5 Ultra High Dividend Stocks Hedge Funds Are Piling On

Investing in dividend stocks can be a profitable strategy to build wealth, and especially, to build a decent portfolio for retirement. Because of the stability of most dividend stocks, an investor can estimate the cash flow that a portfolio will generate, which is helpful once dividend payments replace paychecks as an investor’s sole means of income. On the other hand, the same cash flow stability can be provided by bonds, which are less risky (a bankrupt company will first repay its debt holders before its shareholders) or even risk-free (government bonds). However, investing in dividend stocks provides more liquidity and can also provide investors with a premium due to the stock’s appreciating value. In addition, in a low-interest-rate environment, investing in bonds is less rewarding than investing in dividend stocks. So in the end, the question of whether to invest in dividend stocks or bonds has to take into account the risk-awareness and the investment horizon, though literature generally suggests investing in a mix of the two.

Buying high dividend stocks has its advantages over high growth stocks. Companies that are not paying dividends are reinvesting all of their profits into their business instead of paying off shareholders, which can generate even more shareholder value in the future if things go smoothly. However, companies that are paying dividends are usually well-established and have solid financial positions. Moreover, they are committed to rewarding their shareholders even in troubled times. For example, Johnson & Johnson (NYSE:JNJ) paid dividends (and even increased them) during the financial crisis (2007-2009).

If an investor decides to add some dividend stocks to his/her portfolio, the question is: which ones to choose? There are dividend aristocrats, which are companies that have increased their dividends every year for at least 25 years, and dividend kings, which have raised their dividends for at least 50 years in a row. Another choice is to invest in an ETF that focuses on dividend stocks, like the Vanguard Dividend Appreciation ETF (NYSEARCA:VIG), which will provide exposure to a basket of dividend stocks.

However, there also are some ultra high dividend stocks that the broader public is less familiar with, because the media usually talks about large and well-known companies. These stocks, aside from sporting sky-high dividend yields, also have the potential to appreciate greatly in value due to their growing businesses. However, they can also be more volatile and risky. In any case, investing in these stocks requires a lot of research. Nevertheless, there is a way to benefit from the research that was done by someone else, that being hedge funds and other large institutional investors, which employ a lot of resources when determining which stocks to invest in.

In this way, following hedge funds into their dividend stocks can be a good strategy to beat the market. Here’s where our research can come in handy. We follow some of the best-performing hedge funds and other institutional investors and analyze their quarterly 13F filings to identify the stocks that they are collectively bullish on. We use the data to compile a portfolio that we share with our premium subscribers. Our flagship strategy has gained 44% since February 2016 and our stock picks released in the middle of February gained over 5 percentage points in the three months that followed. Our latest stock picks were released last month, which investors can take advantage of by accessing this link.

In this article, we won’t talk about the stocks that make up our strategy, but will instead focus on dividend stocks that the funds tracked by us are collectively bullish on. More specifically, we are going to take a closer look at five ultra high dividend stocks that registered a substantial increase in the number of bullish investors during the first three months of 2017. The companies in question are: Iron Mountain Incorporated (Delaware) REIT (NYSE:IRM), Windstream Holdings, Inc. (NASDAQ:WIN), Washington Prime Group Inc (NYSE:WPG), Seagate Technology PLC (NASDAQ:STX), and Park Hotels & Resorts Inc (NYSE:PK).

Let’s start with Iron Mountain Incorporated (Delaware) REIT (NYSE:IRM), in which the number of funds in our database long the stock went up by six to 17 during the first quarter. Subsequently, the total value of their holdings grew to $107.02 million from $90.86 million. Iron Mountain Incorporated (Delaware) REIT (NYSE:IRM) is engaged in providing services for storage and information management, having started nearly seven decades ago as an underground facility to store paper records. The company registered as a real estate investment trust only a couple of years ago and that status means that it has to pay out almost all of its profits to investors. For the first quarter, Iron Mountain Incorporated (Delaware) REIT (NYSE:IRM) posted EPS of $0.24, missing estimates by $0.02, while its revenue of $939 million was up by 25% on the year and $10.4 million higher than expected.

