Stocks With Over $700 Bn Cash on Hands

In the second quarter of 2017, twenty-four of the largest American companies are holding on to a whopping $1.01 trillion in cash reserves, up 1.63% from the first quarter, according to analysis of second quarter earnings reports by Bank of America.

The biggest amount of money is created and kept by technology firms like Alphabet, Apple or Microsoft.

Here are the biggest cash companies compiled:

Source: Business Insider

How Tech Giants Amazon, Facebook, Microsoft, Apple and Google Make Money

Source: Barry Ritholtz

Here Are The 10 Most Loved And Hated Stocks On The Street Right Now!

Source: Bloomber

14 Arguments For Apple Each Long-Term Investor Should Know Now!

Apple released recently its quarter results from the most important fiscal of the full year.

The number disappointed investors despite numbers at all time highs.

Apple is still the biggest company on the planet but if you compare the size with its business operations around the world, apple becomes modest.

These are now over 1 billion active iphone outside, which are potential iTunes sales machines.

The company owned store becomes more and more imporant. The core question is if we have seen the apple peak or will the tech giant become more dominant in the future with new products like iWatch, iTV and iCar?

Mid-Term AAPL Forecasts By Reuters,
Source: www.zonebourse.com

Make your own picture with these 14 facts from the latest Apple report...

A Solid Portfolio Of Stocks With A Strong Balance Sheet

A Solid Portfolio Of Stocks With A Strong Balance Sheet (click to enlarge)
Source: Goldman Sachs, MarketWatch

Do You Think Apple Is Big? This Company Is 11 Times Bigger Than The iPhone Maker!

Here Is How The Most Dominated Companies Have Changed - Energy Loses Ground While Tech Becoming More Important

30 High-Margin Stocks With Strong Competitive Advantages

Investing into high margin companies could end in a better return. The underlying thought is simple: A companies that works on higher margin can survive a market correction more likely and become stronger after a recession.

Attached, you can find a list of companies with high profit margins. Those could be a first step to start a further research. 

In general, the margin tells us something about the competition as well as the business model. 

High margins mean that the corporate make many business processing steps by it. The competition is less hard. Products are unique and could have a market barrier.

Here is the selection of high-margin stocks...

Super Investors Love These 10 Stocks Mostly By Betting On Rising Stock Prices

Today I like to introduce 10 of the top buys from the past quarter by super investors like Warren Buffett or George Soros.

I've posted an article related to the activities of Warren Buffett recently on this blog. Warren is one of the investors I watch closer. I like to stay informed by with most of his decisions, I don't agree.

I like the idea of dividend growth with accent on growth. Growth is more important than yield but you must find a great balance from both.

Google and Berkshire are two top picks on the list who don't pay dividends but generated phenomenal growth in the past. It shows that creating values don't depend on paying dividends or buying back own shares.

The truth is that normal investors like me or maybe you too, need a bigger part of shareholder friendly presents. We don't have the ability to reduce working capital or boost free cash flows by combining several businesses. That's only possible for big investors.

Here are the top dividend results:

7 Good Running Companies That May Pay A Dividend For The First Time

Dividends are great but not all companies pay a dividend. Why? Well, there are many reasons, some might put all free cash-flow into the business in order to boost growth or they are buying back own shares and increases your stake in the company.

Those activities make only sense whey they have a stable running and continuous growing business like McDonalds or Coca Cola.

The second reason why a corporate pays no dividend is because they do not earn money and make losses. That's a really bad issue and I can tell you that it doesn't make sense to put money into a loss-generating machine.

Back to the topic of this article, today I like to introduce 7 stocks with a forward-orientated business that did not pay dividends buy may do it in the near future. It's always great to see what kind of stocks may appear on your dividend radar before others might see it.

Don't look to critical at the P/E valuation. The Enterprise Value gives a more fair view of the stocks. Most of them sit on tons of cash. I've written also a good article about stocks with the biggest cash accounts abroad. GE was on the first place there.

If you like more ideas about Dividend Champions with zero debt, you should check out this article: Dividend Champions With Zero Debt And Promising Payout Growth.

These are the results....

10 Most Popular Dividend Stocks Bought By Investment Gurus

Recently I published an article about Warren Buffett's latest dividend stock buys and sells of the recent quarter.

