Founded in 2001, Phil Gross and Robert Atchinson have grown Adage Capital's holdings to a market value of over $27 billion as of December 31, 2012.
While some managers like to focus their portfolio on only a few choice picks, Adage currently holds shares in over 600 companies, talk about diversification. Below are the top five holdings Adage had at the start of 2013:
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Apple (AAPL) has held the top spot of Adage's portfolio for some time now and this last quarter the position increased by 1% (in shares). However, due to the decline in Apple's share price, the percentage Apple takes up in the portfolio decreased from 3.21 to 2.6%. Apple's shares have been brought down lately as its payout policies have come into question and holders have started to question its ability to grow at the pace it has previously. Shares of Apple trade at $429.80 per share with a P/E of only 9.8, well below the five-year average P/E of 15.6.
Exxon Mobile Corporation (XOM) held its spot as the second-largest holding in Adage's portfolio despite a sale of 3% of the shares held in the year-ending quarter. Shares for Exxon trade currently for $88.97 and have yet to benefit from the increased energy prices that have moved up most of its peers.
The period ending 2012 found Honeywell International (HON) moving up into Adage's top five. In the previous quarter, Adage purchased 10% more of Honeywell's shares. Honeywell currently trades at its 52-week high of $73.70. Its shares have benefited from the market's recent rise and fears of inflation. Valued with a P/E of 19.92, it trades above all of its P/B, P/S, P/E and P/CF five-year averages.
Phillip Morris International (PM) took up the fourth-largest holding for Adage, down from its previous third-largest spot. Adage sold approximately 10% of PM in the last quarter of 2012. Prices for Phillip Morris have been vary volatile since October moving from over $90 per share to close to $80 twice. As of Friday's close, shares trade for $91.11, near their 52-week high.
Adage increased its position in Potash Corp (POT) by close to 67% indicating it has high hopes for this agricultural giant. Shares of Potash trade at $40.18 per share, in the middle of their 52-week range of $36.73-$47.67. With a P/E of 16.93, Potash is valued below its P/B, P/S, P/E and P/CF five-year averages.
Falling from the top 5:
In the last quarter of 2012 Adage sold 45% of its holdings of Mondelez International (MDLZ), which was the fourth-largest holding in the previous quarter, as well as close to 22% of its holdings in General Electric (GE), which previously represented the portfolios fifth largest position.
Disclosure: I am long AAPL.