HypeZero10 Returns 17.1% Last Quarter

For those investors new to HypeZero, we run an automated portfolio of 10 of the best investment ideas from the best hedge funds called HypeZero10.

We take the quarterly holdings of the best hedge funds, and then run our sophisticated algorithm on those holdings to pick the 10 ideas.

This algorithm has returned over 199+% since 2004 exclusive of dividends. A $10,000 investment would be worth almost $30,000 in over 8 years.

For the November 15th to February 15th quarter, HypeZero10 returned 17.1% as compared to 12.9% for the S&P.

Here are the results:

Company Price (Nov 15) Price (Feb 15) Hedge Fund 
Apple Inc. (AAPL) $525.62 $460.16 David Einhorn
Sears Holdings Corporation (SHLD) $58.48+spinoffs $47.33 Edward Lampert
AIG (AIG) $31.24  $38.35 Bruce Berkowitz 
Yahoo! Inc. (YHOO) $17.89  $21.02 Dan Loeb
Procter & Gamble Co. (PG) $66.32  $76.54 Warren Buffett 
AutoNation Inc. (AN) $40.28  $46.03 Edward Lampert 
BankUnited, Inc. (BKU) $22.16  $27.57 Wilbur Ross
News Corp. (NWSA) $23.12  $28.90 Donald Yacktman 
Assured Guaranty Ltd. (AGO)  $12.88  $19.61 Wilbur Ross
Canadian Pacific Railway Limited (CP) $90.38 $118.87 William Ackman
Return  S&P Return   12.9%

Check out new holdings for the February 15th quarter at HypeZero10

Disclosure: I am long AIG

Bought Vodafone!

Last week, I wrote that Vodafone (VOD) was one of David Einhorn’s top picks. I did some due diligence on the stock, and it seems like a great investment. 

Vodafone provides mobile telecommunications services and has significant market share in:

  • Mature European countries such as England (100% ownership, 26% market share), Spain (100% ownership, 29% market share), Germany (100% ownership, 34% market share), Italy (100% ownership, 36% market share).
  • Less Mature Asian and African countries such as India (64.4% ownership, 29% market share), South African (Vodacom Group, 65% ownership, 58% market share)
  • United States through 45% ownership of Verizon Wireless
  • Many other countries through partnerships and equity investments.

Vodafone has a market capitalization of $135 billion. Its most valuable piece is the 45% stake in Verizon Wireless. The other 55% stake is owned by Verizon.

Verizon has a market capitalization of $125 billion and long term debt of $50 billion. Verizon has two business segments:

  • Verizon Wireless. Verizon Wireless has total revenue of $80 billion. Since Verizon owns 55% of Verizon Wireless, $44 billion of that $80 billion belongs to Verizon. That $44 billion makes up about 1/2 of Verizon’s total revenue. Verizon Wireless also makes up all of Verizon’s operating income.
  • Verizon Wireline (FIOS, etc..). Wireline makes up the other 1/2 ($40 billion) of Verizon’s total revenue. It has pretty much break even operating income. 

Verizon Wireless should make up a majority of Verizon’s market capitalization:

  • Contributes to half of revenue.
  • Makes up less than less than $10 billion of Verizon’s total $50 billion long term debt.
  • Makes up all of its operating income.

Conservatively, it is probably worth around $100 billion.So, Vodafone’s ‘s 45% stake is worth around $80 billion. Einhorn argues it is worth even more.

“Look at it from Verizon’s perspective: Historically, Verizon had a very profitable landline business, and Verizon Wireless owed it billions of dollars. Verizon received Verizon Wireless’s free cash flow as it repaid the debt. For years, Verizon used its control to try to starve VOD by refusing to allow Verizon Wireless to pay dividends. Today, Verizon’s landline business generates no cash and the debt from Verizon Wireless has been repaid. Verizon’s 55% control stake in Verizon Wireless is probably worth more than all of Verizon’s market capitalization, and Verizon has become wholly dependent on dividends from Verizon Wireless to fund its parent company obligations and shareholder dividends”

The rest of Vodafone (excluding Verizon Wireless) in fiscal 2012 had FCF of $6 billion pounds or almost $10 billion. At a valuation of 10 times FCF, the rest of Vodafone is worth $100 billion. According to Einhorn, it should be valued at 12 times earnings, in line with other European Telecoms. 

So, the total value of Vodafone is $180 billion or 33% above its current market capitalization of $135 billion. 

