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By Abby Tabuga

Hayman Capital is a hedge fund management company founded by Kyle Bass in 2006. The Texas-based hedge fund is reported to have leveraged $110 million into $700 million, when it betted against the subprime borrower during a wave of U.S. foreclosures in the end of 2007. According to Whalewisdom.com data, Hayman's market value as of the second quarter is $87.9 million. Recently, Hayman cautions the market in The Australian Financial Review that the Australian dollar may be massively overvalued due to the buying spree of the currency by foreign central banks. Earlier this month, Hayman was reported to have purchased 5.6 million shares of Sealy. Shares of Sealy have been performing well recently along with Tempur-Pedic, which has announced to acquire Sealy for $1.3 billion.

During the second quarter, Hayman's portfolio is divided almost evenly through various sectors - technology, utilities, basic materials, services, consumer goods, and others. It made 4 new purchases but sold 8. This brought the number of tickers to 10.

Let us look into Hayman's top dividend stocks. I basically concentrated on the top holdings with high dividend yield and stable dividend amounts. These stocks are Six Flags Entertainment and Tellabs, Inc. I also checked the historical investments of Hayman Capital in these stocks to provide a deeper understanding of the investment moves.

Company

Shares Held

Share to total

Yield

Quarterly earnings growth or EPS Q/Q

Six Flags Entertainment Corp.

573217

35.35%

4.11%

106.49%

Tellabs Inc.

1017706

3.86%

2.21%

84.07%

Source: Finviz.com as of Sept. 27, 2012 & Ycharts.com

Six Flags Entertainment Corp. (SIX)

The Six Flags Entertainment Corporation is the owner and operator of 19 theme, water, and zoological parks in the U.S., Mexico, and Canada. Its parks serve as many as 170 million people within its 100-mile radius. The parks cover approximately 4,400 acres of land. SIX also owns about 1300 acres of land that can be developed in the future. Aside from these, the company is a holder of long-term licenses for theme park operation for certain characters of Warner Bros., DC Comics, Hanna-Barbera and Cartoon Network. Aside from operating the park, the company also has licenses to market merchandise featuring these characters. It has a market capitalization of $3.1 billion. Last July, SIX announced a 10-year extension to its partnership with the beverage company Coca Cola (KO). The latter is designated as the official beverage sponsor for all the company's domestic parks.

Six Flags is the top stock owned by Hayman this second quarter and makes up one-third of its total holdings. Hayman initiated its position in SIX during the 3rd quarter of 2010 with a $13 million purchase of around 300,000 shares. Since then, the stock has always been one of the top 3 stocks of the hedge fund manager. Hayman has sold several shares only in two occasions since the purchase. Hayman holdings form 1.06% of the entertainment companies' total shares held by its investors.

The dividends payment of SIX has risen from $0.06 in 2011 to $0.60 in the current year. Its yield is in a steady and relatively steep climb within the last two years. For instance, the yield went up from 0.05% in December 2010 to 0.36% during the same period last year and to 4.11% as of September 2012. As of Sept. 27, 2012, the EPS (TTM) is 0.72 but the estimate for next year is 1.82. The current EPS for the quarter of 1.27 is higher than that for the past of -2.11. Also, the company's debt/equity ratio of 151.45% is considered acceptable because it is less than the average ratio for its industry of 323.28%. The company's quarterly revenue growth (yoy) is 10.70%.

Date

Yield

Ex/Eff Date

Dividend Amount

Sept. 27, 2012

4.11%

August 30, 2012

$0.60

June 30, 2012

2.44%

May 24, 2012

$0.60

March 31, 2012

1.57%

February 28, 2012

$0.60

Dec. 31, 2011

0.36%

December 1, 2011

$0.06

Sept. 30, 2011

0.38%

May 26, 2011

$0.06

June 30, 2011

0.12%

February 24, 2011

$0.06

March 31, 2011

0.08%

December 16, 2010

$0.06

Dec. 31, 2010

0.05%

Sept. 30, 2010

0.00%

June 30, 2010

0.00%

Sources: Nasdaq.com, Ycharts.com

Tellabs Inc. (TLAB)

Tellabs Inc. engages in developing and supporting telecommunications networking products for service providers in the U.S. and around the world. Through its products and services, the Naperville-based company enables customers to deliver wireless and wireline voice, data, and video services. It has three business segments - Broadband, Transport, and Services. Tellabs was founded in 1974 and currently has a market capitalization of $1.3 billion. The company, which has been suffering from losses, is about to see its Chairman Michael Birck retire next year due to an illness.

With a yield of 2.21%, Tellabs Inc. is one of Hayman's top dividend stocks. Although Hayman sold the majority of its holdings in TLAB during the second quarter of 2012, it still has over a million shares in the telecommunications company. It is noted that the hedge fund initiated its position in the company just in the first quarter of the current year. Hayman's investment is 0.4% of the total shares in the company.

The company's dividend payment has been stable since February 2010, at $0.02. Its yield is rising in a steady manner during the last few years up to June 2012. The quarterly earnings growth is 84.07%. However, TLAB has been incurring losses. For instance, the quarterly revenue growth is -9.03%. This percentage is about the same as that for the past 5 years. The losses, however, have narrowed in the second quarter ($5 million) due to improved margins. The loss during the same period last year was at $29 million. Analysts are also expecting slightly higher revenue in the third quarter as opposed to the company's own estimates. Likewise, it has healthy cash on its balance sheet that is about two-thirds of its market capitalization.

Date

Yield

Ex/Eff Date

Cash Amount

Sept. 27, 2012

2.21%

August 15, 2012

$0.02

June 30, 2012

2.40%

May 9, 2012

$0.02

March 31, 2012

1.98%

February 8, 2012

$0.02

Dec. 31, 2011

1.98%

November 2, 2011

$0.02

Sept. 30, 2011

1.86%

August 10, 2011

$0.02

June 30, 2011

1.74%

May 11, 2011

$0.02

March 31, 2011

1.53%

February 9, 2011

$0.02

Dec. 31, 2010

1.19%

November 9, 2010

$0.02

Sept. 30, 2010

0.81%

August 11, 2010

$0.02

June 30, 2010

0.63%

May 12, 2010

$0.02

March 31, 2010

0.26%

February 10, 2010

$0.02

Sources: Nasdaq.com, Ycharts.com

Source: Analysis On Top Dividend Stocks Of Hayman Capital