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
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

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs 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!