One of the high-quality hedge funds on our radar screens is Robert Pohly’s Samlyn Capital. Samlyn’s $2.8 billion hedge fund’s equity portfolio is primarily invested in the financial, consumer goods, and healthcare sectors. Although some investors feel that declining alpha amongst hedge funds has made them more like mutual funds than ever, we, at Insider Monkey, believe that the average investor can profit — quite literally — from keeping tabs on the money moves of the best hedge fund managers; read the details here.
Let’s have a look at Samlyn Capital’s five favorite stock picks.
Mr. Pohly allocates significantly fewer resources to his largest holdings than many of the fund managers we track. Anadarko Petroleum Corporation (NYSE:APC), his largest holding, only makes up 3.69% of his portfolio. Clearly, then, Pohly prefers a very diversified approach.
The independent oil exploration and production company currently trades at a P/E of 18.45 and has a low debt-to-equity value of just 0.64. More material to investors, though, is the company’s 188% EPS expected growth rate this year (based on Wall Street estimates), and the steady upward climb of the stock’s price.
Anadarko Petroleum Corporation (NYSE:APC), at 12.27%, also paces the industry ROE number (12.09%). Further, the company is well positioned in both the oil and natural gas sectors, and with operations around the world, Anadarko Petroleum Corporation (NYSE:APC) is a best of breed pick, through and through. Ken Griffin and Citadel also hold a large position in Anadarko Petroleum Corporation (NYSE:APC); check out Ken Griffin’s full equity portfolio.
The second largest slice of the pie in the Samlyn Capital portfolio belongs to The Goodyear Tire & Rubber Company (NASDAQ:GT), which accounts for 3.65% of Pohly’s portfolio. Prior to the present economic slump, Goodyear’s stock had been trading in the $30 range. The stock is presently at about $12 a share and appears to be a great value play. With a forward P/E of 4.77 and predicted 24% EPS growth rate next year, the tire manufacturer’s stock looks quite appealing. Samlyn Capital is of the same mind, as they recently increased their stake in The Goodyear Tire & Rubber Company (NASDAQ:GT) by 5%.
Worth 3.56% of its total 13F capital, American Express Company (NYSE:AXP), is the third-largest holding in the Samlyn Capital portfolio. The global credit card company’s stock has increased in value by 16.61% over the past year and presently trades at a P/E of 17.42 for the trailing twelve months. Although the AMEX card isn’t is widely accepted at merchants as Visa or MasterCard, the company’s market share is increasing, and the company has an advantageous closed-loop business model, compared to other card companies. Additionally, American Express’s stock displays a ROE value of 23.53%, significantly higher than its industry’s average of 4.52%. American Express Company (NYSE:AXP) is presently paying a dividend yielding 1.21%.
Citigroup Inc (NYSE:C) is the fourth-largest holding in the Samlyn Capital portfolio. The financial services company’s stock is up 18.32% over the past year, as investor confidence in financials seems to be returning, now some five years since Citigroup Inc (NYSE:C)’s government bailout. Fund manager Pohly, for his part, may not see a bright outlook for the stock, however, as he’s recently decreased Samlyn’s long position by 34%. Conversely, UBS also upgraded the stock from “neutral” to “buy” of late, so it’s worth considering both sides of the coin when looking at this stock. At 0.69 times book, Citigroup Inc (NYSE:C) is attractively priced, and with no immediate headwinds on the horizon, we see more value appreciation moving forward.
Whirlpool Corporation (NYSE:WHR), makes up 2.56% of the hedge fund’s equity portfolio. The consumer cyclical stock is up more than 40% in the past six months alone. The company’s ROI and ROE figures both outpace the industry: Whirlpool Corporation (NYSE:WHR)’s ROI is 4.84%, compared to an industry average of 3.89%. Likewise, the company’s ROE is 9.50%, which is vastly higher than the industry average of 4.64%. The stock, too, is trading at an above-industry P/E value: 22.97, compared to the industry average. 15.83. Samlyn may not be too bullish on the stock, however, as they have recently decreased their position by nearly 30%.
Looking at Samlyn Capital’s portfolio compared to the other funds we track is interesting from the standpoint mentioned earlier: Pohly elects to allocate a relatively small amount of resources to his favorite stocks. In other words, Samlyn’s largest holding accounts for 3.69% of the portfolio, while their tenth-largest accounts for 2.25% of the portfolio; there’s only a little more than 1% difference in the amount Mr. Pohly allocates to the stock he is most confident in, compared to his tenth best.
This is a very conservative philosophy of diversification, indeed, and may be something for ardent hedge fund piggybackers to consider. All in all, Whirlpool, Citigroup Inc (NYSE:C), American Express, Goodyear and Anadarko Petroleum Corporation (NYSE:APC) each give Pohly and Samlyn Capital a best-in-breed investment in their respective industries, and the sheer size of his equity portfolio makes it worth watching. Check out the rest of Samlyn Capital’s stock picks here, on Insider Monkey.