group, Inc. (ALK) has also been given a buy rating by UBS with a price target of $81.0 per share. Alaska, through its subsidiaries, Alaska Airlines, Inc. and Horizon Air Industries, Inc., operates as an airline company serving 23 million passengers, and offering mail and freight services. Its destinations are concentrated in the western United States, Canada, and Mexico. The company’s subsidiary Alaska Airlines operates a fleet of 114 jet aircrafts, while Horizon Air Industries operates a fleet of 13 jets and 41 turboprop aircrafts. On a forward P/E and a 12M trailing EV/EBITDA basis, the stock is trading at a hefty discount at 7.7x and 3.0x compared to its peer average of 9.9x and 5.2x respectively. Moreover, the stock is also trading cheap at 6.1x the P/FCF basis compared to its regional peer average of 10.0x. Jim Simons’ Renaissance Technologies had the largest stake in ALK among the 350+ hedge funds we are tracking.

JetBlue Airways Corporation (JBLU) has been given a neutral rating by UBS and a price target of $5.0 per share. JetBlue Airways provides passenger air transportation services through 650 flights on daily basis with 63 destinations in 21 states and 10 countries in the Caribbean and Latin America. The company operates through a fleet of 115 Airbus A320 aircrafts and 45 EMBRAER 190 aircrafts. Other services offered through the company’s subsidiaries include in-flight entertainment, voice communication, and data connectivity systems for commercial and general aviation aircrafts. On a forward P/E and a 12M trailing EV/EBITDA basis, the stock is trading slightly expensive at 11.1x and 5.7x compared to its peer average of 9.9x and 5.2x respectively. However, the stock is trading cheap at 6.7x the P/FCF basis compared to its regional peer average of 10.0x. Robert Millard’s Realm Partners sold out its $14 million position in JBLU during the third quarter.

Southwest Airlines Co. (LUV) has been given a neutral rating by UBS with a price target of $9.5 per share. Southwest Airlines Co. operates as a passenger transportation airline in the United States. The company has 548 Boeing 737 aircrafts and provides transportation to 69 cities in 35 states. The company also sells frequent flyer credits and related services to companies participating in its Rapid Rewards frequent flyer program. The stock is trading slightly expensive at 11.0x the forward P/E ratio as compared to its peer average of 9.9x. Whereas on the basis of a 12M trailing EV/EBITDA, the stock is trading at a discount at 4.5x compared to its peer average of 5.2x. It also trades cheap at1.0x the price-to-book-value. The stock offers a small dividend yield as compared to its regional peers offering no dividends. Bill Miller’s Legg Mason is among Southwest investors.

United Continental Inc. (UAL) has been given a buy rating by UBS and a price target of $35.0 per share. United Continental offers passenger and cargo air transportation services. The company operates a total of 5,675 flights in a day to 372 destinations worldwide. The stock trades extremely cheap on valuations. On a forward P/E basis, a 12M trailing EV/EBITDA basis and a P/FCF basis, the stock is trading at 3.5x, 2.9x and 4.0x compared to its peer average of 9.9x, 5.2x and 10.0 respectively. John Griffin’s Blue Ridge Capital cut its stake in UAL by 54% during the third quarter.

Allegiant Travel Company (ALGT) has been given a buy rating by UBS with a price target of $61.0 per share. The company, through its subsidiaries, operates as a leisure travel company in the United States. It operates a fleet of 51 MD-80 aircrafts and 1 Boeing 757-200 aircraft, and also owns and leased 3 Boeing 757-200 aircrafts. Allegiant provides charter air services under long-term contracts, as well as on a seasonal and ad-hoc basis. It primarily sells air travel on a stand-alone basis, as well as bundled with hotel rooms, rental cars, and other travel related services. Allegiant is the most expensive stock on the basis of valuations among the regional airline companies. On a forward P/E basis, a 12M trailing EV/EBITDA basis, and a P/FCF basis, the stock is trading at 13.6x, 6.1x and 14.4x compared to its peer average of 9.9x, 5.2x and 10.0 respectively.

Hawaiian Holdings, Inc. (HA) has been given buy rating by UBS and a price target of $9.0 per share. Hawaiian, through its subsidiary, Hawaiian Airlines, Inc., offers air transportation for passengers and cargo. The company provides scheduled and ad-hoc services on its Pacific routes between Hawaii and far-east Asia. It operates a fleet of 15 Boeing 717-200, 18 Boeing 767-300 and 3 Airbus A330-200 aircrafts. Hawaiian trades cheap at 5.0x the forward P/E and 2.2x the 12M trailing EV/EBITDA compared to its peer average of 9.9x and 5.2x respectively. Moreover, the stock also appears cheap at 0.8x the price-to-book-value compared to the peer average of 1.6x. Whitebox Advisors boosted its stake in HA by 19% during the third quarter.

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7 Dirt Cheap 5 Stars Rated Stocks by S&P

Value investing is one of the best investment strategies individual investors can use to beat the market in the long run. Even though the stock market was pretty stagnant during the last 10 years, value investors were able to return around 7 percent per year.

In the search for large-cap value stocks, we ran a screen for stocks that were rated 5 stars, or “strong buy,” by Standard & Poor’s. We found the following list of 7 stocks each of which has a P/E ratio of 10 or less.

1. Barrick Gold Corp (ABX): ABX is a gold and mining exploration and production company. It has a market cap of more than $46 billion. The stock is currently trading at a forward PE of 8, and its EPS is expected to grow 58% annually for the next five years. The stock currently trades at about $46.50, and S&P is very bullish about it, predicting a more than 70% return in the next 12 months. ABX lost 13% last year and was owned by 39 hedge funds at the end of Q3. Total hedge fund investment in ABX at that time was nearly $1.58 billion. Dan Loeb, David Einhorn, and Jim Simons were among ABX’s largest stakeholders (see Jim Simons’ top stock picks).

2. Apache Corp (APA) is an energy company which specializes in natural gas, crude oil and natural gas liquids. The company has a market cap of $37.5 billion. It has a forward PE of nearly 8 and its EPS is expected to grow at 6%. The stock lost 24% in 2011, but S&P predicts a 50% return in the next 12 months. Thirty hedge funds had $1.15 billion invested in APA in the third quarter 2011.

