Apple Inc. (AAPL), Exxon Mobil (XOM) Among Adage Capital’s Biggest Bets

Exxon Mobil Corporation (NYSE:XOM) has been Adage’s second largest 13F holding since Apple overtook it for the No. 1 spot during 1Q 2012. Exxon makes up 2% of the fund’s 13F assets after a 20% increase in shares during 3Q. Unlike key competitor Chevron, Exxon still plans to grow both its upstream and downstream businesses moving forward. Exxon pays a 2.6% dividend yield and is the largest publicly traded oil and gas company with a $400+ billion market value.

Its international presence, vast asset base and solid balance sheet makes it a stable long-term play. The oil and gas company has a beta of only 0.5 and over $13 billion in cash compared to $9 billion in long-term debt. From a valuation standpoint, Exxon’s 9x P/E is well in line with other major oil/gas companies Chevron (9x) and BP (8x). Billionaire Bill Gates is Exxon’s top fund owner of those we track with over 7.6 million shares (check out Bill Gates’ top picks).

Philip Morris International Inc. (NYSE:PM), the international tobacco company, is Adage’s third largest 13F holding. Philip has a 3.9% dividend yield and is looking to embark on a $1 billion savings program. These savings should help counter generally declining cigarette consumption in developed countries. The company plans to drive its top-line with a greater focus on Asia, particularly India.

When compared to other major competitors on a sales valuation basis, Philip is the cheapest in the industry. The stock trades at 1.8x sales, cheaper than British American Tobacco (4.1x), Reynolds American (2.8x), Lorillard (2.2x) and Altria (2.6x). Billionaire Jim Simons is one of Phillip Morris’ top-name investors (check out Jim Simons’ top picks).

According to its latest 13F filing, Adage Capital’s fourth largest holding was in Kraft Foods (KFT), which split into Kraft Foods Group (KRFT) and Mondelez International (MDLZ) on October 1st. Due to the fact that this occurred one day after the conclusion of the fund’s latest filing period, and because it’s such a material event, we won’t speculate on just what became of Adage Capital’s position. Check back at Insider Monkey for the next round of 13F filings to learn the details.

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