I'm ever surprised about his new investment. He bought Deere, a great company with high market share in the farmer’s equipment segment, while I was selling it due to high debt loads and operational headwinds.

You also may like my article about 10 stocks with the highest Share Buyback Program on the market.

Today I like to show you what the other super investors like George Soros, David Tepper, Bill Ackman, Bruce Berkowitz or others bought during the latest quarter. Each of the attached stocks were bought at least four times by one of the 60+ superinvestors.

It's a clear signal. They put money into the oil services industry. Drilling and exploration companies- Those are suffering mostly from the low oil price. Is it an anti-cyclic bet? What do you think; please share your thoughts by leaving a small comment.

These are my main favorites from the list....

4 Hedge Funds Heavily Invested in Apple’s Fate

Written By Guest Author Insider Monkey. There are more than 8,000 hedge funds in existence today, and of this group, we at Insider Monkey track close to 600 of the best and brightest. The best picks of the best hedge fund managers have market-beating potential (see how we returned 47.6% in one year), and within this group, there are many ways to parse the data.

This week, we’ve covered some important tech topics in particular, like why Warren Buffett probably won’t buy Twitter [TWTR] and the peculiarities of Longbow Securities’ moves in NQ Mobile [NQ]. One subject that has been flying under the radar, though, is Apple [AAPL] and the hedge funds that surround it.

According to one Apple news site, the tech giant’s latest earnings release has been met with mostly optimism on Wall Street, especially from JPMorgan’s Mark Moskowitz. Moskowitz expects Apple’s current share price to hit $600 by December of 2014, primarily based on strong iPhone sales, the iPad’s potential in future quarters, and gross margins that are “good enough for long-term investors.”

With that in mind, we thought it’d be useful to run through the hedge fund managers that have stayed committed to Apple over the long run. Here are the four biggest bulls that have held the stock for at least two years:

David Einhorn

David Einhorn first bought Apple in the second quarter of 2010 and in the three years since, the manager of Greenlight Capital has upped his stake by nearly eightfold. While Tim Cook and the rest of Apple’s leadership didn’t adopt Einhorn’s iPref idea, his latest Q3 shareholder letter reveals he’ll likely remain bullish here for the “longer-term.”

David Shaw

Another billionaire, David E. Shaw, has held shares of Apple for the better part of the last decade. The manager of D.E. Shaw & Co doubled his exposure to the stock in the last round of 13F filings, and it actually represents the largest long-only holding in his entire equity portfolio. Shaw and Einhorn have the two largest Apple stakes of the funds we track, both of which represent nearly $1 billion in market value apiece.

Philippe Laffont

Philippe Laffont’s Coatue Management, meanwhile, has been a major Apple investor since the fourth quarter of 2004. Laffont founded his tech-focused hedge fund in 1999 after working for the legendary Julian Robertson, and Apple was his top stock pick for all of 2011 and most of 2012 before he slashed over half of his stake in the fourth quarter.

The fund manager now owns over $600 million in Apple stock and has recouped all of the shares he sold at the end of last year. While we don’t know exactly when Laffont cut his stake in 2012, it’s evident that he avoided much of the swoon that plagued investors who stuck with their gut, and actually bought back when shares were cheaper.

Ken Fisher

Although he’s technically not a hedge fund manager, Ken Fisher is a prominent investor worth tracking. Fisher Asset Management oversees nearly $40 billion in equity investments alone, and while it has been a long-term shareholder of Apple, the firm has only recently upped its stake to significant levels. At the halfway point of 2012, Fisher held $50 million worth of Apple stock; today, that number is more than $600 million.

It’s no secret that Fisher likes growth stocks that also trade at reasonable valuations, so we can understand why he’s bullish here. Apple trades at a PEG ratio near 0.9, and the sell-side still expects it to generate earnings growth of 15% a year over the next half-decade. That forecast trumps peers like Google [GOOG] and Microsoft [MSFT], and it’s cheaper than both.

Disclosure: none

How George Soros Plays The Stock Market

The following article was written by our guest author Insider Monkey. Opinions of George Soros vary depending on whom you ask, but there’s no arguing against the Hungarian-American hedge fund manager’s investing pedigree. Earlier this month, Soros shared his thoughts on the Eurozone crisis at the Global Economic Symposium, and most of the usual headlines that surround the billionaire are focused on his macroeconomic views.

