We have compared billionaire James Dinan’s York Capital Management’s most recent 13F to the fund’s previous filings (see a history of Dinan’s trading activity) and here are some things which we noticed:
Time Warner Cable, JPMorgan and Alexion. James Dinan’s fund made a ton of moves last quarter, and a few of the most notable were new stakes in large-caps Time Warner Cable Inc (NYSE:TWC), JPMorgan Chase & Co. (NYSE:JPM) and Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN). Each of these companies offers solid growth prospects in their respective industries of broadcasting, banking and biopharma, and each has tracked the market fairly well in 2013, gaining between 24% and 27% year-to-date.
All three investments offer above-average earnings growth prospects at a reasonable price, and each has a reason for the market to be undervaluing it, which Dinan can jump on. In JPMorgan’s case, high litigation costs have led some investors to stay away from the stock, and higher programming costs are one fear of Time Warner cable investors. Alexion, on the other hand, is benefiting from strong Soliris sales, but as with any pharma company, fears of regulatory hiccups remain.
A few boosts worth discussing. It’s also worth noting that Dinan and York Capital boosted their stake in Comcast Corporation (NASDAQ:CMCSA), so perhaps they’re exhibiting a general bullish on broadcast television in general. Armstrong World Industries, Inc. (NYSE:AWI), a diversified construction supply small-cap, also saw Dinan up his stake by more than 500%, and Canadian Pacific Railway Limited (USA) (NYSE:CP) was also a bullish bet for the billionaire last quarter. We’re particularly intrigued by Dinan’s decision to up his stake in senior living community operator Brookdale Senior Living, Inc. (NYSE:BKD), which is basically flat over the past six months. Generally speaking, one would have to assume that a bet on Brookdale indicates Dinan’s broader bullishness toward Obamacare in particular, which is expected to boost long-term demand for real estate in the senior living industry.
Goodbye portfolio stalwarts. Interestingly, Dinan and York Capital also sold out of two of their favorite stocks from the previous quarter, Yahoo! Inc. (NASDAQ:YHOO) and American International Group Inc (NYSE:AIG). The latter sat at No. 11 in their equity portfolio, while Yahoo was No. 6, and was actually a new stake for the hedge fund. In the cases of both stocks, much of their once-cheap valuation has evaporated, and the multiples are neither pretty nor ugly. In other words, both Yahoo and AIG are great examples of large-caps that gave Dinan a nice place to park his capital while providing appreciation, but it appears he’s found better places to invest now. A year ago, most of the bullish theses calling for investors to take a look at Yahoo and AIG were valuation-based, and at fair metrics across the board, we understand why Dinan is looking elsewhere.