3. Cliffs Natural Resources Inc. (CLF) is a global mining and natural resources company. It has a market cap of $10.4 billion and trades at a forward PE of 5.7. Its expected EPS growth rate is about 20% for the next five years. CLF dropped 20% in 2011 while S&P gives a 12 Mo. target return of 44%. Twenty two hedge funds were invested in CLF at the end of the third quarter last year, with a total volume of $283 million. Ken Fisher was CLF’s largest stakeholder among the funds we track (see Ken Fisher’s stock picks).

4. Chevron Corp (CVX) is an energy giant with a market cap of nearly $213 billion and has a forward PE of just above 8. Its EPS is expected to grow at 7.5%. CVX managed to beat the S&P500 by advancing 20% in 2011. In addition to the upside, it also has a sound dividend yield of 3%. In the next 12 months, S&P predicts a 23% return for CVX. Thirty-eight hedge funds were invested in CVX at the end of the third quarter, with a total exposure of $919 million. Bill Miller and Cliff Asness each had more than 1 million shares in the stock at the end of September.

5. Dell Inc. (DELL) is a well-known information technology and business services company. It has a market cap of $30.4 billion, with a forward PE of 8. The company also has an expected EPS growth rate of 6% for the next five years. S&P estimates a 13% return over the next 12 months. In 2011, DELL returned 7%. Of the 350+ funds we track, 36 hedge fund portfolios included DELL as of the end of September. Total hedge fund investment was about $2.9 billion at the end of the third quarter. Mason Hawkins’ Southeastern Asset Management had a particularly large position in DELL, owning more than 146 million shares in the company at the end of September.

6. General Motors Co. (GM) is a worldwide automotive company. The company has a $39 billion market cap and currently trades with a forward PE of 6.6. Its EPS is expected to grow at 11% annually for the next five years. GM tumbled in 2011 and lost a whopping 45% during the year. S&P predicts a 36% return in the next 12 months. Seventy-one hedge funds retained their positions in GM at the end of September, with more than $2 billion in the stock. David Einhorn had nearly 15 million shares of GM during that time (see David Einhorn’s favorite stocks).

7. Rio Tinto Plc. (RIO) is a minerals exploration and production company. It has a market cap of $110 billion. The stock currently has a forward PE of 6.7 and an expected EPS growth rate of 17%. RIO lost 30% last year but S&P recommends a 34% return over the next 12 months. Howard Marks initiated a brand new position in RIO during the third quarter.

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Top IT and BPO Services Stocks Recommended by JP Morgan

J.P. Morgan published a report entitled “IT and BPO Services” on January 12, 2012. The report isn’t publicly available but we will share its main points. In the report, Tien-tsin Huang, Puneet Jain, and Dick Wei share their opinion of the IT and BPO Services stocks performing better relative to the S&P 500 in 2012. Stocks that have a high mix of offshore delivery, have the ability to cut costs of clients, have high exposure to healthcare, and have investments with a long-term impact on growth profile are preferred. The overall IT services budget is expected to be flat “with a potential for modest declines” as the macroeconomic environment worsens. Here are the stocks discussed in the report:

Accenture plc (ACN) operates as a management consulting, technology services, and outsourcing company. It has been given an Overweight rating by J.P. Morgan (JPM) due to its strong client relationships. Accenture is able to meet the needs of its clients faster than its competitors, giving it an edge over them. The company is in a position to execute its high return-on-investment projects as well as cutting costs for its clients. The company’s outsourcing may also be able to pick up on any slack. Accenture’s stock is relatively defensive to the macroeconomic uncertainties, according to J.P. Morgan. Shares of the company are currently trading at $53.3 per share and are expected to reach a price target of $62, indicating a potential upside of 16%. Lansdowne Partners has the largest stake in Accenture among the 350+ hedge funds we are tracking.

Cognizant (CTSH) provides information technology, consulting, and business process outsourcing services. It has been given an Overweight rating by J.P. Morgan as they believe that Cognizant is going to grow at industry-leading rates. The vendor consolidation trend is expected to be beneficial for the company. If the current macroeconomic uncertainties persist, Cognizant is expected to grow around 15-20%. If not, it is expected to grow in the high 20s or low 30s. The company has focused on client relationships and the opening of new markets, enabling it to grow faster than its competitors. Shares of the company are currently trading at $68 and are expected to go north of $85 per share. Lee Ainslie’s Maverick Capital initiated a new position in CTSH during the third quarter.

ExlService Holdings, Inc. (EXLS) is a provider of outsourcing and transformation services. It is the top pick from within J.P. Morgan’s coverage universe and has been given an Overweight rating. With clients looking to decrease costs, and outsource their BPO operations, J.P. Morgan expects ExlService to benefit. J.P. Morgan also expects the company to reach a revenue growth near its top end target of 15-20%.  Its relatively inexpensive valuation is going to provide it with an upside opportunity. It has also lowered its business risk over the last few years. Shares of ExlServices are currently trading at $22.9 per share and are expected to reach a price target of $28, indicating a potential upside of 22%. Anand Parekh initiated a brand new position in EXLS during the third quarter.

Genpact (G) engages in the provision of business process and technology management services. J.P. Morgan has given the company an Overweight rating because it is one of the premium offshore BPO companies in terms of its service capabilities, size, and diversification. Genpact is expected to benefit as its clients cut their internal costs. The company’s long-term growth profile is likely to appreciate as the new CEO looks to reinvest the margin upside back into the business. Shares of Genpact are currently trading at $14.5 and are expected to reach a price target of $18 per share. Ricky Sandler and Chase Coleman are among the hedge fund managers with large positions in Genpact at the end of September.