Vodafone seems to be a great investment. There is significant upside and investors are paid to wait with the juicy dividend. 

DIsclosure: I own Vodafone

Insight From Einhorn’s Latest Picks

Greenlight Capital, the hedge fund run by famed investor David Einhorn, just came out with their quarterly letter to share holders. He had interesting comments on some positions:

Apple (AAPL)

Apple is Greenlight’s largest position. Greenlight bought back the Apple shares it had sold in the third quarter. In my last article, I advised readers to stay on the sideline on Apple shares. Obviously, Apple took a big hit today after reporting quarterly results yesterday. Even at $450, I would continue to be cautious and stay on the sideline. If it hits near $400, I will most likely initiate a position, but as I mentioned before this stock does not have huge upside. So, it makes sense to be cautious. 

General Motors (GM)

General Motors is one of Greenlight’s top holdings. He is still bullish on GM even after the recent run up. I agree and am still long GM. It has multiple catalysts:

  • Buy back even more of its shares from the government. They already bought back 11% which should increase eps.
  • Lower pension risks further. It announced last year that Prudential would administer and pay $26 billion of its pension obligations at a cost of $3.5 to $4.5 billion to the company. It can use the excess capital to move more of its pension obligations to Prudential.
  • United States vehicle sales return to a more normalized level as the economy picks up.
  • Europe economy picks up.

Marvell Technology (MRVL)

Marvell used to be one of Greenlight’s top holdings. However, the stock has been one of his worst performers. Earnings and revenue have been down. Recently, a jury awarded Carnegie Mellon University (my alma mater) $1 billion for patent infringement. Einhorn thinks that award will be reduced and the market is also discounting a new product cycle. 

I am avoiding Marvell because I am not confident that the patent infringement award will be reduced and do not understand its products well enough to make an investment.

Vodafone (VOD)

Vodafone is by far the most interesting of Einhorn’s stock picks. According to Einhorn:

  • It pays a 7% dividend.
  • It owns 45% of Verizon Wireless.
  • It trades at 12 times cash earnings excluding the Verizon Wireless ownership.

This definitely seems like a great investment. I will look more into Vodafone this weekend and share my findings.

Here is the letter.

Disclosure: I am long GM.

Apple Broken Down

Apple White iPhone

Let me preface this article by saying, I am a fan of Apple (AAPL) products. I own an iPhone, a MacBook Pro, and an iPad Mini. So, I am a bit biased. However, I will be objective as possible when talking about Apple as an investment. 

Apple has been the subject of heated debates from bears and bulls. Let’s first look at the bullish arguments and then the bearish argument. 

Bullish Argument

  • Apple’s valuation is cheap. At around $500/share, it has a market capitalization of around $475 billion. It has a huge cash cushion of around $120 billion. It trades at around 10 times 2013 earnings estimate. This is cheap for a company that has been growing earnings 70% a year over the last 5 years (Source: Yahoo Finance)
  •  The biggest contributor to income, the iPhone, is still the best smartphone in the market.
  • Apple products command premium price and margins.
  • Apple just had a major upgrade cycle, iPhone 5 and iPad Mini just came out.
  • The smartphone revolution is still in its infancy. According to the Business Insider in September, “There are an estimated 6 billion mobile handsets in the world, and only about 1/5th of them are smartphones.”
  • Apple is still not supported by the biggest telecommunications network in China, China Mobile.
  • Apple is working on the next big thing, Apple TV. This could be next catalyst for income and stock price.
  • Once users are in the Apple ecosystem, they tend to buy more products and apps. According to Fortune magazine, Apple is projected to generate $22 billion in App store revenue by 2016.

Bearish Argument

  • Yes, Apple is cheap based on past earnings growth. However, future earnings growth is questionable. It is hard to grow a company earning $40-$50 billion a year much less maintain it. A lot of the cash is overseas and Apple would have to pay taxes to bring it to United States.
  • It is debatable whether iPhone is still the best smartphone. Samsung is catching up or has caught up. The different between iPhone is much smaller than what it used to be a couple of years back.
  • Although, Apple’s premium price and margins have lasted in the pc industry, the smartphone industry is different. It’s a different OS (Windows vs Android) and different manufacturers. Unless, Apple makes much better smartphones, the margins will not last.
  • Apple just had major upgrade cycles, but the changes were not revolutionary. Apple’s products are not matching their hype anymore. The first quarter should be huge, but what about the rest of the year.
  • There are a lot of people without smartphones. However, most of the are not the high income Apple customers. A lot of these customers are in India and China where customers are a lot more cost conscious and will not pay a premium price for Apple products.
  • China Mobile and Apple have been working on a deal for years. Even if the deal goes through, China Mobile has a lot more leverage than other telecommunications networks and the deal will not be as favorable to Apple as with other partners.
  • First, Apple TV has to come out. Once it does, it has to be a success. Even if it is a success and say the product is worth $100 billion. That will only equate to about 20% of Apple’s current worth.
  • A projection of $22 billion generated by the App Store in 2016 is nothing especially when you consider that Apple makes 30% of that revenue. If you factor in taxes, the net income from the App Store comes out to less than $5 billion. This is nothing for company worth $500 billion.

