The 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%.