That’s all fine and dandy. We’d like to point out, though, that George Soros’ Soros Fund Management does maintain a $9 billion equity portfolio too. Due to the market-beating potential of hedge funds’ best stock picks (discover how we returned 47.6% in our first year), it’s useful to understand how a prominent investor like Soros is playing the stock market.

At the end of last quarter, George Soros and his management team disclosed a little over 200-equity holdings, with 15% of their capital allocated to their top five stock picks. This level of concentration is not uncommon for a large hedge fund, but a few of the specific names may surprise you.

Google

Other than Google [GOOG], that is. It’s really not very difficult to understand why the tech company is Soros’ No. 1 stock. Google was hedge funds’ favorite pick in the latest round of 13F filings, ahead of AIG [AIG] and Apple [AAPL]. Aside from offering a bevy of long-term product innovations like self-driving cars or smart thermostats, more immediate catalysts are the launch of the Moto X and next year’s release of Google Glass.

Both devices play into Wall Street’s bullish earnings estimates for Google, in which it expects 17% to 18% EPS growth in 2014 and 15% annual growth over the next half-decade. This trumps peers like Yahoo [s:YHOO] and even Apple. In addition to Soros’ bullishness, big-name fund managers Ray Dalio and Israel Englander have initiated Google positions in the last few months.

J.C. Penney

This is what we meant when we said you might be surprised. J.C. Penney [JCP] represents everything Google does not: poor market performance in 2013, high CEO turnover, an inconsistent business plan, and an uncertain future. The retailer is going back to its pre-Ron Johnson coupon strategy, which leads some to believe that it can recapture most of its old customers, and is thus undervalued at current levels.

It’s easier to be skeptical of this move than it is to support a bullish thesis, so we have a rare case where Soros is acting as a contrarian by betting on a stock rather than against it. Assuming you are for a turnaround here, J.C. Penney trades at a mere 0.15 times sales, but earnings will have to pick up. Longs can’t take many more monumental bottom line whiffs. Last quarter the retailer missed sell-side estimates by 88%, and in the first quarter of the year, EPS fell short of consensus by 36%. In fact, J.C. Penney has been in the red for a year and a half now.

A few days ago, Richard Perry cut almost half of his position in the retailer and last month, Bill Ackman liquidated his entire stake. What’s so notable about both of these moves is that Ackman’s hedge fund had the largest stake in J.C. Penney at the end of last quarter while Perry was third.

The remaining three

After the antithetical duo of Google and J.C. Penney, Soros’ next largest holdings are Herbalife [HLF], Charter Communications [CHTR] and Johnson & Johnson [JNJ].

While Ackman and Carl Icahn continue to feud about the legitimacy of Herbalife’s marketing practices, George Soros continues to book gains. Since we know that he held shares of the company on the last day of June, it can be inferred that Soros has made at least a 51% return on his long position. If he initiated the stake earlier in the second quarter, like in early May for example, this return stretches to more than 70%. Either way, the billionaire has to be happy that it represents one of his biggest holdings.

Charter Communications, meanwhile, is another stock that is up big (+72%) in 2013. The cable entertainment company has been a long-term pick for Soros, sitting in his clutches since early 2011. The same can be said for Johnson & Johnson, which has been in Soros’ equity portfolio for exactly four quarters. Johnson & Johnson is a prototypical dividend-payer that has actually offered double-digit capital gains this year, while Charter is a growth play plain and simple.

All in all, the variety presented in George Soros’ five largest stock picks is truly one of the best things about this group. Google, J.C. Penney and Herbalife are the three we’ll watch the closest going forward, particularly when new 13F filings come in mid-November.

Disclosure: none

100 Most Bought Stocks By Investment Gurus

100 most bought stocks by investment professionals originally published on Dividend Yield – Stock, Capital, Investment. I love it to see how the big investors act on the market. Some of them have a really interesting and creative investing strategy which works only with huge amounts of capital.

Some hedge funds play with money and try to boost its return by ignoring a good diversification. But if they know the business and management team the risk might be lower as for desk research investors like us.