Syntel, Inc. (SYNT) engages in the provision of information technology and knowledge process outsourcing services. It has been given an Overweight rating by J.P. Morgan. If the company is looking to maintaining its STT business, it needs to offer a price discount, according to J.P. Morgan. Also, the company’s AXP business is likely to underperform, resulting in a negative impact on its growth profile. A depreciation of the rupee, on the other hand, is expected to provide a margin upside and will buffer earnings growth. According to J.P. Morgan’s bearing outlook, Syntel’s financial expenditure is likely to create tailwinds that will protect its earnings growth. Shares of the company are currently trading at $45.5 per share and are expected to reach a price target of $55. Jim Simons’ Renaissance Technologies cut its stake in SYNT by 29% during the third quarter.

VanceInfo (VIT) provides information technology consulting services. It has been given an Overweight rating by J.P. Morgan. The company has a relatively inexpensive valuation that, together with secular growth trends, will allow the company to outperform its peers in 2012. Despite an expansion into the financial services, the Huawei overhang is expected to slow down multiple expansions. Shares of VanceInfo are currently trading at $13.7 per share and are expected to reach a price target of $20. Steadfast Capital and Emerging Sovereign Group are among the hedge funds with VIT holdings. 

Virtusa Corp. (VRTU) provides information technology consulting, and implementation and application outsourcing services. It has been given a neutral rating by J.P. Morgan. Virtusa’s capabilities and its growth profile have seen a significant improvement over the last few years. However, J.P. Morgan is of the opinion that the company’s management needs to maintain a record of meeting its estimates. In a favorable macroeconomic environment, Virtusa’s application rationalization abilities are expected to grow. Shares of the company are currently trading at $14.7 per share and are expected to reach a price target of $16.

Some of the other companies mentioned in the article are iSoftstone (ISS), WNS Holdings Ltd. (WNS), and Computer Sciences Corporation (CSC). iSoftstone has an Overweight rating while both WNS Holdings and Computer Sciences Corporation have been given an Underweight rating. Shares of WNS Holdings and Computer Sciences Corporation are currently trading at $9.9 and $24 respectively, while shares of iSoftstone are currently trading at $9. Stephen Mandel’s Lone Pine Capital had $33 million invested in ISS at the end of September.

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Jim Cramer's Favorite Technology Stock Picks

Jim Cramer is a former hedge fund manager. Cramer expresses his views on stocks during his TV shows, which has helped many ordinary investors who watch his show daily on TV make their own investments. We believe that by focusing on Jim Cramer’s top recommendations, investors are more likely to beat the market in the long term. In this article, we are going to focus on the technology stocks Cramer are bullish about recently. All companies have at least $10 billion market cap and were recommended by Jim Cramer during his TV show over the past month.

Apple Inc (AAPL): AAPL is the technology stock that recommended by Cramer the most times over the past month. Cramer recommended investors to buy AAPL on January 4, 9, 18, and 20. Hedge funds agree with Cramer. As of September 30, 2011, there are 125 hedge funds with AAPL positions. For example, Tiger Cub Stephen Mandel and Chase Coleman are both bullish about AAPL. Mandel’s Lone Pine Capital had $785 million invested in AAPL and Coleman’s Tiger Global Management LLC had $646 million invested in AAPL at the end of the third quarter. AAPL has a market cap of $392B and a low forward P/E ratio of 10.72. It returned 10.22% so far since the end of September, versus 16.99% for SPY in the same period. We are long-term bullish about Apple because of its low valuation and high growth expectations.

Intel Corp (INTC): Cramer also mentioned INTC more than once over the past month. He recommended “Buy” for INTC on January 4 and January 20. Hedge funds agree with Cramer’s judgments about INTC as well. There are 42 hedge funds with INTC positions at the end of the third quarter. For example, Ken Fisher’s Fisher Asset Management had $414 million invested in INTC. Jim Simons’ Renaissance Technologies also invested $200+ million in this stock. Intel reported net income of $3.4 billion for the fourth quarter of 2011, up from $3.2 billion for the same quarter a year earlier. INTC has a market cap of $134B and a relatively low forward P/E ratio of 11.08. It was up 24.73% since the end of September, beating the market by 8 percentage points. We are also long-term bullish about Intel because of its low valuation.

AT&T Inc (T): AT&T provides communication services in the United States and worldwide. During the past month, Cramer also recommended investors to buy T twice. He mentioned the stock on January 3 and January 4. A certain number of hedge funds agree with Cramer. For example, Cliff Asness’ AQR Capital Management had $100+ million invested in T at the end of September. Since then, the stock returned 10.22%, lower than the 16.99% for SPY. But T seems to be trading at a discount. The $181billion market cap stock has a low forward P/E ratio of 12.45. We like AT&T’s high dividend yield and relatively high growth rate for a high dividend stock. This is one of our long-term positions in our portfolio.

Cramer is also bullish about Applied Materials Inc (AMAT), American Tower Corp (AMT), Broadcom Corp (BRCM), Google Inc (GOOG), International Business Machines Corp (IBM), Microsoft Corporation (MSFT), QUALCOMM Incorporated (QCOM), and Texas Instruments Inc (TXN). We like technology stocks. We have Microsoft in our portfolio and plan to add other names when their prices reach more attractive levels. We believe technology stocks are undervalued as a sector as most of them are trading at attractive multiples. We strongly encourage investors to do some deep research on the technology stocks that Cramer recommended recently. The only large-cap name we would add to this list is Dell (DELL) which was bought by David Einhorn during the fourth quarter.

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6 Sell Rated Technology Stocks by Goldman Sachs

Goldman Sachs published a report entitled “Americas: Technology: IT Services” on January 11, 2012. The report isn’t publicly available but we will discuss its main points. In their report, Julio C. Quinteros Jr., Vincent Lin, Roman Leal, and Geo John are defensive for the IT services sector in the year 2012. Goldman Sachs (GS) is concerned about the “current macro backdrop, with expectations for a slower global growth clouding visibility as we head onto 2012”. They have concentrated on stocks that are U.S. based mentioning a number of buy and sell rated stocks. Here are Goldman Sachs’ sell rated stocks.

