NEW YORK (TheStreet) -- The market has been dissecting the latest portfolio changes of the big hedge fund investors such as John Paulson, George Soros and David Tepper. To get a broader view of what these sophisticated investors think about the markets, TheStreet studied the top ten hedge fund stock buys ranked by market value. The data is compiled from 13F quarterly regulatory filings.
>>5 Market Heavyweights' Recent Picks
Investors should note that the filings are dated and also offer only a partial glimpse of the portfolio. Institutional investors are not required to disclose short positions.
Hedge funds appeared to favor financial above other sectors, with three of the top four big banks ranking high in the list of buys. Bank of America was conspicuously missing from that list.
Hedge funds added to their positions in blue-chip names as well, as they bet on a recovery in the U.S. economy and actively sought out dividend yielding stocks.
Global biotech major Genzyme attracted $1.1 billion worth of hedge fund purchases in the fourth quarter. John Paulson was a big buyer, snapping up an additional 4.93 million shares to take his total holding to over 6 million. SAC Capital, Eton Park and Farallon Capital were other prominent buyers.
After nine months of negotiation, Sanofi- Aventis agreed to buy Genzyme for $20.1 billion in cash, with additional payments possible depending upon the performance of the latter's drugs. Shareholders will initially receive $74 per share and a potential $14 per share if drugs such as its multiple-sclerosis drug Lemtrada, Cerezyme and Fabrazyme, used to treat rare diseases, meet performance targets.
Clearly Paulson's bet on the deal going through paid off. It will be interesting to see the changes in positions in Genzyme in his next quarterly filing now that the terms of the deal are out, as it would likely reflect the hedge fund titan's expectations on the performance of Genzyme's drug pipeline.
Most sell-side analysts preferred to sit on the fence on that one, with 17 rating the stock a hold. Only three analysts rate the stock a buy. 9. Williams Companies
Williams Companies is engaged in finding, producing, gathering, processing and transporting natural gas, with operations in the Pacific Northwest, Rocky Mountains, Gulf Coast, the Eastern Seaboard and the province of Alberta in Canada.
Daniel Loeb's Third Point bought 4 million shares of Williams in the fourth quarter. Jana Partners bought 3.6 million shares while Steven Cohen's SAC Capital bought 1.7 million.
The natural gas company said in mid-February that it would spin off its exploration and production business during the third quarter of 2011 through a public offering of up to 20% of its interest and then spin off the remaining interest in 2012 to shareholders.
Following the spinoff, Williams shareholders will own a stake in: Williams, a premier owner/operator of North American midstream infrastructure and natural gas pipeline assets and, separately, a large-scale, independent North American diversified exploration and production company with interests in South America.
"Williams has generated significant value by operating as an integrated natural gas company," said Alan Armstrong, Williams' chief executive officer. "As we look to the future, though, we are convinced that the capital efficiency created by separating into two distinct investment opportunities will allow shareholders to realize greater value."
The company also recently announced a dividend hike of 60% in the first quarter, with plans to additionally raise dividends by 10 % to 15% in 2012.
Nine analysts rate the stock a buy, while 2 have a hold rating. There were no sell ratings on the stock. 8. Anadarko Petroleum
Anadarko Petroleum is engaged in the exploration and production of oil and natural gas. The Company's three operating segments are oil and gas exploration and production, midstream and Marketing.
Anadarko is among the top five equity holdings of John Paulson. Paulson bought another 7.8 million shares during the fourth quarter, bringing his total holding in the company to 21.28 million.
Shumway Capital took a fresh exposure to the company as well, buying 1.3 million shares.
Oil and exploration companies are poised to benefit from higher oil prices and are gearing up to raise output. Anadarko said Thursday it will increase capital spending to $5.6 to $6 billion in 2011 up from $5.2 billion in 2010 as it develops projects in Africa and the U.S.
It plans to allocate 10% of its capital to developing the Eagleford and Marcellus shale plays in the U.S. The company expects to announce a joint-venture agreement in the Eagleford soon.
Output is expected to increase to 244 million barrels of oil equivalent (mmboe) to 248 mmboe in 2011. It projects a 10% increase in liquid volumes that will deliver higher margins.
