Paul Singer founded Elliott 35 years ago, and the fund’s success over that time- including as it has increased in size- has made him a billionaire and helped Elliott be one of the longest-tenured hedge funds still under the same management. Last month, the fund filed its 13F, disclosing many of the long equity positions it owned at the end of the third quarter of 2012. We have compared the 13F for the third quarter to the one for the quarter ending in June and picked out five of the largest new positions in Elliott’s portfolio to see if they might still make for good values. Read on for our quick take on these stock picks or see the rest of the stocks Elliott likes.
One of Singer’s ten favorite stocks was France Telecom SA (NYSE:FTE), a $29 billion market cap telecommunications company. A 29% decrease in the stock price over the last year has brought its trailing P/E multiple to 6, though earnings have been down and the sell-side expects net income to continue to decrease in 2013. At first glance the dividend yield look high, but payments seem to be inconsistent and likely exposed to changes in exchange rates. Income investors might want to look further, but in general we don’t think that it’s a good stock to buy.
The fund also liked Reed Elsevier NV (NYSE:ENL), initiating a position of 4.4 million shares. The $11 billion market cap publishing company- which gets a considerable amount of business from publishing scientific and technical books and journals- may be better suited to handle changes in the industry than other peers which are more consumer facing. Reed Elsevier trades at 15 times trailing earnings and 11 times forward earnings estimates. It might be worth investigating further.