Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Pfizer Inc. (PFE), Citigroup Inc (C): Legendary Investor Is Bullish, Should You Be?

3 Drug Launches You Need to Know in 2013: Pfizer, NPS Pharma, Ariad PharmaThe oldest living investment professional, Irving Kahn, 107 years old, has managed to increase the market value of his long holdings by more than 17.8% in the past three months, from $576 million in the last quarter 2012 to more than $678.7 million in the first quarter 2013.

According to his 13F filing, his top two positions are Pfizer Inc. (NYSE:PFE) and Citigroup Inc (NYSE:C). Those two positions combined accounted for 28.1% of his total portfolio. Moreover, he has kept adding more shares into those two companies in the first quarter 2013.

Pfizer – the top position with sluggish first quarter performance

Pfizer Inc. (NYSE:PFE) remained Kahn’s top positions, with more than 2.57 million shares, representing 10.9% of his total portfolio as of March 2013. Pfizer Inc. (NYSE:PFE) is considered one of the largest global pharmaceutical corporations in the world, operating in five business segments: Primary Care; Specialty Care and Oncology; Established Products and Emerging Markets, Animal Health; and Consumer Healthcare.

Recently, the company reported disappointing first quarter earnings results. Its first quarter 2013 revenue came in at $13.5 billion, including all Zoetis revenue. The revenue was below the expectation of Wall Street at nearly $14 billion. Its GAAP net income was $2.75 billion, 53.3% higher than the net income in the first quarter last year. However, the much lower net income in the first quarter last year was caused by a significant increase in restructuring charges and lawsuit settlement. The company has decreased its full-year forecast from $2.20 – $2.30 per share down to only $2.14 – $2.24 per share, due to the depreciation of the Japanese yen and the earning loss of 20% after Zoetis’ spinoff. Pfizer is trading at around $29 per share, with a total market cap of around $208.2 billion. The market values Pfizer Inc. (NYSE:PFE) at 8.44 times its EV/EBITDA. At this current trading price, Pfizer Inc. (NYSE:PFE) offers shareholders decent dividend yield at 3.2%.

Citigroup – cheap but low yield

In the first quarter 2013, Citigroup Inc (NYSE:C) remained Irving Kahn’s second biggest position, with more than 1.37 million shares. Citigroup represented 9% of his total portfolio in March 2013. Since the middle of 2012, Citigroup Inc (NYSE:C) has advanced significantly, from around $25.30 per share to nearly $47 per share. The first quarter earnings results of the bank surprised the market with its rising profit. Its net income came in at $3.81 billion, or $1.23 EPS, a growth of as much as 30% compared to the net income of $2.93 billion, or $0.95 EPS in the first quarter last year. Its net interest margin rose to 2.9%. Interestingly, in the first quarter, Citigroup Inc (NYSE:C) released $652 million in loan loss reserve while last year the loan loss reserve release was around $1.2 billion. Its allowance for loan losses stayed at $23.7 billion, accounting for a decent 3.7% of the total loans.

Citigroup is trading at $47 per share, with a total market cap of $142.9 billion. The market values Citigroup Inc (NYSE:C) quite cheaply at 0.74 times its book value. Citigroup pays its shareholders dividends with a very low yield at only 0.1%. The bank intends to spend around $1.2 billion to buy back its shares. Thus, at the current price, the buyback would create an additional yield of only 0.84%.