This Lake Oswego, OR based hedge fund seems to have a good appetite for technology stocks, with Oracle Corporation (NASDAQ:ORCL) and Microsoft Corporation (NASDAQ:MSFT) being its two major holdings. The management team at Jensen Investment has also made a massive addition to their stake in Abbott Laboratories (NYSE:ABT). Let us take a closer look into the fund’s top 5 positions. You can also compare this portfolio with that of other hedge funds and also make sure you check out our premium offers.
Why pay attention?
It’s important to track hedge fund sentiment, because on the whole, their best picks have been shown to outperform the market by 18 percentage points a year. Best of all, retail investors can capitalize on this phenomenon, but they have to know where to look first. Learn more here.
Let’s get started
At the top of the list is Oracle Corporation (NASDAQ:ORCL). The hedge fund has increased its stake in the software giant by 2.6% and now hold more that 8.7 million shares. Oracle Corporation (NASDAQ:ORCL) trades today at a trailing Price over Earnings (P/E) ratio of 15.67, which is lower than the industry average of 20.10, as reported by Yahoo Finance. The company’s forward P/E ratio is 11.52 an indicator that the market expects Oracle to grow and generate higher earnings. The software giant also boasts a $11.05 billion Levered Free Cash Flow and pays a dividend of $0.3. On March 21st the company reported financial results that failed to meet the market expectations.
The second place is held by another software development company Microsoft Corporation (NASDAQ:MSFT). Bill Gates’ baby is getting a lot of attention from both the stock market and the media. The new operating system released by the Redmond, WA based company has failed to live up to the hype, with many PC owners choosing to stick with the old Windows 7.
The stock, however, has done remarkably well so far in 2013, with its price advancing 22% since the start of the year. Microsoft Corporation (NASDAQ:MSFT) is currently trading at a trailing P/E ratio of 17.25. The forward P/E ratio of 10.89 signals the Wall Street expects the software giant to increase its earnings in the next year. Microsoft stock has a beta of 1.18 and pays a dividend of $0.86.
Jensen Investment has also bet on Abbott Laboratories (NYSE:ABT) – a pharmaceutical company based in Abbott Park, IL. The company’s stock price has been steadily growing since the start of 2013, justifying the faith of Zagunis and McIver, the hedge fund’s main portfolio managers. Jensen’s investment team have made a massive addition of 1.7 million shares to their position in Abbott Laboratories (NYSE:ABT), an increase of 48% that took their tally close to 5.5 million shares. The stock is trading at a trailing P/E ratio of 11.17 and a forward P/E of 16.28, signaling that the market expects the odds to change and the stock price to fall. The company, however, has a beta of 0.52, which is a sign that Jensen Investment has added to this stock, bringing more stability to their portfolio.
Zagunis and McIver seem to value advertising companies, with Jensen Investment adding 117,000 shares to their stake in Omnicom Group Inc. (NYSE:OMC). With more than 4 million shares, this stock occupies the 4th position among top holdings of the hedge fund. The Omnicom Group Inc. (NYSE:OMC) stock is traded at a trailing P/E of 16.58 and 20% higher compared to the start of the year. The forward P/E ratio of 13.88 suggests the market expects the company revenues to continue growing. Analysts estimate earnings of $3.92 in 2013 and $4.37 in 2014. Omnicom has a Levered Free Cash Flow in excess of $800 million and pays a dividend of $1.30 per share.
Ending the top five holdings of Jensen Investment is PepsiCo, Inc.(NYSE:PEP). The soft drinks producer’s stock has advanced 20% so far this year. The company pays a dividend of $2.15 and has a beta of 0.35. Coupled with the appreciation of the stock price, we can conclude that it was a great move by Jensen’s management team. Analysts estimate PepsiCo, Inc.(NYSE:PEP) to continue growing, by estimating earnings of $4.40 per share in 2013 and $4.77 in 2014. The stock’s trailing P/E ratio is 21.25, while the forward P/E is 17.39.
Final thoughts
