In 1992, Glenn Russell Dubin co-founded Highbridge Capital Management, a New York-based investment management firm, with childhood friend and college classmate, Henry Swieca. The firm currently has $29 billion in assets under management. In 2004, the two sold a majority stake in the firm to JPMorgan Chase & Co. (JPM) for $1.3 billion. In 2009, Swieca left Highbridge, while Dubin continued as the Chairman and CEO of the firm. Today, Glenn Dubin has a net worth of $1.7 billion and is ranked 764th richest person in the world and 274th in the United States.
Highbridge Capital Management initially started as a multi-strategy hedge fund. It has since evolved into a diversified investment firm that manages hedge funds, traditional asset management products, and longer-term debt and equity investments. In 2011, the firm's flagship Highbridge Capital returned -4.2% net of fees, while the firm's Highbridge Long/Short Equity Fund plunged 12.63% after fees.
Here is a quick overview of the latest top five dividend-paying picks from Glenn Dubin's portfolio:
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Cosan Ltd. (CZZ) was the second largest equity position in Glenn Dubin's portfolio in the first quarter. It is currently valued at more than $417 million. Cosan Ltd. is a $3.5 billion company, a leading global ethanol (bioenergy) and sugar company in Brazil and the world. The company is the world's largest grower and processor of sugarcane, second largest producer of ethanol, and one of the three largest producers of sugar. The company has seen strong EPS growth over the past five years.
It is expected to post robust increases in its EPS this year and next. Still, the company disappointed on revenue and posted a large drop in net income in its last quarter, still beating analyst expectations for EPS growth. Moreover, the outlook for ethanol has become cloudier, as there are some indications that the market in some places, such as the U.S., is cooling due to lower than expected gasoline consumption. Ethanol producers are also struggling due to severely squeezed profit margins.
On the other hand, the NYMEX sugar futures prices have also corrected this year. The stock is paying an annual dividend yield of 2.1% on a payout ratio of 13% (trailing-twelve-month basis). Cosan's international competitor Archer Daniels Midland Company (ADM) pays a dividend yield of 2.6%. Cosan also competes with a number of smaller Bovespa-listed sugar producers. On the current P/E basis, Cosan is selling at a discount to its industry on average. The stock is trading at $13.17 a share, up nearly 3% over the past year. The stock is also popular with billionaires D. E. Shaw and Jim Simons.
MetLife Inc. (MET) is another large holding in Dubin's portfolio. Based on the number of shares owned in the first quarter, the position is currently valued at close to $49 million. MetLife Inc. is a $31 billion provider of insurance, annuities, and employee benefit programs. It pays a dividend yield of 2.5% on a payout ratio of 14%. The company's peers The Allstate Corporation (ALL) and Progressive Corp. (PGR) yield 2.6%, and 2.0%, respectively.
The company is attractive on valuation as its current and forward P/Es are at 5.4, well below the industry on average. The shares are trading below book value at a price-book ratio of 0.5, well below the industry average of 0.9. MetLife's revenue and net income have been on a sharp rebound since 2009. The company has been generating strong cash flow from operations. The stock is trading at $29.53 a share, down nearly 30% over the past year. Billionaires Ken Griffin and John Paulson are also big fans of the stock. Billionaire Leon Cooperman, who owned 2.1 million shares in the company in the first quarter, named it one of his top 10 picks at the recent Delivering Alpha conference.
ManpowerGroup (MAN) is another Dubin's pick paying dividends. Based on the number of shares reported in the first quarter, Dubin's stake in the company is currently valued at $73 million. The company is a global recruitment and workforce solutions and services company with $2.7 billion in market capitalization. By revenue, ManpowerGroup is the second largest staffing company in the world. This appears to be a pure play on the expected rebound in the labor markets, particularly in the U.S.
However, a sustainable employment market recovery remains elusive for the time being. Weak labor markets in Europe are taking an especially heavy toll on ManpowerGroup's performance. Once the labor market is revived, the company is forecast to boost its EPS at an average rate of 10% per year for the next five years. The stock pays a dividend yield of 2.6%, on a payout ratio of 31%. Its peers Robert Half International (RHI) and Kelly Services, Inc. (KELYA) pay dividend yields of 2.1% and 1.7%, respectively.
A Switzerland-based Adecco SA ADR (AHEXY) pays a dividend yield of 4.3%. ManpowerGroup trades on a forward P/E of 12.1, which is below its respective industry on average. The shares are changing hands at $33.46 a share, down almost 38% from a year ago. Fund managers Chuck Royce at Royce & Associates and Jim Simons are also bullish about the stock.
Lowe's Companies, Inc. (LOW) is also one of top picks in Dubin's portfolio. His share in the company is currently valued at $83 million. The company is a $30 billion home improvement retailer and likely Dubin's play on the recovery in the housing sector. The stock pays a dividend yield of 2.5% on a payout ratio of 42%. The company's direct competitor Home Depot (HD) pays a dividend yield of 2.3%. Despite the improvement in the housing market, analysts at Janney Montgomery Scott downgraded Lowe's from a buy to a neutral rating, based on "valuation, moderating sales trends, the weaker macro backdrop, and more difficult comps."
Still, the stock is currently trading on a forward P/E that is below the home improvement retail industry. The shares are changing hands at $25.79 a share, up 14% over the past year. Among fund managers, the stock is also popular with Edgar Wachenheim at Greenhaven Associates and John Griffin at Blue Ridge Capital.
Caterpillar Inc. (CAT) is another dividend-paying pick in Dubin's portfolio. The stake is currently valued at $68 million. Caterpillar was Dubin's new pick in the first quarter. The company produces heavy-duty vehicles and technologies for construction and mining industries. By revenue, the company is also the leading producer of engines and turbines used in machinery, heavy-duty trucks, electric generators, and seaborne vessels.
Caterpillar has a market cap of $53 billion and pays a dividend yield of 2.6%. Its dividend payout ratio is 26%. The company's competitors Deere & Company (DE), Fastenal Company (FAST), and Kubota (KUB) pay dividend yields of 2.4%, 1.7%, and 1.7%, respectively. The company is likely Dubin's play on the cyclical recovery in manufacturing, mining, and construction industries. On a forward P/E basis, Caterpillar trades at a discount to the commercial vehicles and trucks industry. The shares are trading at $80.95 a share, down 23% over the past 12 months. Billionaire Ken Fisher is also bullish about the stock.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.