Here's What This $18 Billion Hedge Fund Is Buying

Do these dividends topping 5% and 6% interest you?

Jan 23, 2014 at 5:36PM

Every quarter, many money managers have to disclose what they've bought and sold, via "13F" filings. Their latest moves can shine a bright light on smart stock picks.

Today let's look at Acadian Asset Management, founded in 1988 as a foreign stock fund manager. Today it manages more than 40 different investing strategies in global stocks and emerging markets and employs "sophisticated analytical models" with a database of more than 40,000 securities.

The company's reportable stock portfolio totaled $18 billion in value as of Dec. 31, 2013.

Interesting developments
So what does Acadian's latest quarterly 13F filing tell us? Here are a few interesting details.

The biggest new holdings are Cablevision Systems and Intuit. Other new holdings of interest include Kodiak Oil & Gold (NYSE:KOG) and New York Community Bancorp (NYSE:NYCB). Kodiak Oil & Gas is one of the fastest-growing companies in shale drilling, though recent freezing temperatures threaten operations. The company is cutting back a bit on capital spending, while still expecting production increases. Kodiak Oil & Gold's recent quarterly earnings report disappointed some, but others noted revenue's 167% increase. Despite the company's hefty debt load, bulls like its focus on efficiency and see it as having considerable promise.

Known for solid management, New York Community Bancorp has grown by more than 20% annually since its IPO in 1993, far outpacing rivals as it has acquired other banks and grown its commercial and industrial lending business. It's trading near a 52-week high and sports a whopping 5.9% dividend, though some worry that the payout might be reduced if the bank grows larger. Earnings in the bank's third quarter exceeded estimates, but were also below year-ago levels due to declines in mortgage-banking income. Credit quality improved, though. New York Community Bancorp has attracted many with its cost-cutting and risk management, but its stock may not be a bargain right now, with current and forward P/E ratios above its five-year average.

Among holdings in which Acadian Asset Management increased its stake were Qualcomm (NASDAQ:QCOM) and Intel (NASDAQ:INTC). Qualcomm, trading near its own 52-week high, supplies iDevices and Android devices with chips and very profitably licenses its technology. The company's fourth-quarter report was mixed, with revenue up 33% but management lowering expectations. Bulls are hopeful about Qualcomm's investments in China, as well as its expansion into health care and networking. Its Snapdragon 805 chip was well received at the recent Consumer Electronics Show, but some worry about competition from rivals such as MediaTek. Qualcomm has been hiking its dividend aggressively for a decade now, and its yield is at 1.9%, while the company's forward P/E was recently below 14. Impressively, Qualcomm's market capitalization has exceeded that of chip giant Intel.

Intel has been struggling lately, posting underwhelming earnings and trying to boost its presence in the mobile world. Still, many see value in the company, given its dominant market position, growing revenue and earnings, and significant payout. Intel faces some powerful competition, but its next-generation Cherry Trail technology is promising. It's using discounting to build its position in the tablet arena, too. Investors need to take a long-term view with Intel as it works to develop sizable alternate revenue streams. Its last quarter featured evidence of a recovering PC market, but still disappointed investors. Intel's hefty dividend yield of 3.5% is attractive, but many would like to see it increased, as it hasn't risen since 2012.

Acadian Asset Management reduced its stake in many companies, including Kinder Morgan Energy Partners (NYSE:KMP). The energy company's last quarter featured strong growth in natural-gas pipelines but modest growth elsewhere. The company's COO recently spoke with The Motley Fool about shifts in the global energy market, and about how investors might view master limited partnerships, or MLPs, such as Kinder Morgan Energy Partners. The stock offers a dividend yield of 6.7% that seems sustainable, and the company has been buying back shares, too.

Finally, Acadian's biggest closed positions included Embraer and Consolidated Edison.

We should never blindly copy any investor's moves, no matter how talented the investor. But it can be useful to keep an eye on what smart folks are doing. 13F forms can be great places to find intriguing candidates for our portfolios.

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Longtime Fool contributor Selena Maranjian, whom you can follow on Twitter,owns shares of Intel and Qualcomm. The Motley Fool recommends Embraer-Empresa Brasileira, Intel, and Intuit. The Motley Fool owns shares of Intel, Intuit, and Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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