The company's operations in Algeria have not been disrupted by protests in that country, but Anadarko has halted operations in the Ivory Coast.
16 analysts rate the stock a buy, 12 a hold. There are currently no sell ratings on the stock. 7. Wells Fargo
Wells Fargo seems to be a real hedgie favorite, with everyone from John Paulson to David Tepper and George Soros adding to their exposure to the bank. The stock has been a long-time favorite of legendary investor Warren Buffett and Berkshire Hathaway duly bought more of the stock during the quarter, even as it exited Bank of America.
The bank earned $3.4 billion, or 61 cents a share, in the fourth quarter, up from $2.8 billion, or 8 cents a share, in the year-earlier period, matching analysts' forecasts. For the year, Wells Fargo reported net income of $12.36 billion in 2010, compared with $12.28 billion in 2009.
Wells Fargo is expanding beyond traditional lending as it looks for opportunities to grow and has been recently getting aggressive in insurance. In January, the bank announced small deals to buy two employee-benefits insurance brokerage firms in Ohio and Kansas, called Prestige Professional Plans an JFK Consulting Group, respectively. During the bank's fourth-quarter conference call, CEO John Stumpf reiterated the firm's commitment to building out its insurance-distribution franchise.
Wells has also been in the news lately after its CFO and face of the company Howard Atkins unexpectedly resigned, raising eyebrows in the analyst community. Although the bank has said that the resignation was for personal reasons and had nothing to do with the financial conditions of the company, the news has generated its fair share of controversy, with investors worried about the impact of the transition on the bank.
16 out of 26 analysts rate the stock a buy, 7 have a hold rating, while 3 advise selling the stock. 6. JPMorgan Chase
JPMorgan Chasewas yet another bank that curried favor with hedge funds, attracting $1.4 billion in net purchases.
Maverick Capital and Shumway Capital were among the prominent funds that initiated fresh positions in the stock. Eton Park, Appaloosa Management and FrontPoint Partners added more to their holdings as well.
JPMorgan reported a strong performance in the fourth quarter even as Bank of America and Citigroup faltered. Earnings grew 47% to $4.83 billion, or $1.12, per share from $3.28 billion, or 74 cents, per share a year earlier, easily beating estimates.
CEO Jamie Dimon has said that the bank will raise its dividend to as much as 75 cents per share if given a green light by regulators. The bank currently pays an annual dividend of 20 cents per share, giving it a dividend yield of 0.4 percent.
21 analysts rate the stock a buy, while 3 have a hold rating. There are no sell ratings on the stock. 5. Google
Search giant Google is a popular top holding for hedge funds. In the last quarter, over 240 hedge funds bought into the stock. Citadel and D.E. Shaw were among the prominent hedge funds that added significantly to their positions in Google.
Google surprised analysts in January when it announced a major management shake-up in what it called an attempt to simplify management structure and speed up decision making.
Larry Page, co-founder of the company, will take over the reins of chief executive officer from Eric Schmidt, who had operated in that role for 10 years. Schmidt would assume the role of executive chairman, focusing on deals, partnerships, relationships and government outreach. The change goes into effect on April 4.
Industry observers saw Google's appointment of Page as CEO as an attempt to breathe back entrepreneurial spirit into the search giant as it faces rising competition from social media networks including Mark Zuckerberg's Facebook.
Google's adjusted profit rose to $8.75 per share from $6.79 during the same quarter last year. Analysts had expected adjusted profit of $8.07 per share. The company posted adjusted revenue of $6.4 billion, beating analyst forecasts of $6.05 billion.
30 analysts rate the stock a strong buy.Five analysts rate it a moderate buy while 3 have a hold rating on the stock. 4. Blackrock
Blackrock along with its subsidiaries provides investment management services to institutional clients and to individual investors through various investment vehicles.
Blackrock completed a secondary offering of about 58 million shares priced at $163 per share in November 2010. The offer for sale included over 51 million shares from Bank of America Merill Lynch and 7.5 million offered by PNC Financial Services. The offering improved the company's float to 52%.
Hedge fund titan John Paulson appears to have participated in the secondary offering, taking a fresh exposure to Blackrock with a purchase of 2 million shares. Maverick Capital and Citadel were among the other hedge funds that made significant purchases in the stock.
