Billionaire Paul Tudor Jones (PTJ) has been all over the news after telling an audience of University of Virginia students and others that it’s difficult for mothers to be successful traders given that their connection to a child is a focus “killer.” PTJ has been one of the most successful traders over the past few decades, with a net worth of some $3.3 billion. Let’s check out PTJ’s latest moves during the first quarter (check out Tudor’s top five).
Drugs and dividend bets
One of Tudor’s biggest additions was Pfizer Inc. (NYSE:PFE), which now makes up 3.9% of the hedge fund’s portfolio and is its second-largest stock holding. Pfizer Inc. (NYSE:PFE) is a major drug maker paying a 3.4% dividend yield. Pfizer managed to miss last quarter EPS estimates as dug-patent expirations hurt revenue. Pfizer Inc. (NYSE:PFE) also revised its 2013 outlook, cutting EPS guidance from a range of $2.20 to $2.30 down to $2.14 to $2.24.
Part of what Pfizer Inc. (NYSE:PFE) hopes will drive long-term growth is cost-cutting initiatives and a focus on higher-growth areas. These include the areas of oncology and entry into the Asian market and operations in share. Back to the cost cutting, the drug company managed to cut research and development nicely, with R&D expenses down to $7.3 billion in 2012. Those costs are expected to decline to a range of $6.5 billion to $7 billion in 2013.
The positive for shareholders is that the company plans on upping its dividend payout ratio to 40% by the end of 2013, from the current 33%. Billionaire Ken Fisher also has Pfizer Inc. (NYSE:PFE) as one of his top picks (check out Fisher’s cheap stock picks).
Another big drug name that Tudor was buying up includes Merck & Co., Inc. (NYSE:MRK), which comes after a 2,600% increase in shares owned. Merck & Co., Inc. (NYSE:MRK) is another major drug maker paying a 3.5% dividend yield. Merck recently lowered its EPS guidance due to a possibly greater than expected generic erosion in its drug Singulair. Yet, the stock is still up more than 15% year-to-date, as the market believes Merck & Co., Inc. (NYSE:MRK)’s robust pipeline will support the stock over the interim. These include net treatments for insomnia, diabetes, cancer, and hepatitis C.
Another new addition for Tudor was Agilent Technologies Inc. (NYSE:A), now the fund’s sixth-largest holding and 1.7% of its portfolio. Agilent is a measurement company that provides bio-analytical and electronic-measurement solutions to the life sciences industries.
One overhang for the stock is that about 10% of Agilent Technologies Inc. (NYSE:A)’s revenue comes from the defense sector. Budge cuts could have a negative impact on the stock. As well, its government and academic segment could be negatively impact by sequestration. Agilent also lowered its fiscal 2013 sales and EPSguidance. This is partly due to the company’s higher mix of instrument sales (one time CapEx purchases) to the recurring sales revenue mix.
Although there appears to be headwinds for the company, Agilent trades on the cheap side of the industry, at only 15.4 times earnings, compared to PerkinElmer, Inc. (NYSE:PKI) at 47 times, Teradyne, Inc. (NYSE:TER) at 21.7 times and Thermo Fisher Scientific Inc. (NYSE:TMO) at 23.4 times. However, Agilent’s mere 8% annualized expected EPS growth rate puts its PEG at a relatively high 2.
One of Tudor’s biggest additions is WellPoint, Inc. (NYSE:WLP), which was a 2,500% increase in shares owned during the first quarter and now makes up 1.6% of the portfolio. WellPoint, Inc. (NYSE:WLP) posted EPS of $2.94 compared to $2.34 for the same period last year.