Top 3 Buys From the World’s Largest Hedge Fund

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

In 2011, Bridgewater was ranked as the best-performing hedge fund in the world. Continuing with its growth performance in 2012, it has earned more for its clients than any other hedge fund. Based in Westport, Connecticut, and owned by the legendary mega-investor Raymond Dalio, this hedge fund is the world’s largest hedge fund with around $150 billion of assets under management.

In mid-May, Bridgewater filed its 13F with the SEC. It added 121 stocks in its portfolio. The major new positions as on March 31, 2013 were CenturyLink (NYSE: CTL), Expeditors International of Washington (NASDAQ: EXPD), and General Electric (NYSE: GE). These companies are 0.15%, 0.12% and 0.13% respectively of the portfolio.

Profit from cloud computing and broadband services

CenturyLink merged with Savvis in July 2011 to enter into the cloud computing segment. The company’s revenue in the cloud computing segment increased by $30 million, year-over-year, to $340 million in the first-quarter of 2013.

To further strengthen its cloud computing business, the company is looking for expansion in North America, Europe and Asia. These expansion plans will add approximately 85,000 square feet of new storage space by the end of this year. Also, it will boost CenturyLink's currently available space to more than 2.4 million square feet.

Furthermore, CenturyLink is seeing growth in its internet broadband services. This growth is due to the additional revenue from its IPTV -- Prism TV, which added over 13,000 subscribers during the first-quarter of 2013. With Prism TV, CenturyLink is expanding its Internet broadband services by running Fiber to the Node, or FTTN.

FTTN is used to provide higher-speed Internet access. It brings faster Internet speeds using fiber closer to subscribers. The company currently provides Internet speed up to 6 million bits/second (Mbps) to 73% of its access lines. Prism TV’s revenue is expected to grow, year-over-year, from $182 million in 2012 to $250 million this fiscal year and $426 million in 2014.

Revenue from strong airfreight and technology sector

Expeditors International airfreight volume increased 10% year-over-year, in the first-quarter of 2013. This growth is attributed to the increase in exports at Hong Kong Air Cargo terminals and strong intra-Asia airfreight business. The airfreight exports at Hong Kong Air Cargo terminals grew 5.9%, year-over-year, in December 2012. Moreover, intra-Asia airfreight capacity grew more than 45% in the first-quarter of 2013, year-over-year.

In the second half of the current year, Expeditors International expects airfreight volume growth, due to increasing shipments. This expected increase in the airfreight volumes is supported by IATA, which raised its growth forecast to 2.7% for 2013, from the previous forecast of 1.4%. This is due to the growing industrial production. Airfreight services are expected to increase the company's revenue from $2.60 billion in 2012 to $2.72 billion in 2014.

Expeditors International generates around 30% of its revenue from the technology sector. According to the World Semiconductor Trade statistics, the global semiconductor revenue is estimated to grow at 4.5% this year and by 5.2% next year. This upward sales trend will be beneficial for airfreight companies, as semiconductor sales is 70% correlated with the airfreight. This will act as a tailwind to the Expeditors International for upcoming quarters.

Growth from aviation and oil and gas segments

General Electric (NYSE: GE) is planning to expand in advanced technologies in its aviation segment. The company is planning to invest $27 million in the next five years in its Delaware facility. This facility makes advanced aircraft’s engine components from ceramic matrix composites, or CMC. Demand for CMC components is expected to grow ten folds over the next ten years. These components help in achieving higher fuel efficiency and lower emission.

As a result, the company’s GE9X engine is selected by Boeing for its forthcoming 777X aircraft. Owing to these developments, General Electric aviation’s segment revenue will grow from $19.9 billion in 2012 to $22 billion in 2014.

General Electric also announced on June 11, 2013, the supply of three of its Waukesha gas engines to its cryogenic natural gas processing plant in Texas. The plant’s start up is scheduled in January 2014. This gas plant will link with the Cuervo Cree pipeline, owned by Howard Energy -- an independent midstream energy company.

This plant is an example of General Electric’s gas technology, being used to support efficient and cleaner facilities to promote North America’s shale and unconventional resources. The revenue from this segment is likely to increase from $15.24 billion in 2012 to $17.94 billion in 2014.

Conclusion

CenturyLink is counting on long term profit from its cloud computing segment, post its merger with Savvis. It also holds good growth prospects from its broadband services.

Expeditor is set for strong growth due to rise in its airfreight business. The company is also positive about its technology segment.

General Electric is focusing on strong revenue opportunities from its two major segments, aviation and oil and gas.

Due to these optimistic trends, I recommend a buy for all the three stocks.


Madhu Dube has no position in any stocks mentioned. The Motley Fool owns shares of Expeditors International of Washington and General Electric Company. 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!

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