This Massive Hedge Fund Company Has Been Buying Citigroup, Merck, and Hertz

Might they interest you, too?

Mar 10, 2014 at 5:00PM

The latest 13F season is here, when many money managers issue required reports on their holdings. It can be worthwhile to pay attention, as you might get an investment idea or two by seeing what some major investors have been buying and selling.

For example, consider D. E. Shaw & Co. Founded by David E. Shaw, the firm has a reportable stock portfolio totaling $73.3 billion in value as of Dec. 31, 2013. Shaw is known as a math wizard and a quantitative investing pioneer. His firm is extremely selective when hiring, reportedly accepting about one in 500 applicants -- CEO Jeff Bezos once made the cut.

D. E. Shaw's latest 13F report shows that it has boosted its positions in Citigroup, (NYSE:C), Merck & Company, (NYSE:MRK), and Hertz Global Holdings (NYSE:HTZ).

After some tough years, banking giant Citigroup has been turning itself around, and with a forward price-to-earnings ratio near nine, its stock seems to have more room to run. Its retail banking and credit card businesses have been particularly strong lately, and fully 56% of its global consumer banking revenue is from credit cards. Its fourth quarter featured revenue slightly down from year-ago levels and earnings up 19%. Bulls like its prospects, given its strengthening financials, a rebounding housing market, and its stock valuation. Bears worry about global vulnerabilities and whether our government will address the issue of banks being too big to fail.

Pharmaceutical giant Merck has been challenged by competition from generics and slowing growth, and its fourth-quarter report was mixed, with revenue and earnings slipping from year-ago levels. Still, some $11 billion was returned to shareholders in the form of dividends and stock buybacks, and bulls are hopeful about Merck's turnaround plan, which includes downsizing, focusing on more focused drug development, and possibly selling its consumer products business. That division features names such as Coppertone, Claritin, and Dr. Scholl's, and could fetch $11 billion. The company's pipeline is promising, too. Merck's stock yields 3.1%.

Hertz Global Holdings is not just a car rental company. It also rents items such as tools and heavy construction equipment. Hertz's brands include names such as Dollar, Thrifty, and Firefly. (Hertz bought Dollar Thrifty in 2013 for $2.3 billion.) The company's forward P/E of 11 is appealing, but it carries more than $10 billion in debt, too. Hertz's stock took a hit last week when it said it would be late filing its 10-K report and that it expects to revise some numbers. The company posted strong revenue growth in its third quarter, but earnings dropped.

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Selena Maranjianwhom you can follow on Twitter, owns shares of The Motley Fool recommends and owns shares of It also owns shares of Citigroup and Hertz Global Holdings. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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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