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Billionaire Och’s Big Dividend Stocks (Or Two Out Of Three Ain’t Bad)

Daniel S. Och‘s OZ Management LP is among the hedge funds that recently filed their 13F with the U.S. Securities and Exchange Commission for the reporting period of March 31. Based on the filing, the fund had $30.85 billion in holdings in its public equity portfolio, down from $36.69 billion the previous reporting period. OZ Management LP is one of the biggest hedge funds in the world and is constantly tracking its investment performance and making adjustments accordingly, with a large degree of turnover during each quarter. The firm was founded in 1994 by billionaire Och. It leverages a multi-dimensional investment strategy and invests in diverse geographical locations. It boasts stakes in many industries, including services, healthcare, technology, basic materials, and more. Insider Monkey has great interest in the fund due to its investment approach and acumen. In this article, we will take a look at the big dividend stocks carried by Och, which all sport dividend yields of close to 5%. Those stocks are Markwest Energy Partners LP (NYSE:MWE), Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR), and Williams Companies Inc (NYSE:WMB).

Och-Ziff Capital Management

Why are we interested in the 13F filings of a select group of hedge funds? We use these filings to determine the top 15 small-cap stocks held by these elite funds based on 16 years of research that showed their top small-cap picks are much more profitable than both their large-cap stocks and the broader market as a whole. These small-cap stocks beat the S&P 500 Total Return Index by an average of nearly one percentage point per month in our backtests, which were conducted over the period of 1999 to 2012. Moreover, since the beginning of forward testing from August 2012, the strategy worked just as our research predicted, outperforming the market every year and returning 142% over the last 32 months, which is more than 84 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).

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Daniel S. Och
OZ Management

OZ Management held 3.32 million shares of Markwest Energy Partners LP (NYSE:MWE), with a market value of $219.36 million, representing a big increase from the 674,847 shares that it held at the end of 2014. The company, which is the second-largest oil and gas company in the U.S., performed dismally in the first quarter. It posted $0.14 in earnings per share on revenue of $467.30 million, missing analysts’ consensus earnings per share estimate by $0.03 and missing revenue estimates by $109.39 million. Year-over-year, the company’s revenue was down by 8.8%. Analysts are expecting Markwest Energy Partners LP (NYSE:MWE) to post earnings per share of $0.84 for the current fiscal year. The company recently announced a dividend of $0.91 per share with the ex-dividend date being May 5. The dividend rate provides a current yield of 5.92%. A total of 11 hedge funds were invested in the stock during the first quarter, having an aggregate of $569.12 million in investment value. Stockbridge Partners is very high on this dividend stock, owning 3.17 million shares and having public equity exposure of over 11% to it.

At the end of the first quarter, OZ Management LP held a total of 22.32 million shares of Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) worth $135.91 million. The stock was a new purchase of the fund during the quarter. The company is a semi-public Brazilian energy corporation headquartered in Rio de Janeiro, Brazil. Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) has been caught in a very public, multi-billion dollar corruption scandal and has been subject to investigations by Brazilian anti-corruption institutions. The stock lost over 40% over the past year as a result of the scandal. The company posted earnings per share of $0.36 for the first quarter, easily beating analysts’ forecast of $0.14. As a result of the corruptions allegations, however, the company recently backtracked on its plan to pay a dividend this year as a result of the $16.7 billion write-down that it recently incorporated. In 2014 it paid an annual dividend of $0.47 for a yield of over 5% based on the current price of shares. However, the company is expected to begin paying out a dividend again come 2016. A total of six billionaires were invested in the stock at the end of the quarter, accounting for $348.99 million in investment compared to nine billionaires with an aggregate investment of $312.17 million at the end of 2014. A few of these billionaire hedge funds are Rob Citrone‘s Discovery Capital Management, Ken Fisher’s Fisher Asset Management, and Howard Marks‘ Oaktree Capital Management.

OZ Management held a total of 7.85 million shares of Williams Companies Inc (NYSE:WMB) with a value of $397.33 million at the end of the first quarter indicating a decrease of 1.97 million shares from the previous reporting period. In an effort to expand its services in North America, the energy company is planning to construct a gas pipeline through northeast Pennsylvania. It recently faced a slight setback however, when one of its natural gas pipelines ruptured in the area, compelling over 100 residents to evacuate. While this didn’t cause any injuries, the fact that the new project is still under review by the Federal Energy Regulatory Commission might bring more questions. Zacks believes that the security presents a great investment opportunity based on the fact that it’s operating in a solid sector and has been receiving positive earnings revisions from analysts. Over the past month alone, the stock’s earnings estimate has increased from $0.23 per share to $0.28. Williams Companies Inc (NYSE:WMB), named by FORTUNE as the most admired energy company of 2015, is set to pay a $0.59 cash dividend to holders who purchased shares before the June 10 ex-dividend date. The announced quarterly dividend represents an increase of 1.72% over the previous quarter, and provides a yield of 5.01%. The stock, which is part of the Public Utilities sector, posted earnings per share of $0.16, beating analysts’ consensus estimate by $0.01. This figure is lower than the $0.28 that it reported in the respective quarter last year however. For the current fiscal year, Williams Companies Inc (NYSE:WMB) is expected to post earnings per share of $0.99. A total of 60 hedge funds out of the 730 actively reporting funds that we track were invested in the stock as of March 31, with eight of them being billionaires. The billionaires accounted for $1.29 billion of investment. Some of these billionaire hedge funds are Stephen Mandel‘s Lone Pine Capital and D. E. Shaw, founded by D.E Shaw.

Disclosure: None

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