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
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

The 10 Biggest Outlet Malls in USA

The 5 Most Popular Rap Songs of All Time

The 10 Countries that Eat the Most Meat

The10 Most Expensive Countries to Fly To

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 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!