Paul Tudor Jones (Trades, Portfolio)´ Tudor Investment Corp disclosed an equity portfolio valued at some $3.13 billion at the end of the first quarter of 2015. The equity portfolio is mainly invested in Technology (22%), Health Care (20%) and Finance (16%) stocks.
In this article we will look into the top three holdings held at the end of Q1. Among the 10 largest holdings from Tudor Investment’s equity portfolio (which comprises 20.95% of the total portfolio value), the three top positions are: Automatic Data Processing, Inc. (ADP, Financial), NCR Corporation (NCR, Financial) and Pfizer Inc. (PFE, Financial).
In Automatic Data Processing, the fund holds 502,292 shares. The value of the stake amounts to $43.0 million. In that period, the stock gained only 2.72%.
Although the company is a leader, innovations on new payroll customers are somewhat limited, having increased its customer base at only 3% over the past 10 years. As volume does not achieve a great growth, pricing policy becomes relevant, and we believe there exists some positive potential for payroll services. Further, in the payroll business there will be upside potential when interest rates become higher. In addition, the firm has raised its dividend every year for 40 years, showing a clear commitment to return value to shareholders. It offers a dividend yield of 2.4%, which is higher than 58% of the 451 Companies in the Global Business Services industry.
Looking at the future, it will not surprise me that the firm could reach a high revenue growth, while competition is not a real threat. When looking at profitability, operating margin has remain flat in the last four years. It has been relatively constant over a long period.
| Year Ended | Jun-05 | Jun-06 | Jun-07 | Jun-08 | Jun-09 | Jun-10 | Jun-11 | Jun-12 | Jun-13 | Jun-14 |
| Operating Maring (%) | 19.69 | 18.99 | 19.31 | 18.75 | 20.28 | 19.83 | 18.41 | 18.32 | 18.00 | 18.21 |
We expect this trend to continue, while strengthening its cross-selling businesses.
The largest shareholder is Andy Brown's Cedar Rock Capital with 4.47 million shares valued at $383.4 million. The second-largest shareholder of the company is Jean-Marie Eveillard, with 2.78 million shares, valued at $237.9 billion, held as of the end of the Q1 2015.
NCR Corporation represents the second most valuable investment in the fund’s portfolio. After a 2433% increase in the company’s stake during the first quarter, the fund amounted to about 1.43 million shares valued at $42.28 million. The stock returned 1.27% in the first quarter and a total return of 13.21% in a year-to-date basis, compared to 10.52% for Pfizer Inc.
The past week the company´s shares surged by 11% on a single day, because of the potential behind a join offer between The Blackstone Group L.P. (BX, Financial) and The Carlyle Group L.P. of over $10 billion.
At the end of the first-quarter, Ken Fisher (Trades, Portfolio)'s Fisher Asset Management and Joel Greenblatt (Trades, Portfolio)'s Gotham Asset Management held a large number of the company's shares, its stake containing 1.77 and 2.39 million shares, respectively. Both gurus have reduced their positions in the quarter by 26% and 17%, respectively.
In Pfizer, the fund held about 1.14 million shares valued at $39.6 million at the end of the first quarter of 2015. With a market cap of $212.44 billion, the stock is up by 11.68% during the first quarter and 9.13% over the past 12 months. The company generates good cash flows from its broad portfolio. Among the reasons why Pfizer has advantages in developing new drugs, size is part of the answer. The pharma-company has significant economies of scale. The firm is launching products related to cancer, heart disease and immunology which we think will impact performance in a good way.
Guru Ken Fisher (Trades, Portfolio) held a stake of 31.2 million shares valued at $1.08 billion.
Disclosure: As of this writing, Omar Venerio did not hold a position in any of the aforementioned stocks
