CenturyLink, Inc. (CTL), Boston Properties, Inc. (BXP): Don’t Buy a Hedge Fund, Be a Hedge Fund

Page 1 of 2

Hedge funds are performing dismally, according to Barry Ritholtz’s eye-opening opinion piece for The Washington Post. After the standard 2% annual fees and 20% they take out of their clients’ profits, most hedge funds’ rate of return seriously underperforms even a plain-vanilla S&P index fund. Why bother with a hedge fund, when you can keep that 22% for yourself by mimicking the moves of one bright and shining star Ritholtz mentions?

Bridgewater Associates only accepts institutional money anyway, so retails investor can only follow the fund — not be in it. As of March 31, Ray Dalio, Bridgewater’s founder, co-CIO and “mentor,” added several entirely new positions to his fund, which has almost $10 billion in assets under management. You’ve likely heard of all their names, from smaller stocks like Expeditors International of Washington (NASDAQ:EXPD)CenturyLink, Inc. (NYSE:CTL), and Boston Properties, Inc. (NYSE:BXP) to behemoths The Walt Disney Company (NYSE:DIS), International Business Machines Corp. (NYSE:IBM), and General Electric Company (NYSE:GE).

Let’s drill down on the less familiar names, and why Dalio’s buying them.

The shipping news on the back of a napkin

Expeditors International of Washington (NASDAQ:EXPD) is the middleman, the paper shuffler, the fixer of international shipping logistics. Its clients range from apparel manufacturers, electronics retailers, and department stores to industrial, automotive, and high-tech companies.

The company was founded in 1979 with a back-of-the-napkin business model of a transportation services provider/customs brokerage brainstormed by Peter Rose, current Chairman and CEO, and James Wang. Notably, Expeditors International of Washington (NASDAQ:EXPD) has a no-layoff policy, which it maintained even during the worst of the recession. Hanging on to talented employees may have helped the company to boast $6 billion in revenue in 2010.

CEO Rose has said, “Some of our best business is business that we lost.” Rose refers to clients who left, lured by rivals’ lowball prices, but came back disappointed by the service they received. To that end, Expeditors International of Washington (NASDAQ:EXPD) has a white-glove, time-definite, concierge-type service called Transcon, in place domestically for the last decade, and now being rolled out globally.

The company reported Q1 earnings on May 1 that were slightly disappointing. Revenue fell marginally from $446.571 million to $445.284 million, but diluted net earnings were up 8% year over year for $0.39 EPS. Most of the decrease was due to the well-publicized global slide in demand for PCs.

The stock trades at a forward P/E of 19.67 with a PEG of 1.94. It offers a yield of 1.50% at a 35% payout ratio. Its main competitors are DHL, FedEx, and UPS.


FDX Revenue Quarterly YoY Growth data by YCharts

As seen in the chart below, Expeditors International of Washington (NASDAQ:EXPD) hasn’t yet returned to its robust pre-recession revenue growth, but it is coming back. Hedge fund boss Dalio must believe in a global shipping renaissance, since he also added to his emerging-markets ETF positions, the Vanguard VWO and the MSCI EEM, in the last quarter.

FYI, Expeditors attributes the sudden surge in its stock price some 6.5 years ago — a larger spike than its competitors’ — to a major hedge fund that had shorted the stock before a blowout earnings release, and was forced to cover to the tune of $100 million. Consider that yet another example why you shouldn’t buy into a hedge fund!


EXPD Revenue Quarterly YoY Growth data by YCharts

Taking care of business

Boston Properties, Inc. (NYSE:BXP) is an office space REIT with most of its properties in downtown Boston, Washington, D.C., midtown Manhattan, San Francisco, and Princeton, N. J., for a total of 60 million square feet. Its most famous properties are the General Motors building in NYC and the Hancock Tower in Boston.

Its main competitor is Vornado Realty Trust (NYSE:VNO), another office REIT. Boston Properties, Inc. (NYSE:BXP)’ trailing P/E is, at 59.27, is more than twice as high as Vornado’s 29.01. Both are big in Manhattan property circles as well as the DC area — which means the federal government’s sequestration will make this area a struggle for both companies.

Page 1 of 2
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 9 Most Dangerous Countries for Tourists to Visit

Reign of Terror: The 10 Most Ruthless Politicians in History

On the Move: The 10 Fastest Growing Businesses in 2015

Fast Money: The 10 Highest Paying Fast Food Restaurants

Mixing It Up: The 14 Best Music Mashups of 2014

Rito Pls Buff: The 10 Least Played Champions in LoL Season 4

10 Covers of Popular Songs that are Better than the Originals

Must See TV: The 9 Most Anticipated Shows of 2015

The 15 Biggest Box Office Bombs of All Time

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations 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 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!