By: Andrei Braghiş
Each quarter, hedge funds and other institutional investors are required to disclose their U.S.-traded equity positions in 13F filings with the SEC. Veritable LP, a Pennsylvania-based firm focused on investing with "objectivity" according to its marketing materials, is worth taking a look at. Although it is not a traditional hedge fund, it still invests a portion of its assets in stocks. Among the biggest holdings of Veritable, we find a beverage behemoth and an energy giant, in addition to a couple of media companies. See the original 13F here.
Why should we pay attention?
It's important to track the smart money's sentiment, because on the whole, their best picks have been shown to outperform the market by as much as 18 percentage points a year. Retail investors can capitalize on this phenomenon, if they know where to look first (discover what's behind this strategy here).
The top position of Veritable is PepsiCo (NYSE:PEP). The firm's investment team has added a small amount of shares to their position in the soft drinks producer in comparison to the last quarter of 2012. They currently hold more than 1.5 million shares of PepsiCo at a reported value of $122 million. The stock has a beta of 0.35 and pays a dividend of $2.15, which is equivalent to a yield of 2.6%. For the first quarter of 2013, PepsiCo reported earnings that beat expectations, with revenues shy of Wall Street estimates. The actual figures were earnings of $0.77 per share and revenues of $12.58 billion.
The outlook for the near future is rosy; analysts estimate the company will report increased earnings of $1.27 per share and revenues of $17.39 billion for the third quarter of this year, with similar growth expected next quarter (Q2).
Media, oil and waste management
The second major investment of Veritable is Comcast (NASDAQ:CMCSK), specifically in the company's class A special common stock. The fund's holding amounts to a bit more than $63 million, but if we add the shares traded as Comcast (NASDAQ:CMCSA), the company's standard common stock, the overall value of the position rises to $73.3 million. Comcast released financial results for the first quarter of 2013 less than a week ago, surpassing the estimates of the market in terms of earnings, while revenues did not meet expectations. The company reported earnings of $0.51 a share and revenues of $15.31 billion. Wall Street expects Comcast to post higher revenues and earnings in the next quarter, on a quarter-over-quarter basis. Comcast also pays a dividend of $0.68 a share, good for a yield of 1.7%.
Exxon Mobil (NYSE:XOM) sits comfortably in third among Veritable's equity investments. The firm's management made an addition shy of 10,000 shares during the first quarter of 2013. Veritable's total investment in the oil company has a reported value of $54 million. Exxon delivered mixed financial results for Q1 of 2013. Like the companies mentioned above, Exxon beat market estimates for earnings, reporting $2.12 per share, but failed to meet expectations in terms of revenues, posting $108.81 billion, a 12% decrease from the year-earlier quarter. The stock has a beta of 0.86 and pays a dividend of $2.28-a yield of 2.5%.
Darling International (NYSE:DAR), a waste management firm, has seen its position in the 13F portfolio of Veritable slightly increase from the end of 2012. The current value of all the shares owned by Veritable is approximately $47.8 million. The stock's price has been in an uptrend in 2013, advancing 14% to a current value of approximately $18.50. Analysts are not particularly bullish on this stock, as six of them recommend it as a Hold, and only one calls it a Strong Buy. Darling International released first quarter financial results on May 9, after the market's close. Analysts expected earnings of $0.26 per share and revenues of $414 million, and Darling lived up to its name, beating both figures. The company reported an EPS of $0.27 and revenues of $445.4 million.
Ending the top five equity positions of Veritable's 13F is an intriguing investment in The New York Times (NYSE:NYT). The fund's management team has made a solid addition to this position, increasing their stake by 7% from the previous quarter; its total value is now near $42 million. The Times' recently announced financial results for the first quarter of 2013 have met market expectations at best. The company reported earnings per share of $0.04 and revenues of $466 million; both figures decreased year-over-year. In a secularly declining industry, this isn't altogether surprising, and it's easy to see that any bull in this space is making a value play. Analysts estimate earnings to increase during the second quarter, but revenues are expected to fall 5.5%.
Veritable's top five equity positions have undergone little change from the end of 2012, signaling that the firm's management likely believes in the long-term potential of these stocks. Thus, we would suggest the investors to keep and eye on them, while watching the rest of our coverage of 13F season (here's how to prepare yourself).