In addition, the company paid a dividend of $0.55 per share in March, which translates into a dividend yield of 6.53%. Iron Mountain is well positioned to further reward its investors with high dividends. It serves over 200,000 customers in 45 countries, offering them over 85 million square feet of real estate spread across 1,400 facilities. Among the largest shareholders of Iron Mountain Incorporated (Delaware) REIT (NYSE:IRM) is Thomas Bancroft’s Makaira Partners, which held 1.64 million shares heading into the second quarter.

In Windstream Holdings, Inc. (NASDAQ:WIN), 21 funds from our database had amassed $117.23 million worth of its stock as of the end of March, compared to 13 funds and $61.16 million, respectively, a quarter earlier. The company issued a dividend of $0.15 per share in May, in line with the previous payment.  Windstream Holdings, Inc. (NASDAQ:WIN)’s stock has slid by over 39% year-to-date, which has pushed its dividend yield up to 13.45%. Among the reasons for the decline were two worse-than-expected financial reports. For the first quarter, Windstream posted a net loss of $0.89, missing estimates by $0.21, while its revenue of $1.37 billion was $170 million lower than expected. Nevertheless, some analysts consider the stock’s sell-off to be overdone. In May, Raymond James’ analyst Frank Louthan IV upgraded the stock to ‘Outperform’ from ‘Underperform’ with a price target of $5.25. The analyst believes that Windstream Holdings has the potential to improve its free cash flow once it completes the acquisition of Broadview Networks that was announced in April.

It looks like some investors are also taking a positive view of the company. Among its largest shareholders are two so-called “quant” funds led by billionaires: Jim Simons‘ Renaissance Technologies and Israel Englander’s Millennium Management. During the first quarter, Renaissance Technologies increased its stake by 140% to 10.85 million shares, while Millennium Management added 3.10 million shares to hold 3.13 million shares at the end of March.

Next in line is another REIT, Washington Prime Group Inc (NYSE:WPG), in which 22 funds held shares heading into the second quarter, compared to 14 funds a quarter earlier. The aggregate value of their positions also advanced to $69.83 million from $59.84 million during the first three months of 2017. The company is currently paying a dividend of $0.25 per share, which gives its stock a yield of 12.35%.  Washington Prime Group Inc (NYSE:WPG)’s stock is 22% in the red so far this year and has lost over 59% in the last five years. The reason for the poor performance could be the advance of online retail, with companies like Amazon.com, Inc. (NASDAQ:AMZN) taking the lead. As Washington Prime Group Inc (NYSE:WPG) specializes in operating retail real estate, there are fears that the demand for retail properties will decline, which is being fueled by the possible bankruptcy of Sears Holdings Corp (NASDAQ:SHLD) and the poor performance of other retailers like J C Penney Company Inc (NYSE:JCP).

In general, the trends among malls have been weakening, with low traffic and productivity suggesting that many locations will have to be closed before the situation stabilizes. However, Washington Prime Group Inc (NYSE:WPG) has a hedge against closures, which is the non-recourse mortgages on a vast majority of its properties. A non-recourse mortgage means that if the borrower defaults, the issuer can take the property, but cannot pursue the borrower for other compensation, even if the value of the property does not cover the full value of the defaulted loan. In addition, Washington Prime Group Inc (NYSE:WPG)’s dividend currently amounts to around 60% of its adjusted funds from operations, so it is well covered. This could explain why hedge funds have been piling into the stock. One of these funds is J. Alan Reid, Jr.’s Forward Management, which initiated a stake containing 2.86 million shares during the first quarter.

