Receiving a $61mm investment from the firm, Broadcom Corporation (NASDAQ:BRCM) landed the top spot as Highbridge’s best new stock play. The semiconductor and chipmaker has created a history of beating earnings expectations, with the most recent release at the end of January delivering higher EPS and revenues that grew year over year. Rating agencies Cowen and Piper Jaffray have initiated coverage of Broadcom Corporation (NASDAQ:BRCM) since the announcement, giving the company Overweight and Outperform ratings, respectively. JP Morgan is slightly more reserved, downgrading BRCM to neutral in light of what the firm believes will be a slower adoption of smartphones going into next year. Billionaire Ken Griffin of Citadel Investment Group has built a position of nearly $5mm in Broadcom Corporation (NASDAQ:BRCM) (see his fund’s major positions here).
Transocean LTD (NYSE:RIG) comes in at the second spot on our list, with a $52mm commitment from the hedge fund. Although RIG saw a slight decline in popularity amongst the hedge funds that we cover, Wall Street analysts still have high hopes for the oil rig operator, giving the stock a one year mean price target north of $61, representing a potential 15% jump in price from current levels. Famed investor Carl Icahn has been lobbying Transocean LTD (NYSE:RIG) to pay a $4/share annual dividend and add three new members to its board, with RIG’s counter-response agreeing to a $2.24/share dividend, much to Icahn’s chagrin. An agreed upon amount has yet to be announced. Icahn currently holds about 5.8mm shares in his Icahn Capital fund (view his portfolio’s make-up here).
Eaton Corporation, PLC Ordinary Shares (NYSE:ETN) landed a spot in Dubin’s portfolio with a purchase of 950,000 shares. The diversified power management company has seen strong support from analysts this year, with positive comments from Credit Suisse and ISI Group. Investors who bought in a year ago would be up almost 27% now, all while collecting the high dividend yield of 2.7%. The company added to that dividend last month, pushing it from $0.38 to $0.42. Eaton Corporation, PLC Ordinary Shares (NYSE:ETN) announced the completion of its Cooper Industries acquisition late last year, with the stock gaining 19% since then. Billionaire Mario Gabelli of GAMCO Investors pushed up his ownership to 750,000 shares in Q4 2012 (check out his fund’s top stocks here).
Read on to see the fund’s other new plays.
Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP) was the fund’s fourth largest new position. The China-based company serves the demand for travel in China by providing resources such as guided tours, hotel accommodations, and airline ticketing. CTRP is a favorite amongst analysts from firms like Goldman Sachs, Raymond James, and most recently, Brean Capital. These positive ratings could largely be in part due to earnings beat after earnings beat from Ctrip.com, including the most recent surprise of $0.10 at the end of January. The company has high hopes for Q1 as guided during its announcement, expecting 15%-20% revenue growth versus the same quarter last year. Billionaire Andreas Halvorsen of Viking Global owns about $38mm worth of CTRP (take a look at his top five stocks here).
Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) made its way into Highbridge’s top five new picks by taking up $50mm of the fund’s AUM. With a market cap of $111bn, PBR was far and away the largest company on our list to be added; it also gave the worst performance, losing 37% in the past twelve months. Wall Street has modeled much higher valuations for the stock than what it is currently trading at; on March 7th, Credit Suisse upgraded PBR to outperform and planted a $25 price target on its report, which could mean a near-50% gain from today’s levels. A recent increase in diesel prices is the fire fueling that growth. Ken Fisher of Fisher Asset Management reduced his position from Q3 2012 to Q4 but still carries a staggering 12.7mm shares (research his portfolio here).
Disclosure: I do not own shares of any stocks mentioned in this article.
