In addition to its substantial dividend yield, Seadrill also sports a PEG ratio below 1.0, which indicates that the markets are undervaluing the company’s growth prospects. To be fair, sell-side analysts are being pretty generous in their projections—forecasting 24-25% annual EPS growth through 2017—but it’s worth noting that ENSCO PLC (NYSE:ESV), Magnum Hunter Resources Corp (NYSE:MHR), Northern Oil & Gas, Inc. (NYSEMKT:NOG), Rex Energy Corporation (NASDAQ:REXX), and Kodiak Oil & Gas Corp (USA) (NYSE:KOG) all sport even higher estimates. Due to the aforementioned factors, it’s foreseeable that Seadrill at least comes close to this target; it’s easy to see why Soros is long.
Macquarie
Another new position with a high dividend yield in Soros’s equity portfolio is Macquarie Infrastructure Company LLC (NYSE:MIC), in which the hedge fund owns 28,989 shares, worth $1.6 million. With a dividend yield of 4.8%, this diversified infrastructure company with a slant toward energy is one of the top 50 income stocks in the 850-company services sector, and like Seadrill, the growth picture is promising.
Insider trading activity at Macquarie Infrastructure Company LLC (NYSE:MIC) has been positive in the past month, and Wall Street’s average price target predicts another 21-22% upside in the company’s share price from current levels near the $54 mark.
Macquarie Infrastructure Company LLC (NYSE:MIC)’s involvement in public-private manufacturing projects more commonly known as PPPs gives it an added advantage that most investors don’t consider. Some of its more prominent PPPs have been the Chicago Skyway project, the first PPP of a brownfield (aka preexisting) asset; the North Tarrant Expressway, the first to issue Private Activity Bonds for such a project; and the Denver Fastracks commuter rail system, the first PPP of transit nature.
In fact, most readers probably wouldn’t place “innovation” and “infrastructure” in the same sentence, but this is what Macquarie Infrastructure Company LLC (NYSE:MIC) does best. This advantage, in addition to low-double-digit EBITDA growth over the past year and lessening debt costs contribute to the picture that is analysts’ forecast for 25-26% annual earnings growth for the next half-decade. The Street’s outlook places Macquarie Infrastructure Company LLC (NYSE:MIC) in the top tenth percentile of the entire services sector in terms of this metric.
A trio of REITs
Soros also showed confidence in the REIT marketplace last quarter, disclosing positions in Biomed Realty Trust Inc (NYSE:BMR), Capstead Mortgage Corporation (NYSE:CMO) and Anworth Mortgage Asset Corporation (NYSE:ANH). This trio sports an average dividend yield of 8.3%, with Anworth Mortgage Asset Corporation (NYSE:ANH) yielding in excess of 10%, seventh highest in the diversified REIT industry.
While Anworth is focused on agency mortgage-backed securities, Capstead Mortgage Corporation (NYSE:CMO) gives Soros greater exposure to adjustable-rate mortgages, particularly from Fannie Mae and Freddie Mac.
Operating as a lab space manager for various biotech and pharmaceutical firms, Biomed Realty Trust Inc (NYSE:BMR) is a bit of a different play here, but Soros is likely invested for its upcoming merger with Wexford Science & Technology, a privately held real estate investment and development company. On the deal that was announced a few days before the close of the first quarter, BioMed’s Chairman and CEO Alan Gold said that it “accelerates our growth as the leading provider of real estate to the life science industry.”
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