New Stock Plays from First Eagle Investment Management
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Now that first quarter earnings season has died down, analysts get the opportunity to get a closer look at many hedge funds’ 13F filings, which disclose institutional managers’ positions quarter by quarter. First Eagle Investment Management recently released its 13F outlining its holdings from Q1 2013. We use this information as the basis of our small-cap portfolio strategy, a system that has returned over 38% since we made it public in September 2012; discover the details here. Let’s take a look at the hedge fund’s newest stock plays.
Anheuser-Busch Inbev SA (NYSE: BUD) tops our list as the biggest initiation made by First Eagle so far in 2013. The firm saw fit to buy over a million shares of the beverage maker, amounting to a market value north of $106 million. Anheuser-Busch Inbev has also had the most dramatic upward performance of the stocks on our list, registering a 42% gain for those who bought in this time last year. Anheuser-Busch Inbev was met with some tepid remarks from analysts at the end of April -- Rabobank, Bernstein, and Canaccord Genuity all downgraded the beverage maker to a neutral rating at that time (an earnings beat on April 30 followed shortly after). Billionaire Daniel S. Och of OZ Management recently purchased 1.4 million shares as well; read about his portfolio’s make-up here.
Qualcomm (NASDAQ: QCOM) grabs the second spot, receiving a $92 million allocation by the fund, or a little under 1.4 million shares. The $110bn telecom giant has lagged the market in the past year, clocking in a gain that is fifteen percentage points less than the market’s 26.4% return. Goldman recently recognized Qualcomm as being in the top 20 in terms of stocks that appear most frequently in hedge fund top 10 holdings. Wall Street is quite bullish on Qualcomm, with thirty-seven brokers weighing in to tabulate a mean one-year price target that indicates a near-17% gain from current levels. Billionaire Ken Fisher of Fisher Asset Management owns nearly 9mm shares of the stock; take a look at the fund’s top five positions here.
National Oilwell Varco
National Oilwell Varco (NYSE: NOV) saw a 1.3 million share position built by First Eagle, rounding out to $90.7 million in market value at the time of the 13F’s reporting. The drilling equipment supplier recently doubled its quarterly dividend from $0.13 to $0.26, so income investors take note. The stock is well positioned to appreciate with increased demand for oil and gas going forward, says Edward Jones’ analyst Kate Warne. Year-to-date performance has been underwhelming thus far, with a single-digit gain under 5%. Billionaire Israel Englander of Millennium Management nearly tripled his position from 12Q4 to 13Q1.
Norfolk Southern (NYSE: NSC) became an $82 million commitment by the firm, once again amounting to slightly over a million shares purchased. The railroad operator has seen near-linear growth in stock price so far this year, up over 25%; fellow rail stock CSX Corp edges out that impressive number with its own 28% gain. Ratings agencies from Jefferies to Deutsche Bank are singing the praises of Norfolk Southern since the turn of the year, bestowing upgrade after upgrade on the stock. Billionaire Ken Griffin of Citadel Investment Group beefed up his position to 2.6 million shares recently; see his other holdings here.
Target (NYSE: TGT) wraps up the bottom of our screen with almost 950,000 shares bought by First Eagle according to its Q1 13F. The fund’s position in the retailer tallied up to $64 million, 40% less than what First Eagle devoted to its top new holding, Anheuser-Busch Inbev. Riding the wave of this bull market, Target has tacked on 20% since this time last year. Target has joined sixteen other retailers including Macy’s and Kohl’s in filing a lawsuit in late May, suing Visa and MasterCard over interchange fees that the payment companies charge. Billionaire Steven Cohen of SAC Capital Advisors has a put position valued at almost $18 million.
First Eagle Investment Management isn’t the number one fund on many investors’ collective radar, but it’s on Insider Monkey’s list of the 500 most elite hedge funds, and is therefore worth watching. A few of the fund’s largest new positions were detailed above, and from Target’s potential in a recovering economy to Norfolk Southern’s ability to outperform many of its railroad peers, there are many stocks worth watching. National Oilwell Varco, Qualcomm and Anheuser-Busch Inbev are also intriguing plays as well.
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This article is written by Eric Winter 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 recommends National Oilwell Varco. The Motley Fool owns shares of National Oilwell Varco and Qualcomm. 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!