Blackrock has emerged as a top pick among asset management firms. According to analysts at Wells Fargo, the asset manager is poised to benefit from a surge in flows into mutual funds and from its 45%-50% market share in the ETF space.
Blackrock reported an adjusted profit of $3.42 per share, soundly beating analysts' estimates of $2.90. Assets under management totaled $3.561 trillion, benefiting from both inflows and strong performance across funds.
12 out of 13 analysts rate it a buy. There is no sell rating on the stock. 3. Lyondell Basell
Lyondell Basell is an independent chemical company. It is a producer of polypropylene and polypropylene compounds and a producer of propylene oxide, polyethylene, ethylene and propylene.
Lyondell has been a favorite for Daniel Loeb's Third Point for some time now. The hedge fund added another 4.4 million shares to its portfolio during the fourth quarter.
The stock also attracted David Einhorn's Greenlight Capital and hedge fund Jana Partners, both buying about 2.5 million shares each in the company.
Lyondell, which emerged from bankruptcy last April, swung to profit in the fourth quarter, with net income coming in at $874 million or $1.54 per share compared with a year earlier loss of $850 million. Analysts were unsure what to make of the numbers as the company adopted "fresh start" accounting, which essentially revalued its balance sheet. The company through that move earned a tax benefit that boosted its earnings by 60 cents per share.
Outlook for the company is bullish, with all 12 analysts who cover the stock rating it a buy or outperform, according to Thomson Reuters. 2. General Motors
General Motors tapped the equity markets for the second time in November 2010, in the biggest public offering in U.S. history. Institutional investors flocked to the $20 billion offering, betting that GM had put its bankruptcy days behind it and that the company's cost-cutting measures will pay off as the U.S. recovery strengthens.
Bill Ackman's Pershing Square Management bought 7.1 million shares in the company. Jana Partners snapped up 3.5 million shares. Tepper's Appaloosa and Soros Fund Management also added the stock to their portfolios.
Nearly all big car companies reported double-digit growth in sales in January. GM said its sales to individuals rose 36 percent, while its fleet sales fell 7 percent.
GM beat fourth quarter expectations with a net income of $510 million. Revenue rose nearly 15 percent from a year earlier to $37 billion. But stocks came under selling pressure immediately following the results Thursday, as investors worried about the rising prices of crude oil and its impact on automobile sales.
GM CEO Dan Akerson told analysts in a conference call that the company was ready to tackle higher oil prices. "I will tell you that we were concerned about this (fuel price increases) well before it was on the front page of any paper in the U.S. or around the world," said Akerson."We've been contingency planning going back to before the IPO on what we would do, how we would react."
GM has lined up four new car vehicle lines in the compact, high-mileage segment, which should help them cater to consumers sensitive to high oil prices.
GM is also continuing to invest aggressively in China, where it remained the sales leader in 2010, when the company and its affiliates sold a record 2.35 million vehicles.
"GM will continue to make China one of our priorities," Akerson told reporters in Beijing recntly. "We plan to introduce more than 20 new and upgraded models over the next two years."
Nine out of 12 analysts rate the stock a buy. There are no sell ratings. 1. Citigroup
Banking bellwether Citigroup was the hot favorite during the fourth quarter, netting a total $5.3 billion in hedge fund purchases.
George Soros' Soros Fund Management and David Tepper's Appaloosa Management were among the big funds that bought more shares of the bank. It also remains among the top five holdings of heavyweight John Paulson.
Citi has been touted as an "improving story", with the company staging a turnaround of its Citi Holdings arm.
While the bank's core business performance was less impressive in 2010 due to its capital markets division, consumer banking may be the key to its future, according to Rochdale Securities analyst Dick Bove.
The bank recently streamlined its management structure to enable it to better focus on expanding in global markets.
While expectations for dividend payouts from banks are climbing, Citigroup has said that it will pay a dividend only in 2012.
The stock trades at a PE of 14 and price to book of 0.8. Ten out of 20 analysts rate the stock a buy, 8 have a hold rating while 2 have a sell rating.
-- Written by Shanthi Bharatwaj in New York
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