We track quarterly 13F filings from hedge funds and other notable investors including Joel Greenblatt, the author of several investing books, founder of Value Investors Club, and former manager of Gotham Capital. We use our database of filings to develop investment strategies- for example, we have found that the most popular small caps stocks among hedge funds generate an average excess return of 18 percentage points per year (learn more about our small cap strategy). The information from 13Fs can also be used to see which stocks individual managers such as Greenblatt like in a number of areas, including dividend stocks. Income investors can then review these high-yielding stocks and do further research on any interesting companies. Here are five stocks which Greenblatt’s Gotham Asset Management reported owning in his filing for the beginning of January which pay yields of 3% or higher (or see the full list of stocks from the 13F):
Greenblatt increased his holdings of Raytheon Company (NYSE:RTN) by 21% to about 300,000 shares; the aerospace and defense company was his largest single-stock position by market value. The stock trades at 11 times earnings, whether we use trailing numbers or forward estimates, as the financial community expects the company to be hit hard by cuts in U.S. military spending. Raytheon Company (NYSE:RTN) pays a dividend yield of 3.8%, though we’d note that peer Lockheed Martin Corporation (NYSE:LMT) has an even higher yield. Adage Capital Management, managed by Phil Gross and Robert Atchinson, owned 4.2 million shares of Raytheon Company (NYSE:RTN) (research more stocks Adage likes).
GameStop Corp. (NYSE:GME) was another of Greenblatt’s high yield picks. The $4.1 billion market cap gaming software and hardware retailer is up 51% in the last year; even as digital distribution has become more common, GameStop Corp. (NYSE:GME)’s revenue numbers have been down only slightly. 51% of the float is held short despite the company’s success (at least so far; we’d be very skeptical of its prospects going forward) and the yield of 3.4%. AQR Capital Management, managed by Cliff Asness, had 4.3 million shares of GameStop Corp. (NYSE:GME) in its portfolio at the end of December (check out Asness’s stock picks).
Gotham reported a position of about 260,000 shares in KLA-Tencor Corporation (NASDAQ:KLAC), a semiconductor materials company with a market capitalization of $8.5 billion. The dividend yield here comes out to 3% going by current prices and recent dividend levels. In addition, KLA-Tencor Corporation (NASDAQ:KLAC) at least qualifies as a potential value play with trailing and forward P/Es of 13 and 11 respectively and with a business that seems fairly stable at this point. Renaissance Technologies, founded by billionaire Jim Simons, owned 2.3 million shares according to its own filing (see Renaissance’s favorite stocks).
According to the 13F, Greenblatt slightly increased his stake in SAIC, Inc. (NYSE:SAI) between October and December to 1.1 million shares. SAIC, Inc. (NYSE:SAI) provides services and solutions to the U.S. national defense establishment including the military, intelligence agencies, and the Department of Homeland Security. We imagine it’s also at risk from federal spending cuts, even though the company is coming off a quarter in which revenue at least increased versus a year earlier, and the sell-side does expect earnings per share to fall over the next couple years placing the current price at 12 times forward earnings estimates. SAIC, Inc. (NYSE:SAI) pays a dividend yield of 3.4%.
Disclosure: I own no shares of any stocks mentioned in this article.