In Seagate Technology PLC (NASDAQ:STX), the number of funds long the stock advances by six to 38 during the first three months of 2017, while the total value of their holdings appreciated to $1.34 billion from $1.12 billion and represented nearly 10% of its outstanding stock. Among the investors bullish on Seagate Technology PLC (NASDAQ:STX) is billionaire Jeffrey Ubben‘s ValueAct Capital, which held 9.54 million shares at the end of March. Seagate Technology pays a dividend of $0.63 per share, which gives its stock a yield of almost 6%.

Now, with REITs and MLPs, it’s clear why they have high yields, but when it comes to normal companies (like Seagate and the aforementioned Windstream Holdings), a high dividend can be a warning sign that the company is trying to retain investors through dividends, while its business is facing challenges. Even though Seagate Technology PLC (NASDAQ:STX) managed to beat bottom-line estimates in its last several earnings reports, investors are worried that the company’s market position will weaken once Solid State Drives (SSD) overtake the more traditional Hard Disk Drives (HDD) once the price for the former overtakes the latter’s. In this way, Seagate has to push harder to gain more share in the SSD market instead of being happy with its leading position in the HDD market. In turn, this will require more investment, which could make the dividend unsustainable in the long-run. Nevertheless, Seagate Technology PLC (NASDAQ:STX)’s management currently seems to be committed to returning cash to shareholders through buybacks and dividends. In addition, it has been reducing costs and has decent free cash flow, but additional investments will probably require a reduction in the distributed capital.

Finally, we have Park Hotels & Resorts Inc (NYSE:PK), in which 34 funds tracked by us held shares at the end of March, compared to just eight funds a quarter earlier. Additionally, the aggregate value of their holdings surged to $752.20 million from $16.99 million. The significant increase in the number of long investors can be explained by the fact that the company only started trading at the end of December, after having been spun-off from Hilton Worldwide Holdings Inc (NYSE:HLT). Soon after the spin-off, Park Hotels & Resorts Inc (NYSE:PK) declared a dividend of $0.43, which gives its stock a yield of 6.30%. The company’s stock has lost around 8% so far this year, but looking at its dividend yield alone, it seems attractive, as the yield is one of the highest among hospitality REITs. By comparison, Pebblebrook Hotel Trust (NYSE:PEB) has a yield of 4.70%, while Ashford Hospitality Trust, Inc. (NYSE:AHT)’s dividend yield is only slightly higher at 7.20%. Among the investors that reported new positions in Park Hotels & Resorts Inc (NYSE:PK) as of the end of March were David S. Och’s OZ Management and Steve Cohen‘s Point72 Asset Management, which disclosed ownership of 4.96 million shares and 4.62 million shares, respectively, in their latest 13F filings.

By Alexandr Oleinic

Source:https://goo.gl/F3XDya

How To Beat The Market By 20 Percentage Points

Hedge funds are much better investors than you are made to believe by the financial press. Even hedge fund indices hide the truth about hedge funds’ amazing talent in picking winners and losers. Our research has shown that hedge funds’ top small-cap picks outperformed the market by nearly a percentage point per month between 1999 and 2012. We launched an investment newsletter that shares the stock picks of this strategy in real-time. This strategy returned 131.4% between the end of August 2012 and February, 2015. S&P 500 ETF (SPY) gained only 57.2% during the same period. Hedge funds’ top stock picks significantly outperformed the market.

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However our advice to you is to dump your hedge funds.

The fact is that most hedge fund investors don’t make as much money as they did in the nineties and the first half of the past decade, where alpha in excess of 10% was the norm. Aggregately speaking, hedge funds’ alpha has been in decline over the past decade for several reasons. They are as follows:

1) A greater level of competition within the hedge fund industry has caused profit margins to shrink.

2) Hedge funds got bigger and started investing in less profitable areas.

3) There are a lot of unskilled hedge fund managers who are trying to get rich by being “lucky”.

4) Equity hedge funds charge an arm and a leg for beta exposure.

