They say there is power in numbers, and when it comes to
investing like the pros, that sentiment is right on the
#-ad_banner-#One of my favorite analytical methods is to find
stocks that possess as many professional "endorsements" as
possible. These stocks not only have impressively high yields,
but they are also well-represented in the portfolios of the
world's investing elite.
The beauty of today's hedge fund regulations mean that
managers are required to disclose their long positions every
quarter, allowing investors of all sizes access to detailed
insight into what a manager is holding.
Some of the disclosures are intentionally vague or "padded" to
decrease transparency, but there are ways to glean actionable
info from these filings, known as 13Fs. (My StreetAuthority
colleagues and I have written about 13F's on several occasions
.) One of my favorite investment strategies is to collect the
filings of a number of successful managers (read: billionaires)
and see where their investing methodologies intersect.
Long-term investors like
have reaped the benefits of high-paying
for years, and those securities should be favorites in the
portfolios of those with a greater time horizon in mind. That
said, I've gone through the most popular high-yielding stocks of
20 billionaire hedge fund managers to see where these gurus are
finding respectable income in these markets.
|Transocean (NYSE:RIG )
|Transocean stands out as the highest-paying stock on
the list with a 5.7% yield. Unfortunately, from a growth
standpoint, it's also the worst-performing stock over the
past year (it has lost 19% versus the market's overall 17%
gain). Transocean has been beaten up by the Street in
recent months, pushing the stock to near 52-week lows.
However, the drilling service provider saw an upgrade from
Deutsche Bank this week, whose analysts contend RIG is
oversold, pegging its price target at $45. Notorious
owns greater than 5% of RIG; his stake was worth more than
$1 billion as of the end of last year.
has been lagging well behind the market as well, down
slightly over the past 12 months and flatlining this year.
However, the $183 billion telecom has offered investors
some reprieve in the form of a 5.2% dividend. Other good
news has come in the form of an authorization to up the
company's stock buyback from 125 million shares to 425
million shares, which amounts to roughly 8% of current
outstanding shares. Jim Simons of Renaissance Technologies
got his feet wet in AT&T in the final quarter of 2013
with a $100 million investment in the form of 2.8 million
|Verizon is the second telecom to come up on my screen,
offering a yield of 4.5% to investors and mirroring the
same 12-month stock performance as its AT&T counterpart
(not surprising, given the similarity in business models).
The company continues to increase its coverage area in the
U.S., most recently inking a $210 million deal to acquire
spectrum licenses and tower lease obligations from
Cincinnati Bell in Ohio. Citadel Advisors, headed by Ken
Griffin, increased its stake significantly in the last two
quarters of 2013, from 110,000 shares in the third quarter
to over 900,000 by the end of the year.
|ConocoPhillips rounds out the bottom of the list with a
yield of 3.9%. While it may seem paltry compared with these
other dividends, COP has seen strong price growth lately,
beating the S&P's gain by nearly 7 percentage points
over the past year. Analysts at Morgan Stanley think there
is still more room to grow, pinning their price target at
$85, representing upside of nearly 20% from current levels.
Who's on the roster of outsized COP investors?
Buffett's Berkshire Hathaway (NYSE:
, which reported a holding of over 11 million shares.
That's a nearly $800 million investment according to COP
prices at the end of last year.
Risks to Consider:
You don't always get the whole picture from 13F filings,
which is why it is important to choose the managers you follow
wisely. The form does not require short or international
positions to be disclosed, which can be important parts of an
overall portfolio or basket trade. To minimize these risks, use a
discerning eye and cumulative screens such as the one employed
Action to Take -->
Investors who favor bargain stocks may have their interest piqued
by RIG, while COP may be the better choice for those looking to
hold for the long term. Increased competition could plague the
short-term growth of telecom, so I would seek opportunities
elsewhere if the strong dividends of VZ and T are not enough to
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