A Look at the Performance of Paul Tudor Jones' Top Sells

Includes: ABX, C, HBAN, PFE, T
by: Rash Menaria
Tudor Investment Corporation is a hedge fund management firm that was founded by billionaire Paul Tudor Jones II. The firm manages the Tudor series of hedge funds. The following is a brief look at performance of its top 5 sells of Q1 (Source: 13F filing) from March 31-June 30, 2011.
Shares Held - 12/31/2010
Shares Held - 03/31/2011
Performance March 31-June30
Citigroup Inc
AT&T Inc
Pfizer Inc
Barrick Gold Corporation
Huntington Bancshares Inc

Barrick Gold, Citigroup and HBAN underperformed S&P 500 (NYSEARCA:SPY), while AT&T and Pfizer outperformed it. Here is my take on Tudor Investment’s top five sells by market value:

Citigroup is a global diversified financial services holding company. Citigroup businesses provide consumers, corporations, governments and institutions with a range of financial products and services.

My take: Buy.

Citigroup is a significantly undervalued financial company from every perspective. It is trading at a discount to its Tangible Book Value and has a forward PE of just 8x. Further, it has a strong emerging market presence and over 60% of its core business coming from foreign markets. Going forward, its earnings are likely to continue benefiting from improving credit trends, partly offset by seasonally lower trading revenues over the next two quarters. Its operating leverage is also expected to improve in the back half of 2011, as a ramp up in investments in Asia and Latin America begin to generate revenue. Attractive valuation, strong capital levels and potential for faster growth from emerging markets makes it a good buy.

AT&T Inc, together with its subsidiaries, provides telecommunication services to consumers, businesses, and other service providers worldwide. It operates over 57 million telephone lines, owns 100% of wireless operator AT&T Mobility LLC and is the nation's largest telecommunications company.

My Take: Hold

AT&T is using up its spectrum at an accelerating rate, and the wireless broadband revolution is just beginning. Over the next five years, data usage on AT&T’s network is projected to skyrocket as customers “mobilize” all of their communications activities, from streaming HD video and cloud computing to a range of M2M applications like energy management, fleet tracking, and remote health monitoring.

AT&T is trying to overcome the potential communication bottleneck by a takeover of T-Mobile USA. While the boards of directors for AT&T and T-Mobile USA parent company Deutsche Telekom agreed to the takeover in principle, regulators and shareholders must still grant approval. Changes won't be immediate. AT&T and Deutsche Telekom expect the deal to take about 12 months to close. US regulators may not look too favorably to reducing a market by one to just three major carriers.

AT&T is fundamentally sound with a stable subscription-based business model. However, potential for negative estimate revisions and valuation at the high end of the historical range support a Neutral rating. M&A and wireless margin expansion have driven premium earnings growth and fueled the story, but they are running out of steam at a critical juncture. Rising wireless substitution will increase line loss on the fixed line side while wireless margins remain under pressure.

Pfizer Incorporated is a global pharmaceutical company, ranking number one in sales in the world. The company is based in New York City, with its research headquarters in Groton, Connecticut. Pfizer has the #1 market position in cardiovascular, #2 in infectious disease and central nervous system treatments, and is #4 in vaccines globally. It is the market leader in the U.S. (12% share), Europe (10%), Asia (7%), Japan (6%) and Latin America (6%).

My Take: Buy

Pfizer has a strong pipeline for new drugs. It remains on track to achieve 15 to 20 regulatory submissions in 2010-12. The company recently had 12 pending U.S. new drug applications and supplemental filings. An estimated 40% of revenue, however, remains vulnerable over the next five years due to expired or yet-to-expire drug patents (mostly by 2012, including Lipitor). Nonetheless, management has maintained guidance for adjusted diluted EPS of $2.25-2.35 in 2012, up from an estimated $2.16-2.26 in 2011. Pfizer has signed a memorandum of understanding with China-based Zhejiang Hisun Pharmaceuticals to establish a joint venture. This ensures that Pfizer is not left out of the emerging market growth story.

Barrick Gold is the world's largest gold producer with 26 operating mines and several large gold projects under development. Barrick's operations are primarily concentrated in Nevada, Australia, South America and Tanzania.

My Take: Hold (Direction of Gold Prices is the major factor)

Barrick Gold's recent acquisition of Equinox Minerals will give it long lived copper assets and move its revenue mix to 80%Gold/20%Copper. This provides some diversification and should also improve cash flow. However, single biggest factor affecting Barrick Gold stock in near term would be the gold price which continues to hover above $1,500 an ounce. I don’t have a very strong view on gold prices and therefore would like to remain on sidelines.

Huntington Bancshares Incorporated is a $53 billion regional bank holding company headquartered in Columbus, Ohio. Founded in 1866, Huntington provides full-service commercial, small business, and consumer banking services; mortgage banking services; treasury management and foreign exchange services; equipment leasing; wealth and investment management services; trust services; brokerage services; customized insurance brokerage and service programs; and other financial product and services. The principal markets for these services are Huntington’s six-state banking franchise: Ohio, Michigan, Pennsylvania, Indiana, West Virginia, and Kentucky.

My Take: BUY

Recent commentary from Huntington management and several other Midwest banks has pointed to particular strength in loan demand from the manufacturing industry, which is concentrated in the Midwest. The two largest Japanese auto manufacturers (Toyota and Honda) indicated that U.S.-based auto production should return to original plans sooner than previously anticipated after disruptions from the March 11 tsunami.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.