Computer Sciences Corporation (CSC) provides information technology and professional services to both the government and commercial enterprises. Goldman Sachs has given the company a sell rating and remains cautious on its valuation. Computer Sciences Corporation has significant exposure to the Department of Defense which is looking to cut budget in 2012. Also, Goldman Sachs is of the opinion that due to Computer Sciences Corporation’s sluggish booking and a potential loss of the NHS contract, its shares are going to be impacted negatively. Shares of the company are currently trading at $24.9 per share and are expected to go south of $22 by the end of 2012. Glenview Capital sold its entire $42 million position in CSC during the third quarter.

CSG Systems International, Inc. (CSGS) provides outsourced customer care and billing solutions for North America. It has been given a sell rating by Goldman Sachs due to its exposure to the U.S. cable/satellite vertical services. CSG Systems also has a long sales cycle of transformation software deals that are resulting in headwinds. With a lower expected demand for ancillary services in the company’s core processing business, its valuation will most likely be negatively impacted. Shares of the company are currently trading at $15.7 per share and are expected to go south of $13. Currently, it has a price-to-earnings ratio of 18x. Intrepid Capital Management had $26 million in CSGS at the end of September.

Convergys Corporation (CVG) provides relationship management solutions on a global basis and operates in both the Customer Management and Information Management sectors. Goldman Sachs has given the company a sell rating because it believes that Convergys is a low growth company with lower returns to scale. Goldman Sachs recently increased its expected target price due to a higher implied CY2012 price-to-earnings ratio of 12x versus the earlier estimate of 10.9x. This is based on an improvement in the company’s growth prospects with regards to volume. Convergys also recently announced that it is going to buy back shares. Its shares are currently trading at $12.8 per share and are expected to fall to a price target of $11. Barry Rosenstein sold 41% of his stake in CVG during the third quarter.

Equifax, Inc. (EFX) collects, organizes, and manages various financial, demographic, employment, and marketing information solutions for businesses and consumers. Goldman Sachs has given the company a sell rating. Shares of the company are currently trading at $39 per share and are expected to fall to a price target of $36 per share. The price target is based on the CY2012E price-to-earnings ratio of 14.6x. Equifax is expected to generate an estimated return on capital of 10%. The price target was recently revised by Goldman Sachs taking into account improved operating results and recent multiple expansions for Equifax. Eminence Capital had the largest stake in EFX among the 350 hedge funds we are tracking.

Pitney Bowes, Inc. (PBI) provides mail processing equipment and integrated mail solutions on a global basis. It has been given a sell rating by Goldman Sachs. The company is currently facing protracted weakness in the SMB sector which could limit its valuation in the near future. Earnings growth is also reporting a slowdown but its consistent dividend yield of 8% will provide some support to the stock prices. Shares of the company are currently trading at $19.3 per share and are expected to go south of $18 per share by the end of 2012. Ray Dalio’s Bridgewater Associates sold its entire position in the company during the third quarter.

Solera Holdings, Inc. (SLH) provides software and services to the automobile insurance claims processing industry. It has been given a sell rating by Goldman Sachs. Solera Holdings has a significant exposure to the European markets in the near-term. Goldman Sachs recently lowered the price target for the company due to headwinds caused by an increase in financial expenditures. Its shares are currently trading at $43 per share and are expected to reach a price target of $41 per share. The company has a price-to-earnings ratio of 19.3x. Jim Simons’ Renaissance Technologies reduced its position in Solera by 11% during the third quarter.

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Best Generic Drug Stocks Picked by UBS

UBS Investment Research published a report entitled “UBS Pharma- Large Cap and Specialty” on January 11, 2012. The report isn’t publicly available but we will summarize its main points. In their report, Marc Goodman, Ami Fadia, Matthew Harrison, and Derek Yuan discuss the expectations for the fourth quarter of 2011 for selected pharmaceutical companies. UBS Investment Research also believes that there are many opportunities in the special pharmaceutical sector, with continued synergies, significant deal glows, and robust core growth. Here is what UBS thinks about the following pharmaceuticals:

Teva Pharmaceuticals (TEVA) is a pharmaceutical company that develops, produces, and markets generic drugs. Teva has been given a buy rating by UBS because the company is in a good position to increase its market share. The company has a good position in the U.S. market and is looking to increase its presence in Europe and other emerging markets. Its earnings growth is expected to be in the double-digits due to the company’s strong P-IV pipeline. UBS is of the opinion that the Cephalon deal is going to benefit the company substantially. Shares of Teva are currently trading at $44.5 per share and are expected to reach a price target of $60, indicating a potential upside of around 35%. John Paulson had $74 million invested in Teva at the end of the third quarter.

Mylan Labs (MYL) engages in the development, manufacture, marketing, licensing, and distribution of generic and branded pharmaceuticals. UBS Investment Research has given the company a buy rating due to an expected increase in its margins. Mylan is going to leverage its low-cost Matrix manufacturing platform which will improve its gross margins. UBS expects revenues to be around $1.5 billion by the end of 2012. Shares of Mylan are currently trading at $21.7 per share and are expected to reach a price target of $28, indicating a potential upside of 29%. Steve Cohen’s SAC Capital boosted its stake in Mylan by 45% during the third quarter.

Perrigo (PRGO) develops, manufactures, and distributes over-the-counter and generic prescription pharmaceuticals and other products. It has been given a buy rating by UBS Investment Research due to Perrigo’s store branded business being more sustainable than appreciated. The company is leveraging its large customer network, its customization abilities, and its low-cost manufacturing. Shares of Perrigo are currently trading at $97 per share and are expected to go north of $115, indicating a potential upside of 18.5%. Ken Fisher had $61 million investe in PRGO at the end of September.

Watson Pharmaceuticals (WPI) is a specialty pharmaceutical company that develops, manufactures, markets, sells, and distributes generic and brand pharmaceutical products. It has been given a buy rating by UBS Investment Research due to the manufacturing problems with several of Watson’s competitors. This has given two key products, namely Micro K and Toprol XL, the opportunity to perform well. The company’s growing branded business is valued by UBS. Shares of Watson Pharmaceuticals are currently trading at $62.2 per share and are expected to go north of $78, indicating a potential upside of 25%. Columbus Circle Investors had $210 million in WPI at the end of September.

