Halliburton Company (HAL), Baker Hughes Incorporated (BHI): Tweedy Browne Value Fund Gets More Bullish on These Stocks

Page 1 of 2

The Tweedy Browne Value Fund has managed to deliver a nice annual return of 8.82% for the past 20 years, beating the S&P 500′s annualized return of 7.70%. The fund, with net assets of $600.5 million, or $21.50 NAV, seeks long-term growth by investing in undervalued securities.

In the first quarter 2013, it added more shares of Halliburton Company (NYSE:HAL) and Royal Dutch Shell plc (ADR) (NYSE:RDS.A) to its portfolio. Let’s take a closer look at these two companies to see whether or not investors should follow Tweedy Browne Value Fund into these stocks.

Halliburton – a relatively undervalued company

Tweedy Browne increased its stake in Halliburton Company (NYSE:HAL) from 252,700 shares to 307,865 shares. Halliburton, established in 1919, is a leading provider of services and products to oil & gas and other related energy players, operating in two business segments: Completion and Production and Drilling and Evaluation.

The Completion and Production segment generated most of its operating income, $3.14 billion, whereas the operating profit of the Drilling and Evaluation segment was around $1.67 billion in 2012. The company has a diverse customer base as no customer accounted for more than 10% of its total revenue during any period. Being the largest hydraulic-fracturing service provider in the world, the company has benefited a lot from a recent fracking boom.

Halliburton CompanyHalliburton Company (NYSE:HAL) is trading at around $40 per share with a total market cap of more than $37 billion. The market values the company at around 6.1 times EV/EBITDA. In the first quarter of 2013, the company increased its quarterly dividend by 39% to $0.125 per share. Consequently, the forward dividend yield is around 1.25%. In addition, the company announced that it would continue its “systematic” share repurchases.

Baker Hughes Incorporated (NYSE:BHI) – similar valuation but much less profitable

Compared to its peer Baker Hughes, Halliburton has a lower valuation. At around $43 per share, Baker Hughes is worth around $19.1 billion on the market. It is valued at 6.2 times EV/EBITDA. The company is also a leading supplier of oilfield services, products, and systems to the big global oil & natural gas companies, operating in more than 80 countries.

Recently, Baker Hughes received an unsolicited “mini-tender offer” from TRC Capital to buy up to 2.5 million shares of the company at around $42 per share. Interestingly, the offer came in at a 4.61% off from its recent closing price. Thus, Baker Hughes recommended investors to reject TRC’s “mini-tender offer”.

Income investors would like Baker Hughes Incorporated (NYSE:BHI) due to its consistent dividend payment for the past several decades. It pays around $0.15 per share with a dividend yield of 1.4%.

Halliburton Company (NYSE:HAL) is more profitable than Baker Hughes with a higher operating margin at 15.64%, while the operating margin of Baker Hughes is only 9.81%. Halliburton also enjoys a higher return on equity of 17.84% whereas the return on equity of Baker Hughes is only 7.13%.

Royal Dutch Shell – a global oil & gas play with juicy dividends

The Tweedy Browne Value Fund has also increased its stake in Royal Dutch Shell to more than 603,000 shares. Shell is considered one of the biggest independent oil/gas companies with global operations in the U.S., the U.K., Brazil, Brunei, China, Denmark, the Netherlands, Nigeria, Oman, Qatar, and Russia. The company operates in both upstream and downstream segments.

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!