In May, billionaire Stanley Druckenmiller- the former manager of Duquesne Capital, though he may be better known as one of George Soros’s portfolio managers- filed his 13F for the first quarter of 2013 with the SEC. We track these filings, which disclose many of a hedge fund or other notable investor’s long equity positions as of the end of the previous quarter, using the results to help us develop investment strategies. For example, we have found that the most popular small cap stocks among hedge funds earn an average excess return of 18 percentage points per year (learn more about our small cap strategy). We can also screen filings from top managers according to a number of criteria, including dividend stocks, so that investors can pursue any initial ideas which strike their fancy. Read on for Druckenmiller’s five largest holdings as of the end of March which currently pay dividend yields of at least 3% (or see the full list of stocks he reported owning):
One of the billionaire’s top picks overall was Pfizer Inc. (NYSE:PFE), at 3.4 million shares. Pfizer Inc. (NYSE:PFE)’s dividend yield is 3.3%, following an increase in quarterly dividend payments at the beginning of 2013 to 24 cents per share. The trailing P/E of 14 is somewhat low, though in its most recent quarter the company’s revenue fell 9% compared to the same period in the previous year. Pfizer Inc. (NYSE:PFE) had been billionaire Ken Fisher’s top stock pick for 2013 (its performance has roughly matched that of the market year to date) with his Fisher Asset Management owning nearly 31 million shares at the end of Q1 (find Fisher’s favorite stocks).
Personal products and pharmaceuticals company Johnson & Johnson (NYSE:JNJ) was another of Druckenmiller’s dividend picks with the filing disclosing ownership of about 720,000 shares. As with Eli Lilly, the beta here is 0.4, with Johnson & Johnson paying a dividend yield just over 3%. While the trailing earnings multiple is high, the sell-side is bullish on EPS growth for 2014 resulting in a forward P/E of only 14. We’d be skeptical, however, seeing as earnings have been down recently. Platinum Asset Management owned 2.8 million shares at the beginning of April; that hedge fund is managed by billionaire Kerr Neilson.
Druckenmiller apparently likes defensive megacaps with 3-4% yields; in addition to the stocks we’ve already discussed, he initiated a position of about 350,000 shares in The Procter & Gamble Company (NYSE:PG) in the first quarter of this year. Procter & Gamble trades at 17 times earnings, whether we consider trailing numbers or consensus forecasts for 2014. Revenue and net income were up modestly in its fiscal Q3 (which ended in March) versus a year earlier. Procter & Gamble was one of the largest positions in Warren Buffett’s holding company Berkshire Hathaway’s 13F portfolio (research more stocks Buffett likes).
Rounding out our list is PBF Energy Inc (NYSE:PBF), a $610 million market cap oil and gas refining and marketing company (on average over 1 million shares of the stock are traded per day) which became publicly traded in December 2012. At quarterly dividend payments of 30 cents per share, PBF’s valuation gives it an annual yield of 4.5%. As with many downstream energy stocks in the current market environment, PBF also features relatively low earnings multiples though of course the trailing numbers are partially based on times before the company became publicly traded.
Disclosure: I own no shares of any stocks mentioned in this article.