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JPMorgan Chase & Co. (JPM) Among Clint Carlson’s +3% Yielders

Quarterly 13F filings disclose many of a hedge fund or other major investor’s long equity holdings as of the end of a fiscal quarter. We use this information to help us develop investing strategies (we have found, for example, that the most popular small cap stocks among hedge funds outperform the S&P 500 by 18 percentage points per year on average) as well as to browse top picks from individual managers in a number of categories. For example, we can identify a manager’s largest holdings in high yielding stocks so that interested investors can do further research on these companies. Read on for our thoughts on the five largest positions in Clint Carlson’s Carlson Capital’s portfolio as of the end of December which pay dividend yields of 3% or higher, or see the full list of stocks the fund reported owning.

One of Carlson’s ten largest holdings by market value as of the end of 2012 was Hudson City Bancorp, Inc. (NASDAQ:HCBK). The bank, which is focused on the New York City metropolitan area, pays a dividend yield of 3.9% going by current prices and recent dividend levels. It is also currently trading at a small discount to the book value of its equity, though the earnings multiples are a bit higher than we would prefer. Cliff Asness’s AQR Capital Management was a buyer of Hudson City Bancorp, Inc. (NASDAQ:HCBK) between October and December, closing the year with over 13 million shares in its portfolio (check out Asness’s stock picks).


The fund increased the size of its position in AvalonBay Communities Inc (NYSE:AVB) by 83% to a total of about 480,000 shares. Avalonbay is a $15 billion market cap real estate investment trust which owns apartment communities nationwide. Real estate investment trusts are required to distribute much of their taxable income to shareholders in order to maintain their favorable tax treatment; this often results in high dividend yields, and AvalonBay Communities Inc (NYSE:AVB)’s yield is currently 3.2%. Citadel Investment Group, managed by billionaire Ken Griffin, was another major shareholder in the company (find Griffin’s favorite stocks).

Microchip Technology Inc (NASDAQ:MCHP) was another of Carlson’s dividend picks as the developer and manufacturer of semiconductor products pays a dividend yield of 3.9%. While that is fairly generous, we would note that the company’s earnings fell dramatically in its most recent quarter compared to the same period in the previous year and the stock currently trades at a high trailing earnings multiple. Analysts expect the business to recover, but we would be reluctant to take their optimism at face value and think investors should be wary. Arrowstreet Capital initiated a position of about 820,000 shares in the fourth quarter of 2012.

Carlson disclosed ownership of 1.3 million shares of JPMorgan Chase & Co. (NYSE:JPM) in the filing, up slightly from three months earlier. One of the most popular financial stocks among hedge funds during Q4 (see more financial stocks hedge funds loved), the bank grew its earnings by 33% in the first quarter of 2013 versus a year earlier (although revenue growth was much lower). JPMorgan Chase & Co. (NYSE:JPM) trades at 8 times earnings, whether we use trailing results or analyst consensus for 2014, and with a P/B ratio of 0.9 it certainly looks like a candidate for value status to us. The dividend yield here is 3.1%.

According to the 13F, Carlson had 1.2 million shares of $24 billion market cap electric utility American Electric Power (NYSE:AEP) in its portfolio at the beginning of January. As a utility, American Electric Power has a low beta of 0.3; combining that with its dividend yield of almost 4%, it is, along with many other utilities, a good defensive stock. We would be a bit concerned that the earnings multiples are high for a low-to-no-growth company, however. Phil Gross and Robert Atchinson’s Adage Capital Management owned 2.1 million shares according to that fund’s own 13F (research more stocks Adage owns).

Disclosure: I own no shares of any stocks mentioned in this article.

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