Hedge Fund Gruss Asset Management’s 5 Largest Equity Holdings: A Q1 Recap

Meena is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Gruss Asset Management is a financial investment advisory firm headquartered in New York with an estimated $2.4 billion of assets under management. It is managed by Howard Guberman. The fund recently filed its 13F with the SEC, describing some of its main investments during 2013’s first quarter. A quick look at the top five equity positions of this new hedge fund might be a good starting point for your own research.

The original 13F can be found here, and it’s important to note that various empirical studies show that retail investors can benefit from watching hedge fund sentiment; see the details of this strategy revealed.

Number one

According to the 13F, the fund’s biggest equity stake was in Liberty Media (NASDAQ: LMCA). By comparison with the prior quarter, the number of shares owned by the fund fell by 400,000 to 650,000, with the total value of the holding falling by 40.43% to $72.560 million. Liberty Media has a trailing EPS of $11.79, and it sports the third lowest trailing P/E ratio within its industry at 10.40, though a forward PE of 48.26 indicates possible overvaluation. Year-over-year revenues increased by 79.30% in its latest quarterly report, while the company’s profit margin was 70.64%, second highest in the TV broadcasting industry.

The best of the rest

Gruss Asset Management maintained its position in CBS (NYSE: CBS), with 1,500,000 shares worth $69.495 million held at the end of first quarter, as stated in the 13F. The value of the holding rose by 22% during the quarter. CBS currently trades at a P/E ratio of 19.25, and the company’s trailing diluted EPS is spotted at $2.54. CBS’s profit margin is a moderate 11.54%, while current-quarter earnings have increased by 22.00%. The stock pays a forward dividend rate of $0.40 at a yield of 1.20%.

A newcomer, energy behemoth BP (NYSE: BP), saw the fund report a position of 1,500,000 shares worth $63.525 million as of March 31. This company’s stock trades at the lowest trailing P/E ratio (6.15) in the major integrated oil & gas industry. The stock’s forward P/E ratio is also below industry norms. With the fourth-highest dividend yield (5.02%) in its industry, BP is recommended as a Hold by seven analysts, a Buy by four analysts, and a Strong Buy by another three.

Next is General Dynamics (NYSE: GD), with Gruss Asset Management holding 451,267 shares at the end of the first quarter, down by 148,733 units when compared with one quarter earlier. The value of the position fell by 23.44% to $31.819 million. General Dynamics pays the fourth highest dividend yield in the industry at 2.98%, and it trades at a moderately attractive forward P/E of 10.65. Analysts have a mean recommendation of 2.2 for the stock.

This top five list closes with Focus Media (UNKNOWN: FMCN.DL), with a big increase during the first quarter. The fund’s stake in Focus Media increased by 439,331 shares to 1,154,331 in Q1, with the value rising by 68.55%. Focus Media shares sport a trailing EPS of $4.09 and a trailing P/E ratio of 6.66, the lowest in its industry. The stock also pays a dividend yield of 1.69%, and analysts have a mean recommendation of 2.3 on the stock.

Final remarks

Gruss Asset Management has some well-performing stocks among its biggest holdings, with a concentration on the services sector. As with the rest of hedge funds’ sentiment, it’s important to take advantage of these filings from an aggregate perspective; see what we mean here.

Focus Media and Liberty Media aren’t always considered the flashiest of players in their space, but each offers very good value. Similarly, BP is extremely cheap, and while General Dynamics isn’t insanely attractively priced, its yield—and cyber security potential—are two things to watch moving forward. CBS is really the odd stock out of this bunch, as it represents more of a momentum play, but it’s also a decent media bet moving off its strong earnings growth.

The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock it is in the brand-new free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.

This article is written by Hioara Dumitru and edited by Jake Mann. Insider Monkey's Editor-in-Chief is Meena Krishnamsetty. They don't own shares in any of the stocks mentioned in this article.The Motley Fool owns shares of General Dynamics. 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. Is this post wrong? Click here. Think you can do better? Join us and write your own!

blog comments powered by Disqus