Why Did Barton Biggs Love This "Fab Five"?
Meena is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Barton Biggs and his firm Traxis Partners began a pivot of their portfolio in the second quarter and refrained from making any bold bets before Biggs passed away in July 2012 at the age of 79. According to Traxis’ second quarter 13F filing, the company was transitioning a large part of its portfolio to ETFs. However, the company did hold a mix of various stocks. Outlined below are Traxis’ largest 13F holdings.
Barton Biggs graduated from Yale University in 1955 as an English major and then served in the U.S. Marines for three years before co-founding one of the industry’s first hedge funds in 1965. Working at his hedge fund, Fairfield Partners, for eight years Biggs had a 133% return versus an S&P 500 return of just 19%. Biggs joined Morgan Stanley in 1973, and served as their global investment strategist from 1985 until retiring in 2003. Upon leaving Morgan Stanley, Biggs formed Traxis Partners. At the time of Biggs’s death, Traxis had around $1.5 billion under management. The Greenwich, Connecticut based investment firm focuses on global, multi-asset class investment strategies.
Du Pont (NYSE: DD) the global science and technology company, offering products and services, including agriculture, nutrition, home and construction, transportation, and apparel is the only position of Traxis’ top five 13F portfolio holdings that was not trimmed in the second quarter. DuPont represents 3.78% of Traxis’ 13F portfolio. Second quarter earnings topped estimates, but EPS was down from the prior year and prior quarter. DuPont’s business is closely tied to the global economy, especially the sale of its agricultural and chemical products. Stagnant global growth could continue to place pressure on the company. The company has seen a number of insider sales around the $50-51 range recently, while currently trading close to $52.
Qualcomm (NASDAQ: QCOM), the designer and manufacturer of advanced semiconductors for mobile phones and commercial wireless applications should benefit from the early launch of the iPhone 5. The iPhone 5 could help spur a pop in the interim for Qualcomm. The bill of materials for Qualcomm is higher for many of the other phones that the company is a part of when compared to the iPhone 5.The trailing P/E for Qualcomm is 19, while the forward P/E is 16. Traxis trimmed its position by 5% in the second quarter.
VMware (NYSE:VMW) is a subsidiary of EMC Corp. and leading supplier of virtualization software, solutions and related services for use in information technology infrastructure. Although Traxis took its VMware position down by 15% in the second quarter, as more companies adopt cloud computing the company should see positive results that will offset certain slowdowns in Europe and reduced spending on technology infrastructure by the U.S. government. Earnings are expected to increase 17% from 2012 to 2013 and the company trades at a trialing P/E of 57, which is above its peers, but the forward P/E comes in at 32.
Apple (NASDAQ: AAPL) the worldwide PC, MP3 player, smartphone, tablet, computer and software company is expected to continue its onslaught of earnings growth. The company has a large cash position, strong free cash flow generation and increasing sales volume. The remaining question relates to valuation and whether Apple’s stock has run up too much, being up over 70% year-to-date. However, Apple trades at a 17 P/E, while Microsoft trades 16x. The company remains popular amongst other top hedge funds, including such names as David Einhorn and Stephen Mandel.
Johnson & Johnson (NYSE: JNJ) is a leading pharmaceutical, medical device and consumer products company. Traxis decreased its Johnson & Johnson position by 18% in the second quarter. Although competition can be vast in the pharmaceutical industry, Johnson and Johnson continues to hold its own. Johnson & Johnson trades above its top competitors, only slightly, on a P/E and P/S basis. Johnson and Johnson trades at a P/E of 22 and P/S of 2.9, where Merck trades at a P/E of 20 and P/S of 2.8, and Pfizer at a P/E of 18 and P/S of 2.7. The company also has a dividend that represents a yield of 3.6%. Johnson & Johnson Is another popular stock with hedge funds, attracting such names as Ken Fisher, Warren Buffett and Jim Simons.
To see Traxis Partners’ 13F portfolio in its entirety, continue reading here.
Interested in Additional Analysis?
The stakes are high and the opportunity is huge after Apple’s introduction of the iPhone 5, so to help investors understand this epic Apple event, the Fool has just released an exclusive update dedicated to the iPhone 5. By picking up a copy of their premium research report on Apple, you'll learn everything you need to know, and receive ongoing guidance as key news hits. Claim your copy today by clicking here now.
InsiderMonkey has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Johnson & Johnson, Qualcomm, and VMware. Motley Fool newsletter services recommend Apple, Johnson & Johnson, and VMware. 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.If you have questions about this post or the Fool’s blog network, click here for information.