However, each month I publish a little list about the largest stock buys from 49 super investors. I analyze how often a stock was bought over the recent six months and ranked them in my 100 best guru buy list. All super gurus combined bought 655 stocks within the recent half year.

In my view, it’s a good tool to look at the activities of guru investors in the market because they have big money in their pockets and if they invest combined, they could change the market very easily.

Their attitude to stocks is also lightning the way to return, not always but sometimes because the media notices the portfolio changes of the hedge fund managers and create additional publicity.

Technology is still the place to be for the investment guru’s. I think that they have noticed the huge cash reserves of Apple and the other stocks. Not enough, most of them are very profitable and grow further despite they don’t have new technologies developed.

Apple vs. Microsoft: What’s the Smart Money Think?

The following article was written by our guest autor Indider Monkey. Apple (AAPL) versus Microsoft (MSFT). It is a clichéd contest debated by everyone from tech bloggers to university professors. If you follow the equity markets, we’re willing to bet you’ve taken a side once or twice, or at least thought about it. So instead of picking favorites using the same old tired P/E or earnings growth metrics, we are going to give you some information that’s a bit more useful.

We’re talking about hedge fund sentiment.

At Insider Monkey, our goal is to help you understand how to parse down the vast hedge fund industry into insight you can use. Our empirical research on hedge funds has allowed us to hone our small-cap strategy into a market-beating machine. In its first year ended last month, this strategy returned 47.6%, outpacing the S&P 500 by more than 29 percentage points.

The crowd’s pick: Apple

We track a little over 500 of the best and brightest hedge funds in existence (out of around 8,000 total), and in the Apple-Microsoft debate, the consensus filings are intriguing. According to the final numbers from last quarter, Apple was the third most popular stock among the money managers we track, with 122 hedge funds invested. Ninety-two elite hedge funds were long Microsoft at this time.

Relatively speaking, Google (GOOG) was a much more well-liked tech stock last quarter with a whopping 157 hedgies, but both Microsoft and Apple finished in this measure’s top 10, easily outpacing peers like Nokia (NOK) or Intel (INTC). This overarching form of analysis isn’t the only way to compare the duo, though.

Einhorn’s pick: Apple

Within the aggregate data, there are quite a few interesting cases of noteworthy hedge fund managers choosing between the two based on a variety of factors. David Einhorn, for example, chose to go with Apple while closing out of Microsoft last quarter. His rational was explained in his Q2 2013 shareholder letter, in which Greenlight Capital wrote, “Windows 8 appears to be a flop, and a decade of mismanagement has put Microsoft at risk of becoming a shrinking company.” Apple, meanwhile, is still Einhorn’s No. 1 stock pick, accounting for just over 16% of his $5.3 billion equity portfolio.

Yacktman’s pick: Microsoft

One hedge fund manager who feels precisely the opposite is Donald Yacktman. At the Value Investing Congress on Monday, Yacktman—who’s particularly skilled at finding opportunities in the large cap space—said Apple isn’t as cheap as most think, reasoning that it can’t sustain its high profit margins.

Yacktman remarked his "hat's off to Steve Jobs, he hit 4 home runs in a row," to those in attendance, but in response to a question posed by an audience member on why he holds Microsoft but not Apple stock, his response was interesting. Essentially, Yacktman said that Microsoft's profit margins are protected, i.e. there aren't competing viable operating systems or Office products, while Apple's margins are not. Assuming Samsung's smartphones are close substitutes to Apple's iPhone, Cupertino is theoretically more vulnerable to a shift in consumer preferences and/or a prolonged lack of innovation.

Ubben’s pick: Microsoft

Behind the next proverbial door we’ll take a look at Jeff Ubben of ValueAct Capital, an activist investor who has a longer-term focus than many of his corporate raider peers. Ubben and ValueAct took a huge stake in Microsoft back in April, and the position represents close to $2 billion on the books.  In the eyes of most analysts familiar with the matter, it’s widely understood that Ubben’s aim is for Microsoft to concentrate on cultivating its Azure platform to become the top dog of cloud computing.

Ubben was also at the VIC in New York, and his statements on Microsoft echoed those of Yacktman. According to CNNMoney, the crux of his bullish thesis—in addition to the recently approved buyback and dividend boost—is that Microsoft can rely on its enterprise contract staple for the long term. Apple and its peers, on the other hand, “have to run faster every year to keep up,” Ubben said.

