DirecTV (NASDAQ:DTV) is Southeastern’s 3rd largest 13F holding and makes up 6.1% of the firm’s 13F portfolio. DirecTV’s stock underperformed top competitor Dish Network by almost ten percentage points in 2012 and trades at a 40% discount on a P/E basis to Dish’s at 13x earnings. Despite a 2Q 2012 quarter that showed DirecTV posting its first ever subscriber loss, total subscriber additions is expected to come in at 4 million for 2013, and put total U.S. customers to over 20 million.
DirecTV’s robust growth is from the Latin American market – driving revenues up 7% in 2013 – and higher margins thanks to higher pricing in the U.S. Interestingly, Warren Buffett is the top fund owner among those we track (see Warren Buffett’s newest picks).
FedEx Corporation (NYSE:FDX) is 6.1% of Southeastern’s 13F portfolio. FedEx saw Southeastern increase its stake by 30% last quarter, which is a vote of confidence for the global delivery economy. The transport company is a major economic bellwether that expects revenues to be up 4% in FY2013 after being up 9% in FY2012. Helping drive this revenue boost should be its Ground segment – expected to see revenue up 8% in FY2013. The transport company’s cost savings should help further drive FedEx’s profit margins higher, where its gross margin is already at 25%, compared to UPS’ 15%.
FedEx trades well below top rival UPS at 0.7x sales and 15x earnings, compared to UPS’ 1.4x sales and 22x earnings, and might be the best play in the transport industry. Billionaire Steve Cohen of SAC Capital is a big fan of FedEx, having upped his stake by over 2000% last quarter (check out Steve Cohen’s top picks).
Aon PLC (NYSE:AON) is Southeastern’s 5th largest 13F holding and has been seeing solid revenue gains driven by its 2010 acquisition of Hewitt Associates – revenues were up 33% in 2011. The global risk manager and insurer now has one of the world’s leading human resource consulting and outsourcing segments. The heavier weighting toward the human resource business should pressure performance in the interim though, thanks to high unemployment and slow hiring practices.
Aon trades at 2x book value and is in line with its peers at 20x earnings, whereas Arthur Gallagher and Brown & Brown also trade at 20x earnings. Although Mason loves Aon, billionaire Ken Griffin – founder of Citadel Investment Group – dumped almost 90% of his shares in 3Q (check out Ken Griffin’s big bets).
To recap: it appears that Mason Hawkins and Southeastern Asset Management have made solid investments in the insurance industry, which include Loews and Aon. It also appears that Hawkins is betting on a better global economy as evident by his FedEx bet, and is standing by Icahn in Chesapeake. For more related coverage, continue reading below:
Southeastern Asset Management Dumps Some Cement
Chesapeake Energy: Are Shares Poised For A Rebound?
Vulcan: Mason Hawkins Is Getting Out of This Materials Company
