By Aubrey Tabuga
Columbus Circle Investors manages discretionary accounts for various organizations. It is one of the leading institutional money managers, providing a broad array of equity investment management services to institutional clients. As of September 30, 2012, CCI's current asset value under management is $12.9 billion based on Whalewisdom.com data. The huge chunks of its investments are in Services at 23.77% of the total; Technology, 23.45%; Healthcare, 14.24%; Financial, 11.49%; and Capital Goods, 7.26%.
In the third quarter, it initiated positions in 69 stocks while it sold out 66. These are the firm's biggest buys in the third quarter of 2012 - Coca-Cola Company (KO); Medivation, Inc. (MDVN); Watson Pharmaceuticals, Inc. (WPI); Sprint Nextel (S); and General Electric (GE).
% of Portfolio
Source: Whalewisdom.com & Finviz.com; as of Nov. 3, 2012
The Coca-Cola Company
Coca-Cola Company is a worldwide leader in non-alcoholic beverage production. It is one of Columbus' big buys and high dividend stocks for the third quarter. The asset manager purchased 2.780 million shares during the third quarter to double its holdings in the beverage company. The total shares owned by the hedge fund are worth $209 million. This sum is equivalent to 1.61% of CCI's total portfolio.
Coca-Cola is investing $300 million to boost its growth in Vietnam. The investment is to be spread over the next three years and is set to commence next year. The company is also eyeing other high-growth areas like India, Russia, and China. It will make a $3 billion investment in India for building brands, consumer marketing, and infrastructure. Hence, EPS at KO is expected to increase by 8.16% annually in the next 5 years. The company's current profit margin is a high 18.63%.
Medivation is a bio-pharmaceutical company based in San Francisco, California. It focuses in producing drugs for the treatment of serious diseases. MDVN collaborates with Astellas for the development and marketing of its prostate cancer drug.
Columbus increased its shares in Medivation by 134% in the third quarter. The company now comprises 1.22% of the asset manager's total holdings. CCI initiated its position during the first quarter, and then drastically increased it by 259% in the second quarter.
Recent reports show that the sales of Medivation's prostate cancer drug Xtandi have just surpassed analysts' expectations. The company's marketer reported third quarter revenue of $14 million even when the drug hit the market only in the middle of September. Thus, the quarterly revenue growth (yoy) is 171.61%. The stocks year-to-date performance has improved by about 106%.
Watson Pharmaceuticals engages in the production and sale of both generic and brand pharmaceutical products in the U.S. and many other countries worldwide. Columbus has increased its position in the New Jersey-based company in the past two quarters. In the third quarter, the increase of 238% was a significant one. It is noted that the fund manager had slashed its shares in the company in the last quarter of 2011 up to the first quarter of this year. The company currently forms 0.81% of the fund's portfolio.
The earnings potential for the healthcare company is remarkable. Its current EPS of 1.22 is expected to rise to 8.21 next year. The long term annual growth estimate is 11.91%. The company's third quarter earnings of $1.35 per share have actually surpassed expectations. This is said to be attributed to the double-digit revenue growth the company enjoyed. With its recent acquisition of Swiss partner Actavis, Watson is now the world's third-largest generic-drug producer after Teva (TEVA) and Novartis' Sandoz (NVS).
Sprint Nextel is the third largest telecom carrier in terms of subscribers. It is based in Overland Park, Kansas and serves around 56 million customers. CCI has bought over 17.7 million shares of the telecom company during the third quarter. Based on Whalewisdom.com data, the buy's market value is $97.941 million. The company currently makes up 0.75% of the fund's total portfolio.
In the third quarter, Sprint has announced a loss that is wider than that for the same quarter last year but is much lower than what analysts have expected. The loss was reported to be attributed to the expenses incurred by the company in its Network Visions Program. Meanwhile, its current recapture rate of 59% is remarkable when compared to that of the previous year's 27%. It is reported to be expanding its 4G LTE coverage in over a hundred markets in the coming months. The stock's year-to-date performance is up by 143.59%.
GE is a world leader in technology innovations. Aside from household appliances, its products are in industrial commodities, aircraft engines, transportation, energy infrastructures, healthcare, and capital. Columbus Circle Investors initiated a position in GE in the third quarter through a purchase of 3.260 million shares worth $74 million. Currently, the technology company comprises 0.57% of the asset management's total holdings. The last time that GE appeared in the fund's 13F filing was in the last quarter of 2010 where it sold off all its 8.9 million shares.
GE Capital, GE's lending arm, is set to purchase 7.69% of Biocon's Research Unit Syngene, a provider of discovery and development services to drug makers such as Abbott (ABT) and Bristol-Myers Squibb (BMY). Biocon is India's biggest biotechnology company in terms of revenue.
Despite the stock's dismal monthly performance, the long term prospects are still huge. GE's annual growth estimate for the next five years is a high 11.15%. The stock's year-to-date performance has improved by 21.98%. GE's is also Columbus' top dividend stocks with a yield of 3.19%.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.