Final thoughts

At the end of the day, it’s up to each individual investor to make up his or her own mind about the Apple-Microsoft debate. The elite hedge fund crowd is leaning toward Apple, and Einhorn is sticking with his guns now that Tim Cook and management have shown their shareholders the money.

Apple’s apparently cheap valuation can be called into question, though, if you’re in Yacktman’s camp with regard to margin pressures. Or, if you’re like Ubben and are more confident in Microsoft’s cloud opportunity and existing strengths in enterprise computing, it’s reasonable to feel like the company represents a safer investment than Apple. Either way, the world’s richest investors are split on the matter, and this is a debate that doesn’t look like it will be decided any time soon.

Disclosure: none

100 Most Bought Stocks By Investment Gurus

100 most bought stocks by investment professionals originally published on Dividend Yield – Stock, Capital, Investment. Big investors are sometimes better informed about the issues of a company. They know where to find low hanging fruits and to make profits. It could make sense for us normal investors to observe the activities from the big investors in order to get a feeling about the good and bad companies, stocks that investors love and hate.

Each month, I develop a little screen about the largest stock buys from 49 super investors. I analyze how often a stock was bought over the recent six months and ranked them in my 100 best guru buy list. All super gurus combined bought 631 stocks within the recent half year; they seem to be more bullish.

In my view, it’s a good tool to look at the activities of the guru investors in the market because they have huge amounts of capital and if they invest combined, they can change the market very easy. Their attitude to stocks is also lightning the way to return, not always but sometimes because the media notices the portfolio changes of the hedge fund managers and create additional publicity.

Technology is still the place to be for the investment guru’s. The top three results from the guru 100 best buy list are all tech stocks: Oracle, Apple and Microsoft.

…and investors bet more on dividends: Now, 80 percent of the equities they bought pay a dividend. But most of them are low yielding stocks, around 11 stocks yielding over 3 percent. Investment guru’s still look for growth and don’t seek for high cash compensation.

George Soros Biggest Dividend Stock Buys And His Latest Portfolio

Georges Soros latest dividend stock moves and his asset allocation originally published at long-term-investments.blogspot.com. George Soros is a legendary and speculative driven hedge fund manager. He manages around $9.22 billion in his asset vehicle Soros Fund Management LLC. The money is invested in over 200 companies.

George Soros is a very active Trader. He bought 59 new companies, around 30 percent of his total assets. Half of his latest big stock purchases pay a dividend. The most important changes were made within the technology and cyclical consumer goods sector. 

He changed assets in this category with impact to his portfolio of around 8.7 percent or net 7.4 percent. Also important areas where he put money in were communication services and defensive consumer stocks. The 20 biggest stock purchases had an impact to his portfolio of around 14 percent.

George Soros is an unpredictable investor. He jumps on everything he believes to make money with. The positive thing is that he is a much diversified guy. 

None of his stock assets is too big to be over weighted. The biggest position has a 3.8 percent portfolio share. His 20 top stock positions represent only 31.5% of his portfolio value, including ETFs, the ratio rises to 47.7 percent.

The Truth About Hedge Funds

It’s time to set the record straight. Many members of the media have reacted negatively to the development that hedge funds will be allowed to advertise to the general public. A number of outlets have been critical of the hedge fund industry for some time due to the fact that some money managers have been accused of unethical behavior like insider trading, as well as the fact that many billionaires (about 40 to be exact) are hedge fund managers, somehow asserting that this means they do not need—or deserve—any additional clients.

In a gift to these critics, the relaxation of advertising rules comes as the S&P 500 ETF [SPY] has risen almost 30% over the last two years, meaning that if a particular hedge fund has only returned 10% per year over this period, it has underperformed the market. This cut-and-dry comparison makes it easy to poo-poo on the industry at large, but it’s frankly not that simple.

Yes, hedge funds indices have, in fact, underperformed the S&P 500 index recently, but that’s assuming that these indices contain the entire “universe” of 8,000-plus hedge funds in existence today. In reality, there are plenty of upper-tier funds that do not report their returns to hedge fund data providers. In addition, most of the hedge funds do not invest in plain vanilla stocks and comparing their returns to the S&P 500 index is absolutely absurd.