Hospira (HSP) is a specialty pharmaceutical and medication delivery company that develops, manufactures, and markets products that aid in improving the safety and productivity of patient care. It has been given a sell rating by UBS Investment Research. The FDA recently issued Hospira a warning letter which will result in a decrease in service levels of the company. The current issues with Plum and Symbiq are impacting the company’s infusion business. Also, UBS is of the opinion that it will take a while for Hospira to gain some meaningful market share. Shares of Hospira are currently trading at $31.5 per share and are expected to go south of $25. Curtis Macnguyen boosted his stake in the company by 59% during the third quarter.

Impax Labs (IPXL) is a specialty pharmaceutical company that develops, manufactures, and markets bioequivalent pharmaceutical products. It has been given a neutral rating by UBS Investment Research due to the uncertainty surrounding its supply of Adderall XR. The company has an increasing pipeline of opportunities that are going to mature over the next few years. IPX-066 has received positive physician feedback but it is going to enter the market along with many other generics. Shares of Impax are currently trading around $20 per share and are expected to remain at the same level by the end of 2012.

Par Pharmaceuticals (PRX) develops, licenses, manufactures, markets, and distributes generic and branded drugs in the U.S. It has been given a buy rating by UBS Investment Research due to its high barrier-to-entry assets. The company is producing in a niche market and is expected to leverage its position. Par Pharmaceuticals is looking to restructure its branded business, helping to increase operating leverage. UBS expects the management of the company to make smart business development deals on account of the company’s strong cash flows. Shares of the company are currently trading at $36.4 per share and are expected to reach a price target of $42. Joel Greenblatt tripled his stake in the company during the third quarter.

Momenta Pharmaceuticals (MNTA) is a biotechnology company that specializes in the characterization and process engineering of complex molecules. UBS Investment Research has given the company a buy rating and is expecting Momenta to generate revenues of $26 million by the end of the year. Due to its strong analytical technology platform, UBS expects Momenta to have a brilliant success in the follow-on-biologics space where it will likely become a partner of choice for bigger pharmaceutical companies. Shares of Momenta are currently trading around $19 per share and are expected to remain at the same level by the end of 2012. Jim Simons’ Renaissance Technologies initiated a brand new position in MNTA during the third quarter.

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Greenlight Capital 2011 Q4 Investor Letter

Greenlight Capital's 2011 Q4 investor letter is now available. David Einhorn managed to beat the S&P 500 index for the 13th consecutive time. You can download it at Insider Monkey:

Greenlight Capital Q4 2011 Investor Letter Read More!

Jim Cramer Stock Picks

Jim Cramer CNBC'de en fazla izlenen, en populer programlardan bir tanesinin sunucusu. Eskiden hedge fon yonetmisligi de var ama simdi yaptigi is sovmenlik. Arada sirada guzel hisse tuyolari verse de cogu zaman verdigi tavsiyeler pek bir ise yaramiyor. Bizim begendigimiz bir kac hisse tavsiyesini anlatan bir yaziyi DividendInvestr sitesinde yayinladik. Yazinin basligi Jim Cramer's 5 Favorite Stocks. Ilgilenenler oradan okuyabilirler. Read More!

Accident and Health Insurance Companies Hedge Funds Love

Accident and health insurance is a big business. People may skimp on life insurance but they rarely go too long without health insurance or accident insurance of some kind – it is just too expensive for treatment otherwise and it can be difficult to find treatment without some kind of insurance. The thing is that investment in this industry is tricky. In as much as people will generally get accident or health insurance at some point, it is also the first thing they drop when times get tough.

To get an idea which companies are worth the risk of investment, looking to hedge fund managers is a good idea – they have teams of analysts at their disposal and they reveal their positions four times a year, plus more often if they add or sell off a large enough portion of a company.

Here is a list of accident and health insurance companies hedge funds are buying.

Aflac, Inc. (AFL): Of the 300+ hedge funds we track, 21 had positions in AFL at the end of the third quarter, compared to 26 at the end of the second quarter. Total hedge fund investment in the company also fell, going from $711.62 million at the end of June to $365.99 at the end of September. In spite of the big change of heart, Bill Miller’s Legg Mason Capital Management, Phill Gross and Robert Atchinson’s Adage Capital Management and John W. Rogers’ Ariel Investments each had positions in AFL worth over $50 million at the end of the third quarter.

Unum Group (UNM): The total number of hedge funds invested in UNM did not change in the third quarter – there were 16 funds invested in the company at the end of the second quarter and at the end of the third quarter – but total volume of that investment declined somewhat, going from $593.69 million at the end of June to $449.61 million at the end of September. UNM’s largest hedge fund investor wasn’t fazed though. Ralph V. Whitworth’s Relational Investors upped its position by +14% in the third quarter to close September with a holding worth more than $361.01 million.

Assurant, Inc. (AIZ): The total number of hedge funds invested in AIZ decreased from 16 at the end of the second quarter to 12 at the end of the third quarter, but the total volume of that investment increased, moving from $286.72 million at the end of June to $385.60 million at the end of September. Top hedge funds invested in AIZ at the end of the third quarter include Ric Dillon’s Diamond Hill Capital, Ralph V. Whitworth’s Relational Investors and Ken Griffin’s Citadel Investment Group.

CNO Financial Group, Inc. (CNO): The total number of hedge funds invested in CNO decreased from 17 at the end of the second quarter to 12 at the end of the third quarter, but the total volume of that investment increased, moving from $295.81 million at the end of June to $422.01 million at the end of September. John Paulson’s Paulson & Co owned several sizable positions in CNO at the end of the third quarter. His largest is a new position in the company worth roughly $147.73 million at the end of September.

Stancorp Financial Group, Inc. (SFG): The total number of hedge funds invested in SFG did not change in the third quarter – there were 6 funds invested in the company at the end of the second quarter and at the end of the third quarter – but total volume of that investment declined somewhat, going from $54.77 million at the end of June to $34.28 million at the end of September. Chuck Royce’s Royce & Associates and Cliff Asness’ AQR Capital Management are fans of SFG.