Our research has shown that hedge funds have a small edge when it comes to large-cap stock picks and a large edge when it comes to small-cap stock picks. We created a 50-stock portfolio of the most popular large-cap stocks among fund managers. Between 1999 and 2012, this 50-stock portfolio underperformed the market by less than 1 percentage point per year but its annual alpha was 0.7 percentage points (read the details here).

It should be clear to you, then, that hedge funds’ large-cap stock picks are marginally better than the S&P 500 index because of their lower risk profile. However, if you are a hedge fund client you won’t see much outperformance in this space because you have to surrender 2% of your assets and 20% of each year’s return to your hedge fund manager. If your hedge fund invested entirely in large-cap stocks in 2014, its gross return would have been 13.5% but YOUR net return would have been only 8.8%, because you have to pay 2 percent flat fee and 2.7 percentage points of performance fee as if they accomplished something significant!!

Hedge funds can’t generate enough alpha in the large-cap space to justify their high fees. They invest in the large caps because they have too much money to manage, and they don’t want to give up juicy management fees that enable them buy condos on New York City’s Park Avenue. How do hedge fund managers get away with this?

The answer is simple.

They generate significantly higher alpha in their small-cap stock investments. Generally speaking, there are fewer analysts covering the little guys, and these stocks are less efficiently priced. Hedge funds spend enormous resources to analyze and uncover data about these stocks because this is one of the places where they can generate significant outperformance. Our analysis also shows that this is also a fertile ground for piggyback investors.

Between June 1999 and August 2012, the 15 most popular small-cap stocks among hedge funds managed to return 127 basis points per month.

It is not a typo. Reread it.

This outperformance wasn’t due to high risk either. Our small-cap strategy’s monthly alpha was 81 basis points during this 13-year period (read the details here). This isn’t even the end of the story.

We launched a newsletter at the end of August 2012 that lists the stock picks of this small-cap strategy. During the 2.5 years between September 2012 and February 2015 hedge funds’ most popular small-cap stock picks returned 131.4% vs. 57.2% return for the S&P 500 ETF. This corresponds to an average monthly return of 2.95% for these stocks versus 1.55% for SPY.

Our proposition is very simple: dump your hedge funds and imitate their small-cap stock picks. You don’t have to surrender 2% of your assets and 20% of your returns. You don’t have to invest in hedge funds’ large-cap picks which usually underperform the market. Finally, you don’t have to worry about fraud/mismanagement and you will have instant access to your funds. Click viewer appreciation button on page top to donate for blog upkeep

by Meena Krishnamsetty

Source: http://www.insidermonkey.com/hedge-fund/education-center/how-to-beat-the-market-by-20-percentage-points/1

Five Stocks Under $5 to Buy Now

Low-priced stocks can present immense opportunities if purchased at the right time. Several factors affect stock prices, including broader market disruption, negative news, bad quarters, or temporary product failures. Even slight delays in product launches can knock down stock prices, as can technical trading run amok, presenting a great opportunity for buyers who know when to pounce on declines.

Low-priced stocks do not necessarily equate to low-market cap companies and greater risk, as the stock price is a combination of number of shares in circulation and market cap. Nonetheless, low-priced stocks may also have an undeserved reputation among inexperienced investors as being too volatile to invest in.

In this article we will share 5 of the best under-$5 stocks which you can buy now. These stocks have huge potential for growth in the future, which is why they’re extremely popular among the collection of top hedge funds in our database, which includes many of the 140 Biggest and Most Famous Activist Hedge Funds in the world. Read on to find out what stocks made the list.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 39.7% gains over the past 12 months and outperformed the 24.1% gain enjoyed by the S&P 500 ETFs. Our enhanced small-cap hedge fund strategy returned more than 45% over the last 12 months and outperformed SPY by more than 30 percentage points over the last 4.5 years (see details here).