My Take

I believe that people who are predicting Apple to fall below $300/share are foolish. I also believe that people who are predicting Apple to go above $1000/share are foolish.

I see Apple now as a value stock that will trade around the $500 range. To me it does not make sense to buy Apple because its market capitalization is so big. It would take tremendous growth and innovation to move a company worth $500 billion. I have a hard time seeing how Apple can move much higher unless:

  • They maintain their margins and gain market share in the smartphone market.
  • Apple TV is somehow a $100 billion+ product.

Having said that I don’t think there is a huge downside to the stock. I do not see it dropping below $400/share. The $120 billion cash cushion should increase to over $150 billion by the end of fiscal 2013. This should provide downside protection.

Disclosure: I do not own Apple stock.

Year end review

Happy new year! I took some time to disconnect over the last two weeks and enjoy the holidays. For the first post of 2013, I thought it might be a good to review all the picks from the last 3 months to see how I fared.

AIG (AIG)

AIG is still one of my top picks. It is up about only $2 from the price I paid for the stock. However, I feel it still has significant upside. Mainly all the arguments I made previously still apply:

  • It trades at half of book value.
  • The government completely sold AIG shares at the end of 2012. It now only holds warrants in the company.
  • AIG sold its stake in AIA. It also has agreed to sell a majority of its stake in ILFC.
  • The company can now focus on its core insurance operations and improve its return on assets.

Dean Foods (DF)

I sold Dean at a little bit of a loss. I still think Fresh Diary Direct segment is undervalued. However, the volatility of Whitewave was too much for me to take. I think the best way to play Dean is to wait for them to distribute the Whitewave shares and buy it before the distribution date if the current prices remain as they are.

General Motors (GM)

GM is one of my biggest winners. It is up nearly 50% for me. The government sold off 200 million shares of its stake in the company to GM recently. This should have a positive impact on EPS. If the economy improves in US and Europe and vehicle sales return to a normalized state, earnings could easily be over $5 over the coming years. Also, it is slowly removing the overhang of the pension liabilities. This could also be a big boon.

With the stock to almost $30, I might cut my position in half and book some profit. The auto industry is very capital-intensive and very competitive.

Orchard Supply Hardware (OSH) & Sears Hometown & Outlet (SHOS)

I have written a lot about these two Sears spin offs and I am short both. As I mentioned in my previous articles, I am convinced Orchard will go under. So far, it has been a very profitable short for me. I am not 100% convinced on Sears Hometown, so I only have a small short position there. Both of these plays are a bit risky, since they are cheap on a revenue multiple basis. Sears Outlet is a wild card for SHOS. If it can grow that successfully, the stock may have upside. I have no faith in the Sears Hometown business as it has had negative same store sale numbers for years. I know a lot fellow financial bloggers are long SHOS and I am open on seeing their analysis. So far, I have been wrong as SHOS. It has bounced nicely from $30 to $35 recently.

Xerox (XRX)

I bought Xerox around $6.50. The stock is around $7.20 today. Nothing fundamentally has changed about the company since I wrote the bullish case. It still trades at a significant discount to FCF and has increased its dividend. I still think there is significant upside.

Genie Energy (GNE)

Genie was a quick arbitrage trade on its offer to exchange common shares for prefered shares. I booked little less than a 10% profit on the trade. I still think there may be an opportunity on this type of trade in Genie in the future. Nobody will exchange the common for the preferred as the common is trading higher than the preferred.

Pandora (P)

I have a small short position in Pandora. So far, it has not been a good trade as the stock has shot up from $8 to $10. I continue to believe that this company will not exist in the future. It really has no barriers to entry, no competitive advantage, and is not profitable. Obviously, a lot of Pandoras profitability depends on the outcome of the Internet Radio Fairness Act. However, there is no doubt that there will be more competitors in this space in the future. I will keep this short position.