Kaynak: Accident and Health Insurance Companies Hedge Funds Love

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Jim Rogers Thinks Stocks Will Go Up in 2012

Legendary investor Jim Rogers shared his outlook for 2012 in an interview with Shanghai’s “First Financial Daily” newspaper. Jim Rogers predicts that world stock markets will bottom up and investors should get ready for an “election market” jump. Jim Rogers is still bullish about commodities in the long-run. However, he expects an even larger world economic crisis in 2013 or 2014. Here is a rough translation of Jim Rogers’ interview:

First Financial Daily: Most stock markets over the world performed poorly in 2011. What about 2012?

Rogers: 2012 is a very special year. Dozens of countries will have elections, including the United States, France, Korea, and Russia. The performance of these countries significantly affects the world economy. Usually governments increase spending in order to win the elections. The central banks will also print more money. Thus we will have more liquidity in the market. However, do not expect that the stock market will perform particularly well, since the global economy is still facing serious problems, such as the debt crisis and the growth slowdown. The rebound will be limited.

First Financial Daily: Gold has been sluggish after it approached $2,000/oz. How do you see the future of gold?

Rogers: The price of gold is indeed correcting, but I think that correction will continue. I am not surprised that gold prices remain at $1,400-1,500/oz. Gold will fall to $1,300/oz. in this wave of adjustment and I will buy then. And if gold fell further to $1,200/oz., I will buy more if I have money.

First Financial Daily: In addition to gold and silver, what are you holding now? How do you predict the future trends of commodity prices?

Rogers: I also bought a lot of agricultural commodities. Their prices are still low. For example, the price of sugar fell 17% from 1974 to the present.

Agricultural development is lagging. We lack the farmers and arable land because of agricultural depression. If this trend continues, we will face food shortages. Therefore, agricultural commodity prices must rise to attract capital and qualified people. Now the trend of investing in agriculture has already started, so not only I can foresee more and more farmers will become rich, but also I know that agricultural commodity prices will rise in the long-term.

If the world economy improves in 2012, commodity prices will rise and I will make money. If there is an economic downturn, currencies will depreciate a lot, and commodity prices will also rise because people will hedge against the depreciation.

New Round Of Economic Recession In 2013; The Euro Area Should Be Bold.

First Financial Daily: In 2002 and 2008, because of the Internet bubble burst, “9.11″ and the debt crisis, the U.S. experienced two economic downturns. Do you expect a new round of economic recession in the future? How will this impact the rest of the world?

Rogers: As said before, the market in 2012 will be driven by the general elections. There will be a lot of government spending, which will pile up the debt. Then the situation may be bad in 2013 and 2014. The recession will be caused by the negative effects of the heavy debt loads. The United States may not have enough bullets to fight the next serious recession. Europe will have very serious problems too.

This will undoubtedly affect other countries, including China. But compared to Western countries, China’s conservatism will lessen the blow. However, in general, no country can be spared from the recession in 2013 or 2014.

First Financial Daily: European debt crisis has been going on for two years. What do you think about the euro area and the euro?

Rogers: The best thing they can do is to let the Greeks go bankrupt, let the banks collapse and shareholders lose, and then restructure the whole thing.

The euro area should do the same thing when it dealt with the three Nordic banking crisis in early 1990s. Take quick and decisive measures. The Government took over insolvent financial institutions, restructured the banks through disposing non-performing assets, and emerged from the crisis quickly. Twenty years ago, the Japanese government’s response to the crisis is a lesson to us. Letting those banks become “zombie banks” will only lead to 10 years of recession or even longer.

Therefore, if the euro zone keeps kicking the can down the road, I am very worried that the euro zone economy may face years of recession. The euro will also be in danger, although the world economy needs the euro and the dollar to compete with each other in order to maintain the balance. If the euro collapses, it will lead to the appreciation of dollar, yen, and even RMB.

First Financial Daily: Recently, some analysts said the “BRIC”(Brazil, Russia, India and China) countries’ golden decade is over. Do you agree?

Rogers: To some extent, I do not agree. Although since the beginning of 2011, I have been shorting the emerging markets, including Brazil, India, Vietnam, U.S. technology stocks, and some European stocks, but I did not short China.

China is the world’s largest creditor. The mainland of China, Singapore, Hong Kong, and other Asian regions gather a lot of capital and assets, so I suggest people to move to Asia in the future, and teach their children to speak Chinese. In some aspect, the future opportunities remain in China and Asia.
Kaynak: Jim Rogers
Source: http://stock.hexun.com/2012-01-06/136987641.htm Read More!

8 Mega Cap Companies with Dividends Over 2%

Mega cap companies are those with market caps higher than $100 billion. They tend to be leaders in their industries and traded with enough volume that a momentum buy or sell is almost possible, even if the company itself is not volatile – but they aren’t all made the same, so to speak. Many mega cap companies pay dividends in addition to the type of returns normally offered by an equity investment, like the ones on this list. Each company on this list has a market cap over $100 billion and pays dividends over 2%. They also have low payout ratios and betas under 1.

Exxon Mobil Corporation (XOM) is a major integrated oil and gas company with a $408.00 billion market cap. It is currently priced at 10.26 times its earnings. XOM pays a 2.21% dividend yield and has a 21.96% payout ratio. Analysts give it a 2.2 on a scale from 1.0, meaning “Strong Buy,” and 5.0, meaning “Sell.” The company has a 0.51 beta and recently traded for $85.12 a share. Ken Fisher’s Fisher Asset Management had $518.97 million in XOM at the end of the third quarter, while Phill Gross and Robert Atchinson’s Adage Capital Management had $497.18 million in the company at the end of September.

Chevron Corporation (CVX) is a major integrated oil and gas company with a $215.70 billion market cap. It is currently priced at 8.03 times its earnings. CVX pays a 2.99% dividend yield and has a 22.20% payout ratio. Analysts give it a 1.9 on a scale from 1.0, meaning “Strong Buy,” and 5.0, meaning “Sell.” The company has a 0.80 beta and recently traded for $108.31 a share. Phill Gross and Robert Atchinson’s Adage Capital Management had $266.89 million in CVX at the end of the third quarter. Bill Miller’s Legg Mason Capital Management and Cliff Asness’ Aqr Capital Management were also fans of the company.