1. Avon Products, Inc. (NYSE:AVP)

Avon is a New York-based company which sells beauty and personal care products. Last month, Avon shares lost a lot of value amid a disappointing fourth quarter report. Avon’s revenue declined by 2.4% during the period to $1.57 billion, while analysts’ were expecting revenue of $1.61 billion. However, investment firm Jefferies reiterated its ‘Buy’ rating on the company, along with a price target of $8, suggesting nearly 100% upside potential. The firm thinks that Avon’s valuation is compelling and that its long-term goals are achievable. A total of 31 hedge funds tracked by Insider Monkey were bullish on Avon Products, Inc. (NYSE:AVP) heading into 2017, owning 12.7% of the company’s shares.

2. Office Depot Inc (NASDAQ:ODP)

Office Depot Inc (NASDAQ:ODP) recently posted upbeat results for its fourth quarter and fiscal year 2016, though the market has been rather tepid towards the stock this year. The office supplies retail company posted sales of $2.73 billion for the fourth quarter, versus the FactSet consensus of $2.70 billion, while EPS of $0.11 was also above the Street’s forecast of $0.10. Full-year sales of $11 billion were down by 6% from 2015. Office Depot’s new CEO Gerry Smith said in a statement that he has developed a three-year ‘strategic plan’ for profitability improvement and shareholder returns. A total of 31 hedge funds tracked by Insider Monkey were long Office Depot Inc (NASDAQ:ODP) as of the end of the fourth quarter, with their positions valued at over $277 million.

3. SUPERVALU INC. (NYSE:SVU)

SUPERVALU INC. (NYSE:SVU) is trading at new lows and presents an attractive bargain. The Minnesota-based retail company’s earnings per share in its fiscal third quarter came in at $0.05, on $3 billion in revenue, worse than the Street’s projections of $0.13 in EPS and $3.79 billion in revenue. SUPERVALU’s CEO Mark Gross said in a statement that the sale of its Save-A-Lot supermarket business in the fourth quarter will help the company grow its business and operations. In January, RBC Capital analyst William Kirk reiterated his ‘Buy’ rating on SUPERVALU INC. (NYSE:SVU) and said that the company’s macro trends are beginning to improve. As of the end of the fourth quarter, 29 hedge funds in our database were long SUPERVALU INC. (NYSE:SVU), including Cliff Asness’ AQR Capital, which owned 2.64 million shares on December 31.

10 Most Popular Stocks Among Hedge Funds

For a very long-time Apple Inc. (NASDAQ:AAPL) has been dominating the hedge fund popularity rankings. Things changed a bit recently. Apple Inc. is still among the top 10, but it isn’t one of the most popular 5 stocks. Fourth quarter was marked by two major events that affected the stock market. In November, Donald Trump won the presidential election, leading to a rally as investors anticipated a more favorable business environment due to lower regulations. A month later, the Federal Reserve hiked the key interest rate by 0.25 percentage points to between 0.50% and 0.75%, which was taken as a sign of optimism about the U.S. economy. In addition, the Fed promised three more increases in 2017, as the central bank is confident in the strength of the labor market and believes that the inflation is closer to reaching the targets


Let’s start from the bottom. On the 10th spot we have Charter Communications, Inc. (NASDAQ:CHTR), in which 103 funds tracked by us amassed shares worth $17.29 billion heading into 2017. During the fourth quarter, the stock registered a decline in popularity, as the number of funds long the stock declined by eight, while the aggregate value of holdings fell by $1.17 billion. Charter’s stock has gained over 13% since the beginning of the year, mainly due to a boost in January amid news that Verizon Communications Inc (NYSE:VZ) might be interested in acquiring Charter Communications, Inc. (NASDAQ:CHTR). The company also reported better-than-expected financial results with EPS of $1.67 per share on revenue of $10.28 billion, versus estimates of $1.00 and $10.23 billion, respectively. However, subscribers growth figures lagged as Charter is integrating Time Warner Cable’s business it acquired last year. Among the largest shareholders of Charter Communications, Inc. (NASDAQ:CHTR) is Warren Buffett’s Berkshire Hathaway, which owns 9.44 million shares as of the end of 2016.


