BlackRock Financial Management, Inc. is an investment advisory and hedge fund firm founded by Robert S. Kapito. The firm is a subsidiary of BlackRock, Inc. (NYSE:BLK). The firm caters to high net-worth individuals, banking or thrift institutions, pension and profit sharing plans, charitable organizations and corporations, and manages over $150 billion in assets.
Investment Strategy: BlackRock Financial Management combines quantitative screens and risk analysis with fundamental research, reducing the universe of potential candidates through proprietary screens. Each specific style determines the factors reviewed in the screens. The BlackRock large-cap series team identifies companies that are trading at reasonable valuations, as well as possess quality management, strong earnings growth rates, and the potential for excellent long-term performance relative to the benchmark. The firm employs fundamental analysis to verify or reject the results of the model by evaluating data accuracy, growth quality, as well as the sustainability or feasibility of growth rates. Bottom-up stock selection is used to guide sector weightings.
The following is a list of its top holdings in the last quarter, as released in BlackRock's most recent 13F filing with the SEC.
Shares Held - 09/30/2011
Shares Held - 12/31/2011
Change in shares
ITAU Unibanco Banco Holding SA
TE Connectivity Ltd.
I believe Anheuser-Busch, Petroleo Brasilerio and TE Connectivity are good buys among the above stocks.
Anheuser-Busch InBev engages in brewing and selling beer in North America, Latin America, Europe, and the Asia Pacific. It manages a portfolio of approximately 200 brands that primarily includes Budweiser, Stella Artois, Beck's, Leffe, Hoegaarden and Brahma. It is by far the largest brewer in the world.
AB InBev has been consistently delivering significant earnings upside through a strong focus on cost control. Going forward, the Latin American markets are expected to continue driving revenue growth and margin expansion. Also, US volumes can see an upside, with improving macro trends. Recent commentary by management indicates that the company targets dividends on par with US Consumer Goods peers. This could potentially result in dividend yields of 3%-4 %.
AB InBev has a solid balance sheet with strong free cash flows. The excess cash position points to an acquisition or share buybacks. On the valuation front, it is trading at a discount to SAB Miller and below its historical average.
Petrobas is a Brazilian integrated oil and gas company. It operates in five segments: exploration and production; refining, commercialization and transport of oil and natural gas; petrochemicals; distribution of derivatives, electrical energy, biofuels; and other renewable energy sources.
Petrobas has one of the strongest fundamentals among the global oil companies, with several catalysts for its stock price appreciation, including strong production growth momentum, additional expected announcements related to ongoing exploration work in Brazil, and new projects coming on stream in its international units.
From a short-term perspective, I expect the company's 2012 output to be better than in 2011. Petrobas' output in 2011 was adversely affected by unusually high maintenance. The situation is expected to be better in 2012, with fewer disruptions from unscheduled maintenance. Full-year production from key units such as the P-56 and P-57 should also help to add more growth compared with 2011.
TE Connectivity is the world's largest manufacturer of electronic connectors. It serves the automotive, appliance, aerospace, defense telecommunications, computer, and consumer electronics industries. Last quarter, the company announced lower-than-expected results, with the main cause of a revenue miss being weakness in telecom late into the quarter. This was offset by solid results in the transportation (auto) segment, where operating margins reached 16%.
I believe the current quarter is the bottom and expect trends to improve from here onwards. In the long term, the company is likely to see continued growth in its auto end-market, which is expected to benefit from the increasing electronic components in automobiles. Currently, hybrid-electric vehicle production is logging a 1-million unit run rate. However, in the next few years, it is expected to reach upwards of 10 million, which will definitely help the company.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.