Many members of the financial media claim that hedge funds can’t pick winning stocks. They acknowledge that there are some hedge fund managers who can beat the market, but no one can pick “good” hedge fund managers before they prove themselves. Based on these two assumptions they conclude that investors should stay away from hedge funds. We are going to present evidence to the contrary. We will also explain why hedge funds invest in Apple [AAPL] and Google [GOOG] in droves.

Do Hedge Funds Know How to Pick Good Stocks?

Absolutely, yes.

We have a database of all 13F holdings for 92% of hedge funds between 1999 and 2009. According to our calculations hedge funds’ stock picks with market values between $1 billion and $10 billion outperformed the S&P 500 index by 10.3 percentage points per year (to be exact 82 basis points per month) during this 10 year period. Hedge funds’ large cap stock picks outperformed the market by 18 basis points per month or about 2.2 percentage points per year.

That’s not the all story though.

From a consensus standpoint, there is a specific range of small and mid-cap stocks that gives piggyback investors the potential to outperform the market indices by a huge margin. The most popular 15 small-cap stocks among hedge funds outperformed the market by 18 percentage points during this time period.

Wait, we know what you are thinking. These results only show that hedge funds were good between 1999 and 2009. How about the past 12 months?

We knew this question would be coming a year ago. So, we launched a quarterly newsletter that picks the 15 most popular small-cap stocks among hedge funds in real time. We launched this newsletter at the end of August 2012 and have been sharing our performance since. So how did these 15 most popular small-cap stocks perform since August 2012?

Much better. Our picks returned 54.5% through July 30^th, vs. a 22.1% gain for the SPY (see the details here). This can’t be explained by coincidence. Hedge funds are amazing at picking winners. We have the historical data and we have been testing this in real time. Our data confirms this fact.

Can We Pick Successful Hedge Fund Managers?

The second myth spelled out by uninformed financial journalists is that even though there are good hedge funds, there is no way that we can spot them before the fact. For every David Einhorn out there, there are dozens of unsuccessful hedge fund managers and we couldn’t know which one is which 15 years ago.

You know what? This is why hedge fund advertising will be beneficial for investors. Investors will have access to more information about hedge funds, their stock picks, their performance, interviews that shed a light on their character, and they will do a much better job at picking good hedge fund managers.

Picking good hedge fund managers is actually much easier than you think. If, on the whole, hedge funds weren’t good at picking stocks (i.e. their performance was purely random), then it would be impossible to pick good managers. However, once you know that it is possible to be good at selecting stocks, you will know that it is also possible to be skilled at finding quality hedge fund managers.

So far, Insider Monkey has endorsed one hedge fund manager based on the performance of his past stock picks: Michael Castor of Sio Capital. We even called him “the next David Einhorn” at the end of March. We also shared his top stock picks in the same article. Do you think his picks underperformed the market? Do you think his picks barely beat the market? Or do you think his picks absolutely crushed the S&P 500 index?  

Castor’s first pick, Cardinal Health [s:CAH], returned 21.5% since we published that article. Castor’s second pick, NPS Pharmaceuticals [s:NPSP], gained 76.5%. The S&P 500 ETF’s 8.2% return during the same period was also worse than Castor’s third pick’s - Anacor Pharmaceuticals [s:ANAC] - 15% gain. Castor’s three picks averaged 37.7% in four months.

We then checked in on Castor again in our June newsletter, where he discussed Rockwell Medical [RMTI] and Mazor Robotics [MZOR]. Since publishing that newsletter on June 10th, Rockwell is up 21.7% and Mazor has risen 17.2%. The S&P 500 index gained only 2.8% during the same time period. We don’t think every single one of Castor’s picks can beat the market, but if you can beat the market 60% of the time, you will have higher returns than billionaire Warren Buffett.

Are Hedge Funds Perfect?

Here is the truth about hedge funds. Their picks beat the market on the average and their small-cap picks have absolutely crushed the market indices. However, their large cap stock picks only beat the market by a couple of percentage points a year.

Hedge funds’ biggest sin is asset hoarding. There aren’t enough small and mid-cap investment ideas for all hedge funds. They have so much capital under management that they have to invest in large cap stocks such as Apple and Google. The problem is that they usually charge 2% of assets and 20% of profits, and these fees are generally higher than the excess return they generate by picking good stocks.

