By: Andrei Braghiş
Realm Partners, managed by Robert Millard, is one of the 500 hedge funds we track at Insider Monkey, and while this number seems large, keep in mind that over 8,000 hedge funds are active today. Tracking the best of the best investors is what we do, and each quarter digging into their equity portfolios (via 13F filings) is essential. Retail investors can capitalize on this phenomenon, but they have to know where to look first (learn the secrets of this strategy here).
Millard's top pick is still TW Telecom (TWTC). The fund has increased its stake in the provider of network services by 9.5% quarter over quarter, and its holding is now worth nearly $13 million. TW Telecom did post a first quarter profit of 2013, but missed market estimates, registering earnings of $0.09 per share and revenues of $381.21 million. Still, analysts estimate TW Telecom to build on that next quarter with an EPS of $0.13 and revenues of $389.01 million. On Wall Street, 10 analysts recommend shares as a Buy or Strong Buy, while six tag them as a Hold.
Realm Partners is also bullish on Anheuser-Busch InBev (BUD). Robert Millard has acquired 121,300 shares of the brewing company, a move that has propelled Anheuser-Busch InBev to the second place among Realm's biggest investments, with a value of $12 million. The stock's price has risen 9% year to date to a current value of approximately $96 per share. The stock sports a beta of 0.86 and pays a dividend of $2.21, the equivalent of a 2.3% yield. Shares exchange hands at a trailing P/E ratio of 20.55, significantly lower than the industry average of 29.10. The stock is mainly recommended as a Buy or Strong Buy, with analysts setting a price range of $103-$118.59 for the near future.
Third among Realm's top investments, and a newcomer, is H.J. Heinz Company (HNZ), the food producer that is to be taken over by Warren Buffett's Berkshire Hathaway and 3G Capital. Millard acquired more than 100,000 shares, an investment valued at $8 million. The stock was in an uptrend when news of the takeover broke early in the year. The price skyrocketed from $60.48 to $72.50 per share, the takeover price agreed to by the parties involved. This was an inspired buy, particularly if Millard added this position before the takeover was announcement.
Realm Partners is not too impressed by software companies, having reduced their investment in Unwired Planet (UPIP) by 9%. The remaining 2.8 million shares have a reported value of $6.2 million. The stock's price has recently been oscillating around the $2 value, but is still up 58% since the start of 2013. Unwired Planet has a beta of 1.49, making it a rather volatile stock, which does not pay any dividend. The company has been bleeding money and is expected to do so in the near future; Wall Street analysts expect earnings to remain flat this year, with an upside growth estimate of 1.5%.
Another New Entrant
DIRECTV (DTV), the well-known provider of digital television entertainment services, closes out the top five. It is a new position in the 13F portfolio managed by Millard, who bought 87,400 shares valued at $4.9 million. DIRECTV reported good financial results for the first quarter of 2013, beating Wall Street estimates. It posted earnings of $1.43 per share and revenues of $7.58 billion. The good financial shape of the company has been reflected in the stock price, which has been rising steadily since the start of 2013. Analysts' estimates for the second quarter are calling for EPS of $1.37 on a net income of $7.76 billion, as reported by Yahoo Finance.
Realm Partners' massive additions to Anheuser-Busch and DIRECTV are a sign that the investment team of the fund believes in them moving forward, making them a duo for retail investors to watch closely (continue preparing for 13F-filing season here).