Susser Holdings (SUSS)

Susser is up about a $1 from what I bought it at. It may take some time for this stock to go up. However, it should be able to expand a lot faster after the spin-off of SUSP. I have a small position and will keep that position.

Others

I also missed out in some of my other bullish calls such as Facebook, Lumos Networks, Nacco Industries and Einsteins. I wrote a bearish case on Western Union, but the stock has been up since then. I still believe in the bearish case. I believe that Western Unions biggest competitor Moneygram will have a tough 2013 due to Western Unions price cuts. I will be looking to short in 2013.

DIsclosure: I own or am short most of the positions

Yahoo! rounds out HypeZero10

Last week I wrote about five top picks from some of the best value based hedge fund managers (HypeZero10). Today, let’s look at the rest of the picks that make up HypeZero10.

BankUnited, Inc. (BKU)

BankUnited is Wilber Ross’s top holding. The bank failed during the financial crisis in 2009 and was taken private by a group that included Ross. It was taken public in 2011 and Ross has owned 13,721,131 shares since then.

Earlier this year, the bank put itself up for sale, but nothing materialized. 

News Corp. (NWSA)

Manager Shares (July 30) Shares (September 30) Change
Dan Loeb 4,000,000 0 -4,000,000
Donald Yacktman 80,823,447 80,556,339 -267,108
Lee Ainslie 1,924,080 4,183,890  +2,259,810
Seth Klarman 15,041,665 13,041,665 -2,000,000
Steve Mandel 13,675,800 14,042,265 +366,465
Andreas Halvorsen 22,846,690 30,757,252 +7,910,562

Even though, Yacktman reduced his holdings by 267,108 shares, it is still his top holding. It is also Halvorsen’s top holding. 

Here is an interview with Yacktman about News Corporation.

Yahoo! Inc. (YHOO)

Yahoo made it on HypeZero10 predominantly due to Dan Loeb. He owns 73,000,400 shares and it is his largest position. Lee Ainslie and David Einhorn also have small positions in the company.

Assured Guaranty Ltd. (AGO)

Assured Guaranty made it on HypeZero10 due to Wilbur Ross. He owns 19,835,370 shares and it is his second largest position. Bruce Berkowitz also owns a very small position, 51,700 shares.

Here is a piece on why he Ross is so bullish on Assured Guaranty saying it is “probably the best risk/reward position in my entire portfolio.”

Canadian Pacific Railway Limited (CP)

Bill Ackman owns 24,159,888 shares of Canadian Pacific and it is his largest holding.

Disclosure: I do not own any stocks mentioned above.

AIG Top Pick Among Hedge Funds

On November 15, all hedge funds reported their quarterly holdings (13F) ending September 30. I updated the new HypeZero10 portfolio for this quarter. Their has not been any changes to the portfolio from the previous quarter. However, their were some interesting trades.

AIG

AIG (AIG) became the top pick for HypeZero10 as a lot of hedge fund managers bought shares of the company. Read my article here on AIG here.

Manager Shares (July 30) Shares (September 30) Change
Dan Loeb 2,250,000  23,500,000  +21,250,000
Julian Robertson 523,000  523,000  0
Bruce Berkowitz  87,987,894  86,545,718  -1,442,176
John Griffin  10,440,000  10,440,000  0
Leon Cooperman 4,586,900  8,054,600  +3,467,700
Andreas Halvorsen 2,090,000 7,505,362  +5,415,362
David Tepper 0 8,250,000 +8,250,000

Although Bruce Berkowitz sold over 1 million shares of AIG, he still holds 40% of his portfolio in AIG and is his top pick.

It is also a top 5 holding of Dan Loeb, John Griffin, Leon Cooperman, and David Tepper.

Sears

Bruce Berkowitz and Eddie Lampert still hold a huge stake in Sears (SHLD). It is Lampert’s top position and it is Berkowitz’s second largest position.

Read my article on Sears here

Apple

Manager Shares (July 30) Shares (September 30) Change
David Einhorn 1,454,520 1,090,890 -363,630
Dan Loeb  425,000 710,000 +285,000
Julian Robertson 100,930  100,930 0
Chuck Akre 35,106 35,106 0
John Griffin 751,500  662,000  -89,500
Lee Ainslie 540,211 536,441  -3,770 
Leon Cooperman 266,104 266,404  +300
Steve Mandel 1,423,209 805,269 -617,940
Andreas Halvorsen 980,600 1,094,000 +113,400
David Tepper 516,338 521,188 +4,850

Most notable here is that David Einhorn reduced his position in Apple (AAPL), but it is still his top holding. Steve Mandel almost halved his stake. 

