3 Stocks Billionaire Ken Griffin Is Bullish On
Madhukar is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Citadel Investment Group is a hedge fund managed by billionaire Ken Griffin. This hedge fund deploys capital in multiple investments, from equity, to commodities, to real estate. The company filed its 13F with the SEC in March 2013, naming 7,146 companies in its portfolio, listed in various exchanges. The total market cap of its investments stood at $66.27 billion as of March 31, 2013.
Citadel’s top 10 holdings constitute 4.83% of the total portfolio. Now, Ken Griffin is a serious investor, so lets discuss his top 3 holdings. Walt Disney (NYSE: DIS), American Tower (NYSE: AMT), and Invesco (NYSE: IVZ) may operate in different markets, but they all have sound strategies to accelerate growth.
Domestic growth opportunities ahead
American Tower's rental segment accounted for 97% of the company's revenue, with growth of 13.7% in first quarter of this year. Due to heavy deployment of 4G networks by telecommunications companies, the company has an opportunity to increase its tower revenue in the U.S. 4G networks require voice-over-LTE, or VoLTE, for which additional equipment needs to be installed on towers. VoLTE is a wireless technology that provides long battery life, more speedy data transmissions, and better video calls.
This new technology will raise demand of the company's leasing tower sites. Total towers are expected to rise in the U.S. market from 22,534 in 2012 to 22,749 by the end of current year. The company is expecting to generate rental income of $2.105 billion this year.
American Tower's conversion into a real estate investment trust, or REIT, will be highly beneficial to investors. After the merger with its wholly-owned subsidiary, American Tower REIT, the company will distribute 90% of its earnings as dividends annually. Distribution of earnings will reduce the tax burden of the company and will also increase investors' confidence. The company declared its last quarterly dividend on May 22, 2013 of $0.27 per share, yielding 1.4% growth year over year. American Tower is hoping for 20% annual growth in dividend distributions over the next five years.
U.S. recovery brings growth opportunities
Rebounding real estate prices are attracting international investors to the U.S. market. This market generated a 6.7% return on investment in the first quarter of this year. Investors from Asia, Europe, and the Middle East invested up to $7.97 billion in the U.S. real estate sector as of April 2013, almost 25% higher than 2012.
Estimates indicate that real estate business in the U.S. market will rise from $290 billion last year to $310 billion this year. The company is estimated to generate higher revenue, as it invested 93% of its total funds in the real estate segment and of this 44% was invested in the U.S.
Invesco's broad diversification and capital deployment in different segments fueled revenue growth of 5.2% in the first quarter this year. The real estate market recovery in the U.S., and increased fees were the main profit drivers. To gain investors' confidence, the company announced its quarterly dividend on May 17, 2013 of $0.22, which was a 30% hike from its prior dividend declared in February 2013.
The recovery of the real estate sector in the U.S. market has led Invesco to the management of $52 billion in assets as of March 2013. Estimates suggest that the company will generate overall revenue of up to $4.74 billion by the end of this year.
Two major segments resulting in high growth
Theme parks and resorts, a major segment of Walt Disney, reported 14% year over year revenue growth in the second quarter of 2013. Parks and resorts revenue for the quarter increased 14% to $3.3 billion. The recent $1 billion expansion of Cars Land at Disney Land and Fantasy Land at Disney World were the main reasons for revenue growth.
In order to provide better service to its customers, Walt Disney is planning to launch My Magic Plus bands by the end of this year. These wearable rubber bands will allow customers to personalize their stay, receive the bands in advance of their trip, and have an all in one access to amenities.
In addition to new features, Walt Disney has decided to implement price increases to its entire ticket range. Increased prices will go into effect this summer and will rise by about 6%. A 7% jump in hotel reservations along with a 6% increase in visitor count, shows positive indication for high revenue generation in the future.
Media networks, another major segment of Walt Disney, reported 6% year over year growth. This segment contributed 47% of total revenue for Disney in the first quarter of 2013. The top contributors of were ESPN and the Disney channel. ESPN revenue growth was due to a high demand for sports programs and multi-year contracts. The company has also increased its advertisement subscription fee and contractual fees due to offset an increase in sports licensing costs.
Walt Disney's increased fees and rising demand in both of its major segments will boost revenue in the future. A growing dividend yield and increasing demand of 4G technology in the domestic market will help American Tower to capture a large market share. The U.S. real estate market recovery will generate revenue for Invesco in the years 2013 and 2014. Maybe Ken Griffin is on to something.
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Madhu Dube has no position in any stocks mentioned. The Motley Fool recommends American Tower and Walt Disney. The Motley Fool owns shares of American Tower and Walt Disney. 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!