A Look at Performance of Hedge Funds’ Five High-Dividend Bets

Williams Companies Inc. (NYSE:WMB)

– Elite Investors with Long Positions (as of December 31): 59

– Aggregate Value of Elite Investors’ Holdings (as of December 31): $4.72 Billion

– Dividend yield: 16.3%

The hedge fund sentiment towards Williams Companies Inc. (NYSE:WMB) declined meaningfully during the December quarter, with the number of money managers holding long positions in the company shrinking to 59 from 73 quarter-on-quarter. Similarly, the overall value of those positions dropped to $4.72 billion from $6.05 billion quarter-over-quarter. The energy infrastructure company boasts a whopping 16.3% yield, after the company increased its quarterly dividend of $0.57 per share in the fourth quarter of 2014 to $0.64 per share in the fourth quarter of 2015. Earlier this week, Williams Companies sued Energy Transfer Equity LP (NYSE:ETE) and its Chief Executive Officer Kelcy Warren, claiming they violated the merger agreement between the two parties executed in September 2015 by making a private offering of Series A Convertible Preferred Units. Williams Companies said the main reason behind the litigation was to ensure that “all ETE and Williams investors are treated fairly and equitably”, claiming that the private offering of convertible units served as a means of insulating Energy Transfer executives from a potential cut in distributions. Nonetheless, Williams Companies remains committed to the multi-billion-dollar merger deal, but most analysts believe that the turmoil around this deal has weighted the valuations of both companies. Shares of Williams Companies lost 35% in the first quarter of 2016, so it would be wise for investors to stay away from the two companies until their hurdles are resolved. Keith Meister’s Corvex Capital reported owning 41.68 million shares of Williams Companies Inc. (NYSE:WMB) as of the end of 2015.

Macquarie Infrastructure Corp (NYSE:MIC)

– Elite Investors with Long Positions (as of December 31): 58

– Aggregate Value of Elite Investors’ Holdings (as of December 31): $1.33 Billion

– Dividend yield: 6.94%

Macquarie Infrastructure Corp (NYSE:MIC) has also lost its charm within the hedge fund industry, as the number of hedgies from our systems bullish on the company decreased to 58 from 69 during the October-to-December period. However, the value of those funds’ stakes declined to only $1.33 billion from $1.48 billion quarter-on-quarter. The 58 money managers hoarded nearly 23% of the company’s outstanding common stock at the end of 2015. Macquarie Infrastructure owns, operates and invests in a diversified group of businesses, which include: a bulk of liquid terminals business; a provider of fuel, terminal and hangaring services; controlling interests in gas-fired, wind and solar power facilities; and a gas energy company. The company pays out an attractive annualized dividend of $4.60 per share, which equates to a current dividend yield of 6.94%. Nonetheless, some investors may be concerned over the company’s relatively high debt load. Specifically, Macquarie Infrastructure had $2.83 billion of debt outstanding at the end of 2015, whereas its cash balanced totaled only $22.4 million. Even so, the company’s available capacity under its revolving credit facilities reached $1.15 billion. According to fresh SEC filings, the company also plans to raise up to $396.95 million through a secondary offering of common stock, with the net proceeds being expected to cover general corporate expenses, as well as fund possible acquisitions and repay or refinance borrowings. The diversified company’s market valued lost 5% in the first quarter of 2016. Robert Boucai’s Newbrook Capital Advisors upped its stake in Macquarie Infrastructure Corp (NYSE:MIC) by 58% during the fourth quarter, ending 2015 with 1.05 million shares.