Looking at Viking Global’s latest 13F disclosure, the fund liquidated its entire position in Apple Inc. (AAPL) last quarter. Instead, it more than doubled its stake in Danaher Corp. (DHR), an industrial conglomerate, and significantly boosted its holdings in Time Warner Cable Inc. (TWC), which became the fund’s single largest position last quarter. Halvorsen’s fund also initiated several new positions in dividend-paying stocks. Here is a closer look at Viking Global’s four new positions that pay dividend yields around the 2.0% mark. These four stocks are either value or growth plays boasting upside potential.
Las Vegas Sands Corp. (NYSE:LVS), a casino and resorts operator, was one of Viking Global’s new dividend-paying picks in the fourth quarter. The hedge fund purchased some 5.9 million LVS shares, valued at $273 million at the quarter’s end. LVS, the owner of The Venetian, The Four Seasons, and The Sands hotels and resorts in the United States and Asia (Macao), has a dividend yield of 2.6% and a payout ratio of 52% of the current-year EPS estimate. The company raised its regular quarterly dividend by 40% back in November 2012, saying that returning capital to its shareholders, including a growing dividend, was the firm’s long-term priority. Las Vegas Sands Corp. (NYSE:LVS) paid a special cash dividend of $2.75 per share in December 2012. The stock is specifically a play on the growth in tourism and gambling revenues in East Asia, driven by rising per capita incomes and wealth of the Asian population (in particular, the Chinese) with a high propensity to spend on gambling. As an indicator of the strong spending, Macau gross gambling revenues rose 14% last year, and the recent forecasts call for another year of double-digit increases (see here). Analysts recognize this growth potential, forecasting the company’s long-term EPS CAGR at 12.1%. Jim Cramer, the host of CNBC’s “Mad Money” show agrees with the bulls, but he points at the stock’s bullish technical momentum. In terms of valuation, Las Vegas Sands Corp. (NYSE:LVS) is trading at 19.9x forward earnings, on par with its rival Wynn Resorts (WYNN).
Comcast Corporation (NASDAQ:CMCSA), the U.S. entertainment, communications, and cable products and services giant, was another new dividend-paying position in Viking Global’s fourth-quarter portfolio. Last quarter, the hedge fund acquired more than 4.2 million CMCSA shares, valued at $157 million at the quarter’s end. CMCSA has a dividend yield of 1.9% and a payout ratio of 33%. Its dividend has increased almost 210% cumulatively since early 2008, including the 20% rise over the past year. The company is another attractively priced growth play. The company’s quarterly results beat analyst estimates for the fourth-quarter EPS, even though CMCSA missed the top-line estimate. For the year as a while, the company still delivered a 12% jump in revenues and a 13.6% growth in operating income. With the last quarterly and full-year earnings, Comcast Corporation (NASDAQ:CMCSA) also announced its plan to acquire the remaining 49% stake in NBC Universal from General Electric (GE) for $16.7 billion in cash, debt, and preferred stock. CMCSA’s NBC Universal revenues grew 12.7% last year alone. The company’s cable business has been a strong performer, which, despite losing video customers, still increased the combined video, high-speed Internet, and voice customer count by 1.5 million (3% year-over-year), driven by gains in the high-speed Internet segment. Analysts see robust growth in CMCSA’s EPS going forward, forecasting a CAGR of 15.4% for the next five years. Comcast Corporation (NASDAQ:CMCSA) is valued at 17.2x forward earnings, below its industry’s forward multiple of 18.6x.
Huntsman Corporation (NYSE:HUN), a maker of inorganic and organic chemicals, was also a new pick by Halvorsen’s Viking Global last quarter. During the quarter, the hedge fund acquired almost 1.4 million HUN shares, valued at $21.5 million at the quarter’s end. HUN has been long viewed as a value play and a possible takeover target. Reportedly, last year, Bank of America Merrill Lynch was looking for a prospective buyer for Huntsman among private equity firms such as Bain Capital and KKR & Co. Huntsman still remains a speculated takeover candidate, boasting an attractive forward P/E of 11.1x (versus 14.7x for its industry) and a price-to-book of 2.6 (versus 3.2 for its industry). Last year, the company reported adjusted EPS which were up 33% from the year earlier on mostly flat revenues. Its sales of polyurethane, used in foam insulation, have been strong; however, the paint pigment segment, producing titanium dioxide, continues to be weak, although the company’s CEO projects better earnings performance in this segment as of the second half of 2013. Still, analysts forecast a relatively modest EPS expansion for HUN for the next five years, averaging 7.3% annually. The company recently boosted its quarterly dividend by 25%. Last quarter, the stock was also popular with Passport Capital’s John Burbank.
Newell Rubbermaid Inc. (NYSE:NWL), the maker of plastic items, including plastic bins and cookware, was also among last quarter’s new dividend-paying picks by Viking Global. The hedge fund acquired little more than 148,000 shares, worth $3.3 million at the quarter’s end. NWL has a dividend yield of 2.4% and a payout ratio of 33%. Its dividend was slashed in 2009 but has recovered since by 200%. At a recent Raymond James Institutional Investors Conference, the company reaffirmed its 2013 guidance, projecting an EPS growth of 6.5% to a midpoint of its guidance at $1.81 per share, based on core sales growth of between 2% and 4% year-over-year and a margin expansion of up to 20 basis points. For the next five years, analysts forecast the company’s EPS CAGR at 9.3%. The stock is priced at 14.0x forward earnings, about on par with its industry’s forward multiple. However, on a price-to-book basis, NWL’s ratio of 3.7 is still lower than its industry’s 4.3, despite the stock’s 38% gain over the past 12 months. Last quarter, NWL was also popular with Citadel Investment’s Ken Griffin.