Hedge funds are taking advantage of investors not because they aren’t good at stock picking, but because investors don’t ask for their money back when hedge funds get too big. There are three simple solutions to this problem.

First, investors shouldn’t pay anything for hedge funds’ beta exposure. Second, investors shouldn’t invest in hedge funds that focus on large-cap stocks (or pay ONLY a management fee of at most 2%). The best way of doing that is investing in small and talented hedge funds like Sio Capital. Third, investors can do what we do: they can invest in hedge funds’ best stock picks without paying them a single dime. Our picks have outperformed the market by more than 30 percentage points. I haven’t heard of a lot of hedge funds that have done that over the last year.

Conclusion

Hedge funds aren’t that complicated. They are amazing at picking small-cap stocks and they are good at picking large cap stocks. It is also possible to spot great hedge fund managers by analyzing their historical performance. The problem is hedge funds are asset hoarders and they charge exorbitant fees. These fees are justifiable if they were only investing in small-cap stocks. Unfortunately they aren’t and this isn’t their fault. It is up to the investors to force hedge funds to invest in smaller-cap stocks, or to yank their money from hedge funds and do it by themselves. It is as simple as that.

Disclosure: none

Dodge & Cox's Latest Dividend Stock Buys And Income Holdings

Dodge & Cox fund investing strategies originally published at long-term-investments.blogspot.com. The Dodge & Cox fund is a real equity based investment vehicle with around USD 81.3 billion in assets under management.

The investment firm was founded in 1930, by Van Duyn Dodge and E. Morris Cox. With this long history in background, there is also a long performance review available. 

Over the recent years, the fund’s performance suffered a bit. There was a small underperformance of 2.7 percent over the recent three years and 9.2 percent over the past five years. The excess gain to the S&P 500 over the longer term was also small with up to 2.9 percent at the peak (15 years).

They own in total 163 companies of which two were recently new in the fund. Kraft Foods Group and Abbvie are the two names.

Dodge & Cox have a real focus on financial, healthcare and technology stocks. More than half of their funds (59.9 percent) are invested in these three stock categories. The biggest impact on the buy side had the technology sector which is now net 0.7 percentage points bigger compared to the previous quarter.

Dodge & Cox have a dividend focus and they like large capitalized stocks. From their 20 biggest stock buys and sells in Q1/13 pay 17 a solid dividend and 17 have a valuation over USD 10 billion. Hewlett Packard is the biggest holding, worth around USD 4 billion. The latest big stock increases are up 26.03 percent year-to-date.

International Business Machines (IBM): Next Portfolio Stock Purchase

On last Friday I needed to make a choice between IBM and Teva Pharmaceuticals. I decided to pick the technology stock despite the fact the IBM has a higher valuation in terms of price to earnings and debt to equity ratio.

The current valuation of IBM is 14.23 and the forward P/E is at 11.25. Also the dividend yield is the lowest below all portfolio holdings. It’s at 1.84 percent. Why buying IBM?

Compared to other high quality dividend growth stocks, IBM is still cheap like most other technology companies with a higher capitalization. IBM is the biggest basic pick within the sector and every long-term dividend growth investor need some shares of the company. As of now, I had no shares of the company and needed to pull the trigger for the first position.

The second reason to take a stake of IBM is the low cyclic and higher degree of safeness. With a $200+ billion company, you have much more possibilities to grow and the self finance ratio is also much higher. IBM makes huge share buybacks while TEVA needs to increase its capital basis. As you might see below, the dividend potenital compared to earnings per share is for IBM unbelievable high.

Earnings and Dividends of IBM

What makes IBM?

International Business Machines Corporation provides information technology (IT) products and services worldwide. The company operates in five segments: Global Technology Services, Global Business Services, Software, Systems and Technology, and Global Financing. The Global Technology Services segment provides IT infrastructure and business process services, including strategic outsourcing, process, integrated technology, and technology support services.

How many shares?

I purchased 8 shares at 206.35 which resulted in a total purchase amount of $1,650.80. IBM is the thirteenth biggest stake in my Dividend Yield Passive Income Portfolio (DYPI).

