Seeking Alpha
Profile| Send Message|
( followers)  

Tudor Investment Corporation is a hedge fund management firm founded by Paul T. Jones II. The firm manages the Tudor series of hedge funds. The following is a list of five top holdings of Tudor Investment Corp. which I believe are good long candidates.

Company Name

Ticker

Shares Held -12/31/2011

Virgin Media Inc.

VMED

1,650,024

CenturyLink, Inc.

CTL

813,200

Devon Energy Corporation

DVN

317,900

Vodafone Group Plc.

VOD

700,000

Google Inc.

GOOG

29,861

Source: 13F filing

Below, I detail company-specific discussions on each of the stocks:

Virgin Media Inc. is the U.K.'s largest cable operator with 'quad-play' service offerings in TV, phone, broadband and mobile. It has a 4.8 million customer base. Future subscriber trends in the UK seem to be healthier than they appear. Triple and quad-play churn has decreased and gross adds are improving. It is expected that a TiVo rollout will drive ARPU and margins growth in 2012. Recently VMED announced doubling of its broadband speed for all its subscribers at no immediate incremental cost. This seems to be a move toward strengthening its competitive positioning in the fiber optic cable broadband segment and is also seen as a strong step to underpin 2012 forecasts.

It seems that VMED stock has bottomed out at low 20 levels after falling ~30% from the June 2011 peak. At current levels investors are pricing in near-zero top line growth, which might prove conservative. By clearing uncertainty over capex expansion, focusing on investments in the right areas and having a $450 million share repurchase authority in 2012, the company's management is sending positive signals and the investor sentiment is likely to change going forward.

CenturyLink, Inc. is the highest yielding stock in the above list with a dividend yield of 7.6%. CenturyLink operates as an integrated communications company. It is the largest rural exchange provider by access lines (15 million), providing local telephone service across 37 states. The company also provides a range of communications services, including voice, Internet, data, and video services in the United States. In 2011 CenturyLink acquired Qwest and Savvis Communications.

CenturyLink remains the best buy among Rural Local Exchange Carriers for its high dividend yield of 7.6% and improving top line trends. CTL expects its access lines losses to improve from Q4 2011 driven by regional focus and increasing penetration of video and data. Further, CTL is expected to generate strong cash flows as Qwest acquisition turns accretive.

On valuation front CTL is trading at a discount to its peers. With double digit growth at Savvis, improving business trends in broadband and video and strong cash flow generation capability, I believe CTL is attractive to income oriented investors and offers the best risk-reward tradeoff in rural telecom space. CTL's dividend is ~60% of its FCF and is well covered in the near term.

Devon Energy Corporation, together with its subsidiaries, engages in the acquisition, exploration, development and production of natural gas and oil in the United States and Canada. After asset sales and divestures DVN)+Announces+$7B+Asset+Sale+to+BP+Plc+(BP)/5429674.html" rel="nofollow">last year, DVN has positioned itself as a pure play North American on-shore oil and natural liquid gas player. It received ~ $11 billion of proceeds from its divestures which it partly used to pare down its debt, stock buybacks and new lease acquisitions. I like the production visibility now inherent in the company's North American asset base after last year's strategic repositioning. I believe a focus on fewer assets will improve the company's operating and financial metrics in the long term.

Vodafone Group Plc. is trading at a compelling valuation of just 10x forward PE and EFCF yield of 11%. Its European business is recovering after a period of heavy EBITDA pressure. Emerging markets also provide a significant opportunity for the company. Recently, the Indian Supreme Court cancelled the 2G licenses of several operators. This is likely to lead to sub-scale competitors exiting the market and driving more rational pricing behaviour. Vodafone is one of the best dividend stocks, with its dividend comfortably covered and potential for decent topline growth. I see a good chance of stock price appreciation as well as a dividend increase going forward.

Google Inc. is the world's #1 search engine and online advertising company. Google is trading at a forward PE of 12x. Its EPS forecast for the current year is 42.29 and next year is 49.62. According to the consensus estimates, Google's top line is expected to grow 21.60% in the current year and 19.90% next year. Google has a much undervalued asset in the form of YouTube, where only 3% of current videos are monetized through video advertising.

Given the secular shift of viewers from offline media to online, I believe online video advertising has a big potential. Google's recent announcement regarding the launch of 100 online video channels on YouTube that would feature new original programming is a very important strategic step in the right direction in getting quality content to attract advertisers. YouTube is likely to become a major growth driver for Google in next few years. With over 18% earnings growth, a cash pile of over $40bn and a secular tailwind in the form of online advertising growth, I find Google's current valuations very low.

Source: 5 Long Ideas From Paul Tudor Jones' Top Holdings