As per the recent 13F filings, Apple Inc. (NASDAQ:AAPL), Berkshire Hathaway Inc. (NYSE:BRK.A), and American International Group Inc (NYSE:AIG) are among the top five holdings of D.E. Shaw and Company. These companies account for 4.5% share of its portfolio. D.E Shaw’s hedge funds have performed well since inception in 1988. The rising performance of its funds is the result of its investment style. As of March 31, it had assets worth $41.88 billion under management.
I am analyzing the hedge fund’s top three holdings in this article to find out if there is any investing opportunity in these companies.
Low-price iPhone and capital allocation program
On April 23, the company announced the expansion of its capital return program of $100 billion. Under the expansion, it has increased its share repurchase plan to $60 billion from $10 billion announced last year. This share repurchase plan is expected to be completed by the end of 2015. The planned annual buyback of 2% will raise EPS by $4.50 in 2015. It has also increased its dividend payment in the second-quarter 2013 by 15% quarter over quarter, raising dividend from $2.65 to $3.05.
Apple Inc. (NASDAQ:AAPL) is among the largest dividend paying companies in the world, with an annual dividend payment of $11 billion. Its current dividend yield is 3%, which is in range with the average 3.10% yield of the 20 largest dividend-paying companies in the U.S.
Growth prospects in non-insurance business and utility acquisition
Berkshire Hathaway Inc. (NYSE:BRK.A)’s non-insurance businesses account for 70% of the company’s pre-tax earnings. Its non-insurance businesses — utilities and energy, manufacturing, service and retail, finance, and financial products are performing well. Earnings in these segments declined in the past due to weakness in the U.S. economy. In 2012, its non-insurance segment revenue increased 12% year over year to $120 billion from $100 billion in 2011. Due to recovery in the economy, strong growth is expected from manufacturing, service and retail, finance, and financial products. Berkshire Hathaway Inc. (NYSE:BRK.A) non-insurance business revenue is expected to rise to $135 billion this year.