Dividend Yield Passive Income Portfolio (Click to enlarge)

Latest Portfolio Transactions (Click to enlarge)

The DYP-Portfolio was funded virtual on October 03, 2012 with 100k. Since then, I purchased each week one stake for around 1k to 2k. Now, I still have $48.491.06 and 35 portfolio holdings.

The full portfolio income is now estimated at $1,807 per year. The average portfolio yield on cost amounts to 3.47 percent and the current yield of the portfolio is 3.20 percent.

Here is the income perspective of the dividend portfolio:

Sym	Name	P/E Ratio	Dividend Yield		Buy	# Shrs	Income	Value
TRI	Thomson Reuters C	15.88	3.86		28.90	50	$64.50	$1,688.50
LMT	Lockheed Martin C	12.05	4.26		92.72	20	$89.00	$2,147.20
INTC	Intel Corporation	12.32	3.59		21.27	50	$44.25	$1,229.50
MCD	McDonald's Corpor	17.93	3.11		87.33	15	$45.15	$1,474.20
WU	Western Union Com	9.89	2.74		11.95	100	$45.00	$1,665.00
PM	Philip Morris Int	17.69	3.65		85.42	20	$67.18	$1,841.80
JNJ	Johnson & Johnson	22.94	2.95		69.19	20	$49.80	$1,698.20
MO	Altria Group Inc	16.57	4.83		33.48	40	$69.20	$1,446.00
SYY	Sysco Corporation	19.41	3.29		31.65	40	$44.00	$1,350.40
DRI	Darden Restaurant	16.26	3.75		46.66	30	$60.00	$1,626.90
CA	CA Inc.	13.52	3.57		21.86	50	$50.00	$1,457.00
PG	Procter & Gamble	17.21	2.98		68.72	25	$57.20	$1,943.75
KRFT	Kraft Foods Group	19.97	3.68		44.41	40	$80.00	$2,174.80
MAT	Mattel Inc.	19.27	2.91		36.45	40	$51.60	$1,807.20
PEP	Pepsico Inc. Com	20.92	2.67		70.88	20	$43.60	$1,650.20
KMB	Kimberly-Clark Co	20.96	3.22		86.82	15	$46.50	$1,456.80
COP	ConocoPhillips Co	10.05	4.26		61.06	20	$52.80	$1,246.40
GIS	General Mills In	17.36	2.78		42.13	30	$39.60	$1,442.40
UL	Unilever PLC Comm	20.86	3.08		39.65	35	$44.91	$1,464.05
NSRGY	NESTLE SA REG SHR	18.77	3.26		68.69	30	$65.31	$2,023.80
GE	General Electric	17.32	3.08		23.39	65	$46.80	$1,550.90
ADP	Automatic Data Pr	23.11	2.44		61.65	25	$41.50	$1,722.75
K	Kellogg Company C	24.38	2.84		61.52	25	$44.00	$1,584.75
KO	Coca-Cola Company	21.34	2.56		38.83	40	$41.80	$1,656.40
RTN	Raytheon Company	11.57	3.11		57.04	20	$41.00	$1,348.20
RCI	Rogers Communicat	13.08	3.61		51.06	30	$48.69	$1,343.10
GPC	Genuine Parts Com	18.33	2.72		77.06	20	$41.28	$1,549.40
TSCDY	TESCO PLC SPONS A	216.15	4.37		17.98	70	$49.63	$1,138.90
APD	Air Products and	16.94	2.78		85.71	15	$39.45	$1,426.35
GSK	GlaxoSmithKline P	18.71	4.58		52.16	30	$70.38	$1,551.30
WMT	Wal-Mart Stores	14.9	2.3		79.25	20	$34.72	$1,526.60
BTI	British American	17.35	3.77		114.6	13	$53.82	$1,431.56
CHL	China Mobile Limi	10.08	4.3		55.32	25	$54.95	$1,271.75
MMM	3M Company Common	17.14	2.25		110.27	15	$36.75	$1,666.65
TUP	Tupperware Brands	23.68	2.08		80.98	15	$25.50	$1,243.05
IBM	International Bus	14.05	1.72		206.35	8	$28.00	$1,650.80
							$1,807.87	$56,496.56
							Average Yield	3.20%
							Yield On Cost	3.47%