This $12 Billion Hedge Fund Bought Cisco, Microsoft, and Xerox

Do you want to buy these growing dividends, too?

Jun 6, 2014 at 8:23AM

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 Bridgewater Associates, one of the world's largest hedge fund companies. According to its recently released 13F statement, the company has increased or initiated positions in Cisco Systems, (NASDAQ:CSCO), Microsoft Corporation, (NASDAQ:MSFT), and Xerox Corp (NYSE:XRX).

Cisco Systems's stock has averaged 16% annual gains over the past 20 years, but only 6% over the past five. Once a rapid grower, the company has experienced shrinking gross margins and lumpy earnings in recent years. Cisco's networking equipment business has been challenged by software-defined networking (SDN), and the company is investing heavily in cloud-computing and the "Internet of things," though it faces serious competition there. Its last quarter was mixed, with revenue and earnings topping expectations but both still declining year over year and emerging-markets revenue declining. Cisco's stock yields 3.1%, and it has been upping that payout aggressively. Shareholders can also benefit via stock buybacks: The company has spent some $2 billion on them and is ready to spend $10 billion more. It seems undervalued, too, with its forward P/E near 11.

Microsoft Corporation may have lost some of its momentum and dominance, but it's not standing still. It posted solid third-quarter results in April, with new CEO Satya Nadella noting the company's focus: "This quarter's results demonstrate the strength of our business, as well as the opportunities we see in a mobile-first, cloud-first world." Microsoft is forging strategic partnerships with industry leaders, SAP, and others as it aims to boost its cloud and marketing efforts. It's also looking to offer smartwatches and is taking on the mobile market with its new Surface Pro 3, which is a bit of a tablet-laptop crossover. There's even talk of making its operating system a subscription product, which would long-lasting revenue streams and address the problem of satisfied customers waiting to upgrade to newer versions. Another winning move is letting Xbox 360 users access entertainment apps without purchasing Xbox Live Gold subscriptions. Microsoft stock yields 2.8%, and it has been growing its dividend by an annual average of 16% over the past five years. Still, bears worry about strong competition, the weak PC market, and shrinking profit margins.

Xerox Corp, like Microsoft, is also transforming its business model, moving from a hardware focus to higher-margin services as it sheds some non-core assets. Obamacare has delivered business for Xerox, and it has been inking long-term contracts, such as processing all of California's Medicaid claims and, more recently, New York's Medicaid management (in a five-year deal worth about $500 million). On the other hand, Xerox was recently dropped as the operator of Nevada's troubled health exchange. The recent purchase of ISG Holdings for $225 million will boost Xerox's workers' compensation operations. Xerox bears may not like a first-quarter drop in revenue and profit over year-ago levels or management's lowering of near-term projections, but bulls love its hefty free cash flow (topping $2 billion annually) and see lots of growth and promise in the company. With a forward P/E near 10 and a 2% dividend, the stock is appealingly priced.

Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend-paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

Longtime Fool specialist Selena Maranjian, whom you can follow on Twitter, owns shares of Microsoft. The Motley Fool recommends Cisco Systems and The Motley Fool owns shares of Microsoft. 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.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers