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 Paulson & Co., founded in 1994 by investing giant John Paulson. Owned by its employees, the company has specialized in merger arbitrage, among other things, profiting when one company buys or merges with another (or merely announces plans to do so). It has grown into one of the largest hedge fund companies in the world.
Paulson & Co.'s latest 13F report shows that it has initiated or increased its positions in Caesars Entertainment Corp (NASDAQ:CZR), General Motors Company (NYSE:GM), and Verizon Communications (NYSE:VZ).
Caesars Entertainment is weighed down with more than $20 billion of debt after a leveraged buyout, and one way it's dealing with that is by having Caesars Acquisition buy some of its assets, such as its promising online gambling business. Caesars Entertainment, the largest gambling operator in Atlantic City, is also considering shedding its properties there. The company's first-quarter results were not encouraging, as casino revenue slid 9% year over year (while total revenue dropped 2%), and operating income plunged 50%. A bright spot for the company is Las Vegas, where some investments are starting to pay off, such as an entertainment center with the world's tallest Ferris wheel. A big competitive disadvantage for the company has been not having gambling properties in Macau, where gambling has been growing briskly. Caesars does have a South Korea property in the works, though.
General Motors Company is facing a big headwind in costs related to many recalls and litigation. (Through May, it has recalled close to 16 million vehicles this year.) Despite that, its first-quarter results exceeded expectations -- though earnings took an 82% hit. The company has been doing many things right, such as applying more discipline to pricing and incentives. Sales in May came in 13% higher than last May, with fleet sales up 21% and retails sales up 10%, outpacing Ford Motor Company. Its momentum might eventually be slowed by recall-related costs, but for now, sales are growing briskly. New CEO Mary Barra reported that an internal investigation into the fatal faulty switches found "a pattern of incompetence and neglect," and she has fired some 15 employees in response. General Motors stock yields a generous 3.5% dividend.
Verizon Communications is a telecom titan, with bulls loving its market dominance and competitive strengths -- and its resulting fat profit margins (net margins recently topped 11%). It boasts more than $20 billion in annual free cash flow, too, which can help it further build out its network while generously rewarding shareholders. More than a few hedge funds are snapping up shares. Verizon recently bought the 45% of Verizon Wireless that it didn't own from Vodafone. That bodes well, given that global mobile data usage grew by 81% in 2013 year over year and is expected to grow 11-fold by 2018, per a Cisco Systems report. The company's first-quarter results were mixed, though, featuring double-digit earnings and operating income growth but expectation-missing earnings. Verizon stock offers investors a fat 4.2% dividend yield.