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This $73 Billion Hedge Fund Company Has Been Buying Ford, GE, and Pitney Bowes

By Selena Maranjian - Mar 7, 2014 at 4:46PM

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Do these generous dividend yields interest you?

The latest 13F season has arrived, 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 fund 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 -- Amazon.com CEO Jeff Bezos once made the cut.

D. E. Shaw's latest 13F report shows that it has boosted its positions in Ford Motor Company ( F 2.03% ), General Electric Company ( GE -2.10% ), and Pitney Bowes ( PBI -2.34% ).

Shaw more than tripled its stake in Ford Motor Company, which was its 103rd-largest holding at the end of the quarter. After enduring many tough years, Ford has been on a roll, averaging more than 50% annual growth over the past five years. It still carries an appealing valuation, recently sporting a forward price-to-earnings ratio of 7.9 -- lower than its five-year average of 8.4. Ford has been enjoying solid sales despite a dip in February as a harsh winter interfered with production and purchases. Still, sales grew by 67% last month in China -- a massive market. Bears are worried, though, about an industrywide sales slowdown and rising inventory levels. Ford stock yields 3.2%.

General Electric has been transforming itself lately, becoming much more of an energy company, with oil and gas now its fourth-largest revenue generator. It's becoming a greener energy company, too, planning to spend some $10 billion on research into cleaner technology. Part of General Electric's transformation involves spinning off its sizable retail finance business, which it's doing via a massive initial public offering. GE's fourth quarter featured revenue up 3% over the year-ago quarter, earnings per share up 20%, and its order backlog growing by 8% to a record $244 billion. Bulls like how General Electric has been thinking outside the box by investing in and partnering with smaller companies on new technologies and sponsoring competitions to develop innovative solutions. CEO Jeff Immelt's purchase of millions of dollars in shares is promising, too. GE stock yields 3.4%.

Pitney Bowes is known for its legendary postage-meter business, but as you might imagine, electronic communications have taken a big bite out of that. Many lost faith in the company, especially after a 50% dividend cut last year. (The stock still sports an attractive yield, though, at 2.8%.) Pitney Bowes stock has nearly doubled over the past year, as the company posted a revenue gain (along with flat earnings that still topped expectations) in its last quarter, and forecast more growth after six years without it. Analysts at Zacks Equity research upgraded the stock to outperform in February, liking Pitney Bowes' prospects in digital commerce, where it has already been seeing growth. Bears worry about the company's debt, though, and whether it will sustain its growth momentum.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

General Electric Company Stock Quote
General Electric Company
GE
$93.00 (-2.10%) $-1.99
Ford Motor Company Stock Quote
Ford Motor Company
F
$19.58 (2.03%) $0.39
Pitney Bowes Inc. Stock Quote
Pitney Bowes Inc.
PBI
$6.67 (-2.34%) $0.16

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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