Microsoft Corporation (MSFT) is an application software company with a $236.42 billion market cap. It is currently priced at 10.22 times its earnings. MSFT pays a 2.85% dividend yield and has a 24.37% payout ratio. Analysts give it a 2.1 on a scale from 1.0, meaning “Strong Buy,” and 5.0, meaning “Sell.” The company has a 0.99 beta and recently traded for $28.10 a share. Boykin Curry’s Eagle Capital Management had $494.86 million in MSFT after increasing its stake in the company by +4%. Jean-Marie Eveillard’s First Eagle Investment Management, Ken Fisher’s Fisher Asset Management and David Einhorn’s Greenlight Capital also had significant stakes in MSFT at the end of the third quarter.

Wal-Mart Stores, Inc. (WMT) is a discount department store with a $202.06 billion market cap. It is currently priced at 13.29 times its earnings. WMT pays a 2.47% dividend yield and has a 31.11% payout ratio. Analysts give it a 2.3 on a scale from 1.0, meaning “Strong Buy,” and 5.0, meaning “Sell.” The company has a 0.35 beta and recently traded for $59 a share. Warren Buffett’s Berkshire Hathaway had $2.03 billion in WMT at the end of the third quarter, while Boykin Curry’s Eagle Capital Managementowned a stake worth $479.72 million at the end of September.

The Coca-Cola Company (KO) is a non-alcoholic beverage company with a $156.56 billion market cap. It is currently priced at 12.69 times its earnings. KO pays a 2.73% dividend yield and has a 33.32% payout ratio. Analysts give it a 1.7 on a scale from 1.0, meaning “Strong Buy,” and 5.0, meaning “Sell.” The company has a 0.55 beta and recently traded for $68.93 a share. Warren Buffett’s Berkshire Hathaway had $13.51 billion in KO during the third quarter. Paul Ruddock’s Lansdowne Partners and Boykin Curry’s Eagle Capital Management are also fans of the company.

McDonald’s Corp. (MCD) is a fast food restaurant company with a $102.94 billion market cap. It is currently priced at 19.73 times its earnings. MCD pays a 2.78% dividend yield and has a 47.27% payout ratio. Analysts give it a 2.0 on a scale from 1.0, meaning “Strong Buy,” and 5.0, meaning “Sell.” The company has a 0.46 beta and recently traded for $100.60 a share. Jim Simons’ Renaissance Technologies had $270.53 million in MCD at the end of September after increasing its stake in the company by +25% during the third quarter.

Procter & Gamble Co. (PG) is a personal products company with a $182.58 billion market cap. It is currently priced at 16.84 times its earnings. PG pays a 3.16% dividend yield and has a 48.59% payout ratio. Analysts give it a 1.8 on a scale from 1.0, meaning “Strong Buy,” and 5.0, meaning “Sell.” The company has a 0.45 beta and recently traded for $66.36 a share. Warren Buffett’s Berkshire Hathaway had more than 8% of its portfolio invested in PG at the end of the third quarter, in a position worth $4.85 billion. Ken Fisher’s Fisher Asset Management was also a fan.

Pepsico, Inc. (PEP) is a non-alcoholic beverage company with a $102.23 billion market cap. It is currently priced at 16.39 times its earnings. PEP pays a 3.15% dividend yield and has a 49.27% payout ratio. Analysts give it a 2.3 on a scale from 1.0, meaning “Strong Buy,” and 5.0, meaning “Sell.” The company has a 0.52 beta and recently traded for $65.39 a share. Boykin Curry’s Eagle Capital Management had $338.14 million in PEP after upping its holding in the company by +4% during the third quarter. Ric Dillon’s Diamond Hill Capital was also a fan.

Kaynak: 8 Mega Cap Companies with Dividends Over 2% Read More!

Top 10 Hedge Funds in 2011

We have been compiling hedge fund returns in 2011 for the past couple of weeks. We gathered returns for more than 60 hedge funds we are tracking. Here are the 10 top hedge funds in 2011:

1. Chase Coleman – Tiger Global: Chase Coleman’s Tiger Global returned 45% through the end of October.

2. Carl Icahn: Icahn was one of the most successful hedge fund managers and returned 35% in 2011.

3. Jim Simons – Renaissance: Renaissance Institutional Equities gained 1.97% from November 30 to December 23. The fund was also up 34.66% through December 23rd.

4. Ray Dalio – Bridgewater Associates: Ray Dalio’s successful fund gained 25% through the end of November.

5. David E. Shaw – D.E. Shaw: David Shaw’s Oculus Fund gained 19% through the end of October.

6. Ken Griffin – Citadel: Ken Griffin returned 17.7% through the end of October.

7. Philippe Laffont – Coatue Capital: Laffont returned 16.9% through the end of October.

8. John Thaler – JAT Capital: JAT Capital had generated a 38% return at its peak in early September. Betting on Netflix didn’t help the fund in the fourth quarter. JAT is still up 14% through mid-December.

9. Hugh Hendry – Eclectica Asset Management: Hugh Hendry’s Eclectica gained 11.7% through the end of October. The fund returned 2.7% in 2010.

10. Alan Howard – Brevan Howard: Brevan Howard Master gained 10.8% through the end of October.

Kaynak: Top Hedge Funds 2011

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Is Todd Combs Better Than Warren Buffett?

Todd Combs, the apprentice portfolio manager Warren Buffett hired at Berkshire Hathaway in 2010, seems to be following in the “Sage of Omaha’s” footsteps – buying when the markets are fearful – but could this up-and-comer be better than Buffett?

Combs “was assigned to oversee as much as $3 billion and can make trades without consulting Buffett,” writes Bloomberg. “Combs is part of a second generation of Berkshire leaders who will collectively assume the responsibilities that Buffett has held through his four decades as chairman, chief executive officer and head of investments.” And, Combs is certainly acting the part. “I’d give him an excellent grade,” said David Kass, a professor at the University of Maryland’s Robert H. Smith School of Business. “He is very much demonstrating what you might expect a value investor like Warren Buffett to do.” For example, Buffett invested in Goldman Sachs when the credit crisis in 2008 was at its most dire and advised shareholders in 1998 to “rejoice when markets decline,” and Combs pulled a similar play on August 8 last year, the first trading day after the S&P downgraded the U.S.

