Avalon Advisors’ Big Buys in the Fourth Quarter: Citigroup Inc. (C) and More

Page 1 of 2

Avalon Advisors Llc is an investment manager of wealthy families, foundations, endowments, and trusts. The firm, which manages $1.46 billion worth of assets as of the end of December 2012, is one of the top fee-only advisers whose competitive advantage is to bring its clients’ tax-efficient, risk-adjusted returns.  Let’s take a look at the investment manager’s huge buys for potential investment ideas.

Citigroup Inc (NYSE:C)In the fourth quarter, Avalon  bought significant amounts of shares in Oracle Corporation (NASDAQ:ORCL) and The Procter & Gamble Company (NYSE:PG).. Likewise, it initiated positions in Citigroup Inc. (NYSE:C), Maxim Integrated Products Inc. (NASDAQ:MXIM), and Goldman Sachs Group, Inc. (NYSE:GS). In this article I’ll briefly analyze each stock in a simplistic and intuitive approach.

Sources: Whalewisdom.com, Finviz.com, and Nasdaq.com; as of Feb. 8, 2013

Oracle Corporation

The investment manager doubled its holding in Oracle in the fourth quarter, a position that was initiated only the third quarter. As of the end of December last year, the holding was equivalent to 1.12 percent of the firm’s total portfolio. Back then, shares of Oracle were selling for roughly $32.00. As of publication time, it has gone up by about 9 percent to $34.90. Its growth prospects show this is likely to continue as the company continues to develop an edge in the sector. For instance, Oracle has just announced a $2.1 billion acquisition of networking specialist Acme Packet (APKT). This and other acquisitions the company has recently made show the company’s intent to continue beefing up its telecoms business.

Looking at its fundamentals, the company is very attractive indeed. The trends of EPS, margins, sales, and dividend payments are all very good.  Its latest quarterly revenue growth of 3.43% for November, 2012 is higher than that of the same period in the previous year at 2.45%. The company has exceeded EPS estimates in the fiscal quarter ending in November 2012, and the dividend growth is remarkable. The annualized dividend almost doubled from 23 cents in 2011 to 42 in 2012. The company paid dividends five times last year as shown in the figure below. With a healthy P/E ratio of 16.46 and PEG at 1.38, you should be sleeping well if you’ve made the same decision that Avalon Advisors had taken.

Source: Ycharts.com

Source: Nasdaq.com

The Procter & Gamble Company

Avalon went on a buying spree for P&G shares in the fourth quarter; it increased its shares six-folds. This brought the stake to 198,105, or 0.92% of the firm’s total portfolio. The stock price has jumped from under $70 towards the end of the fourth quarter to around $75 as of publication date.

Indeed, the leading consumer packaged goods company is growing robustly. P&G has been surpassing earnings consensus estimates for the past 4 quarterly reports. Revenue is picking up impressively, with the most recent growth at around 2 percent. This stock is highly favored not only for its leadership in the market but because it is a powerhouse in terms of dividend growth and safety; the annualized amount has just inched up 7.5% from $2.056 in 2011 to $2.21 in 2012. With its current growth trends and prospects, the robust growth in the stock price is likely to continue.

Source: Ycharts.com

Source: Nasdaq.com

Citigroup Inc.

Avalon initiated a position in Citigroup worth $12.98 million, which is equivalent to 0.89% of the firm’s portfolio. As of the end of December 2102, the stock price was a much lower level, at about $35. Today, as of publication time, the price has gone past $42.  Citigroup is now at the final phase of a spinoff with its hedge fund unit previously managed by the company’s division – Citi Capital Advisors, now renamed as Napier Park Global Capital. The company has exhibited a large jump in net income in the fourth quarter; from 31 cents a year earlier, earnings per diluted share reached 38 cents. However, it has failed to meet earnings expectations by a notable margin of 20 percent. This is attributed to increased litigation costs and lower benefits from releasing loan-loss reserves, reports noted. Despite this, Citigroup remains strong for its wider margins and healthy valuation. The profit margin for the end of 2012 at 5.35% was notably higher than that in the previous year’s 4.25%. It has a healthy P/E ratio of 17.14 and a PEG at 1.47. Its dividend payment  also remains stable at 1 cent per share.

Source: Nasdaq.com

Page 1 of 2

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!