Sprint Nextel Corporation (NYSE:S), after becoming a new addition to JAT’s portfolio, makes up the firm’s 3rd largest and 5.8% of its 13F portfolio. Revenues are expected to see modest growth of 1 to 3% in 2013 and 2014, with longer-term growth to be driven by an accelerated build-out of its 4G network. Sprint has seen some big changes over the past couple months, including the $21 billion investment by Softbank and now the planned acquisition of the remaining shares of Clearwire.
Part of the Softbank investment, around $8 billion, will go toward further spectrum acquisitions. Recent news also suggest that Sprint might be breaking into the pay-as-you go industry, which is just one of its initiatives.
Even after the 80% run up in the stock over the last six months, Sprint still trades at a fraction – $18 billion market cap – compared to major peers AT&T ($200 billion) and Verizon ($125 billion). Although the top two wireless companies AT&T and Verizon pay robust dividend yields – in excess of 4.6% – Sprint is much cheaper from a valuation standpoint. Sprint trades with a P/S of 0.5x compared to AT&T (1.5x) and Verizon (1x). Billionaire David Einhorn of Greenlight Capital did sell off 60% of his Sprint shares last quarter (see David Einhorn’s latest picks).
Equinix Inc (NASDAQ:EQIX) is a computer services company connecting businesses and customers through data centers. JAT has Equinix as its fourth largest 13F holding and it is worth 5.7% of the firm’s 13F portfolio. To help meet the growing demand for data center usage, Equinix has been expanding globally. The data center company trades at a high P/E at 92x, but compared to Rackspace Hosting (106x), it is right in line. With a 27% long-term expected earnings growth rate, the company is not necessarily a screaming value pick, but does present decent growth prospects. These prospects include its key service that allows customers to increase the efficiency of their IT infrastructure. John Paulson upped his stake over 100% last quarter (check out John Paulson’s top picks).
Facebook Inc (NASDAQ:FB), the massive social network, was JAT’s 5th largest 13F holding following a 300% increase in shares during 3Q 2012. The social network is down 25% since its summer-2012 IPO, but still trades at a P/E above 250x. Facebook hopes to continue building on its advertising platform and has a solid balance sheet with over $10 billion in cash and no debt. Assuming Facebook can capitalize on mobile monetization it should have no problem meeting its 30% 5-year expected EPS growth rate. In early 2012, Facebook saw the so-called “crossover point” – where more users accessed the social network via mobile versus computer. Billionaire Ken Griffin – founder of Citadel Investment Group – upped his stake nearly 750% last quarter (check out Ken Griffin’s newest picks).
To recap: We believe that JAT has made some interesting bets on satellite radio and the book business via its Liberty investment. Other big bets include an expected rebound in the travel industry – with Expedia – and a new bet on Sprint. Read more about JAT’s highest profile pick:
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Disclosure: I have no positions in any of the stocks mentioned above