As stated earlier, financial stocks saw funds piling into them between October and December. JPMorgan Chase & Co. (NYSE:JPM) saw 110 funds long its stock at the end of December, versus 98 funds a quarter earlier. Consequently, the aggregate value of these funds’ positions jumped to $10.69 billion from $7.61 billion. Among the investors that added the stock to their equity portfolio is Dan Loeb‘s Third Point, which reported a new stake containing 5.25 million shares in its latest 13F filing. JPMorgan Chase & Co. (NYSE:JPM)’s shares surged by nearly 37% since the end of the third quarter of 2016, with the majority of the gains coming following the November election. With the Fed expressing confidence in the U.S. economy and planning to further increase interest rates this year and Trump promising to cut corporate tax rate, JPMorgan and other banks are expected to provide higher profits. According to Bloomberg, JPMorgan Chase & Co. (NYSE:JPM) could save around $3.0 billion and boost its net income by 14% per year if the tax rate is cut to 15% from 35% and deductions are disallowed.


On the other hand, the number of funds from our database bullish on Visa Inc (NYSE:V) declined by four to 110, while the total value of their holdings declined slightly to $10.67 billion. Seeing as the stock has advanced by over 10% year-to-date and the company posting better-than-expected results earlier this month with fiscal first-quarter EPS of $0.86 and revenue of $4.46 billion topping the consensus estimates by $0.08 and $170 million respectively, it may be the case that some investors rushed to the exits too soon. Among the investors bullish on Visa Inc (NYSE:V) are Ken Fisher’s Fisher Asset Management, Berkshire Hathaway, and Ken Griffin’s Citadel Investment Group.


After being the star company of many hedge funds, Apple Inc. (NASDAQ:AAPL) saw a drop in popularity in the last three months of 2016. At the end of December, 113 funds amassed shares of the company, versus 145 funds a quarter earlier. However, the value of these funds positions advanced to $16.54 billion from $16.22 billion, but a significant contribution to this figure is Berkshire Hathaway’s position, which was boosted by around 280% to 57.36 million shares worth $6.64 billion (40% of the aggregate amount). Apple Inc. (NASDAQ:AAPL)’s stock is 17% in the green year-to-date as investors were upbeat about the company’s financial results and iPhone sales in the holiday company. Moreover, with the general optimism surrounding the U.S. economy, Apple Inc. (NASDAQ:AAPL) is likely to follow the cycle.


Citigroup Inc (NYSE:C) saw the number of institutional investors long its stock advance by 17 during the fourth quarter, while the aggregate value of their stakes jumped by $1.43 billion to $10.14 billion. Aside from the aforementioned interest rates hikes, the recent announcement that Trump wants to repeal the Dodd-Frank act is also expected to benefit big banks. However, a tax rate cut would result in less savings for Citigroup Inc (NYSE:C) compared to other big banks, as it generates more earnings outside the U.S., Bloomberg added. Edgar Wachenheim‘s Greenhaven Associates held some 11.35 million shares of Citigroup Inc (NYSE:C) at the end of December.


While the majority of the top five most popular stocks among hedge funds are represented by tech companies, they generally saw a drop in the number of investors holding shares. Amazon.com, Inc. (NASDAQ:AMZN) saw 123 funds tracked by us holding around $14.44 billion worth of stock heading into 2017, which is significantly lower compared to 150 funds with stakes worth $20.79 billion at the end of September. Among these funds, Fisher Asset Management was the largest shareholder with a 2.0 million-share stake. The strong returns registered by big tech companies’ stocks in the recent past it’s widely discussed which company will reach the $1.0 trillion valuation sooner, with Amazon.com, Inc. (NASDAQ:AMZN) being one of the favorites. as the company has a cloud business growing at a fast pace and has recently entered into the Internet of Things segment and is planning to get into the logistics business.