Warren Buffett has said that if a position is small (i.e. under $200 million), it was probably picked by Todd Combs or Ted Weshler, who was hired to help Combs’ manage the Berkshire Hathaway portfolio in September.

So, is Buffett better or Combs?

To answer this question, let’s look at Berkshire Hathaway’s portfolio at the end of the third quarter and see which positions performed better – those under $200 million or the larger positions under Buffett’s domain?

There were five positions initiated by Berkshire Hathaway during the third quarter, and before Weshler joined the company, that were less than $200 million and, as such, likely attributable to Combs: C V S Caremark Corp (CVS), Directv (DTV), General Dynamics Corp (GD), Intel Corp (INTC) and Visa Inc (V). Since the end of September to the close of trading yesterday, all of these except DTV was returning in the double digits. CVS returned 24.86%, DTV 2.72%, GD 21.18%, INTC 20.43% and V 16.81%.

In comparison, Berkshire Hathaway’s 5 largest positions – Coca Cola Co (KO), International Business Machs Cor (IBM), Wells Fargo & Co New (WFC), American Express Co (AXP) and Procter & Gamble Co (PG) – returned quite a bit less than that. KO gained 2.77% from the end of September to the close of trading yesterday, while IBM, a new position for Berkshire Hathaway in the third quarter, returned just 4.26%. AXP and PG did better, returning 8.62% and 6.33% respectively. WFC did the best of the group, returning 22.08%, but the returns still fall short of the positions Combs picked.

Kaynak: Is Todd Combs Better Than Warren Buffett? Read More!

Kredibilite Nedir?

Merhabalar bu yazımızda kredibiletinin ne olduğunu tartışacağız. Rdynk, Merkez Bankası başkanı Erdem Başçı’ nın iki farklı açıklamasını paylaştı. Bir açıklamada TL’ nin USD’ ye karşı değerini koruyamayacağını söylerken öteki açıklamada ise TL’ nin USD’ yi yeneceğini açıklamaktadır. Burada devreye kredibilite denen hede giriyor.

Kredibilite nedir? Yeni Klasik iktisatçıların literatüre kattığı kredibilite, itibarı olan politika demektir. Eğer kamuoyu uygulanacak politikanın gerçekten uygulanacağına, zaman içinde sapmalar olmayacağına inanmıyorsa bu politikalar itibarlıdır. Kredibilitesi olan politikalar sayesinde iktisadi ajanlar istikrarı kolaylaştıracak şekilde davranırlar. Kredibilitesi olmayan politikalarda ise iktisadi ajanlar istikrarı zorlaştıracak şekilde davranırlar.

Örneğin iktisatta bir dogma vardır. Bu dogma enflasyon ile milli gelir arasında ters bir ilişki olduğudur. Bu şöyle gerçekleşir; fiyatlar genel seviyesinde sağlanacak gerilemeler üretimin dolayısıyla istihdamın gerilemesine yol açacaktır. Bu bakımdan fiyatlar genel seviyesini düşürmenin maliyeti üretim kaybıdır. İtibarlı politikalar sayesinde bu sorunun üstesinden geliriz. Yüksek enflasyondan düşük enflasyona işsizlik ve üretim kaybı minimum olacak şekilde geçebiliriz.( Rasyonel beklentiler varsayımı ile).

Günümüz Merkez Bankacılığında bir kural vardır, para politikası parasızdır kuralı. Yani artık Merkez Bankaları beklentileri yöneterek, bankaları- bireyleri etkileyerek para politikası uygulamaktadır.Belki TCMB Başkanı Erdem Başçı, yukarıdaki açıklamalardan sadece bir tanesini açıklasaydı bu politika itibarlı olabilirdi. Ama artık değil. Diyelim ki Erdem Başçı sadece TL’ nin Dolar karşısında değer kazanacağını söyledi, bu durumda iktisadi aktörler ellerindeki USD' leri, TL’ ye çevirecekler ve politikanın uygulanmasına yardımcı olacaklar-dı. Ama artık değil, iyi günler.

Kaynak:

1)Paya, Merih, Makro İktisat, s.364-365

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Süper yazı

Usta kalem Deniz Gökçe'nin, kimi yazar ve akademisyenlere de giydirerek yazdığı güzel bir yazı. okuyalım, ogrenelim. Read More!

Babuğ'un hatası iktisat bilmemek

mehmet altan bugunki yazısında su tespiti yapıyor ki mukemmel.

"Hep söylerim, ‘iktisat’ bilmek pek bir işe yaramaz ama bilmemek büyük bir eksiğe neden olabilir...

Askerler hiç ekonomi konuşmazlar... Dün gibi hatırlarım 1971 Darbesi sırasında sıkıyönetimin ilk bildirilerinden biri et fiyatları nedeniyle kasaplara karşı yayınlanmıştı... Arz ve talep yasasının ‘emir’ dinleyeceğini sanıyorlardı.

Bizim Genelkurmay bugüne kadar ‘siyasi parti’ gibi davrandığı için Harp Akademileri’ndeki subayları da ‘iktisat’ ve ‘dünya sistemini’ anlamaya yönelik değil, ‘Ergenekon sanığı’ iktisat hocalarının propagandalarıyla eğitir...

Yoksa iyi bir eğitim almış bir kurmayın bu anlattıklarımı görmemesine imkan yok...

Başta söyledim...

İktisat bilmek pek bir işe yaramaz ama bilmemek büyük bir eksiğe neden olabilir...

Genelkurmay’a, kurmaylara doğru dürüst iktisat öğretin...

Orgeneral Başbuğ’un yanlışı da uluslararası ekonomiyi doğru dürüst okuyamaması, yeterince çözememesi oldu... ‘Askeri cumhuriyet’lerin çöküşe geçtiğini, demokratikleşme mecburiyetini göremedi..."

Read More!