We track quarterly 13F filings from hundreds of hedge funds, including Philippe Jabre’s Jabre Capital Partners, as part of our work researching investment strategies; we have found, for example, that the most popular small cap stocks among hedge funds outperform the S&P 500 by an average of 18 percentage points per year (learn more about our small cap strategy). We also like to track activity from individual funds so that investors can briefly review these managers’ top picks and identify stocks which look interesting. Read on for our thoughts on Jabre’s five largest stock positions as of the end of March or see the full list of the fund’s stock picks.
Jabre and his team bought 2.6 million shares of Dell Inc. (NASDAQ:DELL) in the first quarter of 2013. The buyout offer for Dell Inc. (NASDAQ:DELL) from the company’s founder Michael Dell and a consortium of private equity investors including Silver Lake Partners still appears to lead Carl Icahn’s own offer as a potential transaction. The terms of this deal are for $13.65 per share; as of this writing, the stock is trading between $13.40 and $13.45. Hedge funds often pursue merger arbitrage strategies due to their low correlation with broader market indices.
According to the 13F, Jabre owned 2.7 million shares of Wells Fargo & Co (NYSE:WFC) as of the beginning of April. Wells Fargo is priced at a premium to the book value of its equity, at a P/B ratio of 1.5, unlike many of its peer megabanks. However, in earnings terms it is at least arguably in value territory, with trailing and forward P/E multiples of 12 and 11 respectively. That is still a higher valuation than many other banks, though Wells Fargo & Co (NYSE:WFC) does also have a reputation as a lower risk bank than some of its peers.
Another large bank in the fund’s portfolio was Citigroup Inc. (NYSE:C), with the filing disclosing ownership of a little over 500,000 shares of the stock. Citigroup Inc. (NYSE:C) is one of those peers of Wells Fargo which is valued at a discount to book- the P/B ratio is 0.8- and with a forward earnings multiple of only 9 it is arguably a value play no matter which of those two metrics we consider. The forward numbers do include analyst expectations of a significant increase in earnings per share, though its most recent quarterly report showed 30% earnings growth compared to Q1 2012.