Dan Loeb increased his stake and now it is one of his top 5 holdings.

AutoNation

Eddie Lampert still holds 48,063,910 shares of AutoNation (AN). It is his second largest holding behind Sears.

Procter & Gamble Co. (PG)

Manager Shares (July 30) Shares (September 30) Change
Bill Ackman 8,387,700 (Calls) 6,452,700 (Calls) -1,935,000
Bill Ackman 21,916,208  27,946,892 +6,030,684
Warren Buffett 59,602,203 52,793,078 -6,809,125
Donald Yacktman 27,464,378 27,781,353 +316,975

It is interesting that Warren Buffett reduced his stake by more than 10% stake in Procter & Gamble (PG). It is still a top 5 holding for Buffett.

Ackman added to his shares while reducing the number of call options. It is also a top 5 holding for Ackman.

Yacktman added to his stake, and it is also a top 5 holding for him.  

I will have more information about the remaining HypeZero10 picks in the follow-up article.

Disclosure: I am long AIG.

HypeZero10 Beats S&P By 3.2%

For those investors new to HypeZero, we run an automated portfolio of 10 of the best investment ideas from the best hedge funds called HypeZero10.

We take the quarterly holdings of the best hedge funds, and then run our sophisticated algorithm on those holdings to pick the 10 ideas.

This algorithm has returned over 170+% since 2004 exclusive of dividends. A $10,000 investment would be worth $27,000 in over 8 years.

For the August 15th to November 15th quarter, HypeZero10 was flat as compared to -3.2% for the S&P.

Here are the results:

Company Price (Aug 15) Price (Nov 15) Hedge Fund 
Apple Inc. (AAPL) $630.83 $525.62 David Einhorn
Sears Holdings Corporation (SHLD) $56.60 $58.48+spinoffs Edward Lampert
AIG (AIG) $34.03 $31.24  Bruce Berkowitz 
Yahoo! Inc. (YHOO) $14.76 $17.89  Dan Loeb
Procter & Gamble Co. (PG) $66.64  $66.32  Warren Buffett 
AutoNation Inc. (AN) $39.53 $40.28  Edward Lampert 
BankUnited, Inc. (BKU) $25.78  $22.16  Wilbur Ross
News Corp. (NWSA) $23.32 $23.12  Donald Yacktman 
Assured Guaranty Ltd. (AGO)  $13.41 $12.88  Wilbur Ross
Canadian Pacific Railway Limited (CP) $84.38 $90.38 William Ackman
Return  +0.0% S&P Return -3.2%

Check out new holdings for the November 15th quarter at HypeZero10. I will have more details, but AIG is the top pick as a number of hedge funds are bullish on the stock.

Disclosure: I am long AIG

Einsteins Worth A Look

Einstein Noah Restaurant Group Logo

Einstein Noah Restaurant Group (BAGL) owns, operates, franchises, and licenses bagel specialty restaurants under the names Einstein Bros. Bagels, Noah’s New York Bagels, and Manhattan Bagel brands. It is also a long term holding of famed investor David Einhorn. Greenlight Capital, the firm run by Einhorn, holds over 10 million shares or over 63% of the outstanding shares of BAGL. He has held this position in BAGL for over 5 years. Unlike some of his other investments, BAGL has not been a big success. So, he has been pushing management to increase shareholder value.

In May, management announced that it is exploring strategic alternatives such as a merger or a sale to increase shareholder value. The stock shot up from $14 to over $16+.

In mid October, it provided a peek at third quarter results, and updated investors on the progress of the strategic alternative initiatives  In addition to selling or merging the company, BAGL is thinking about recapitalizing the company and giving a special dividend of $154 million or $9 dividend. Third quarter results were below expectations and investors sent the stock down about 10% from $17.81 to $16.10.

The company also shared the presentation it made to public lenders to secure the recapitalization loan. See the full presentation below.

 

GDE Error: Unable to load profile settings

Recapitalization summary

Here are the details of the recapitalization summary:

  • $265 million in senior secured credit facility.
    • $240 million of that is 1st lien term loan
      • $154 million dividend to shareholders
      • $70 million Refinance existing debt
      • $13 million Transaction expenses
      • $2 million OID
    • $25 million revolving credit facility

The company will be highly leveraged. With a $53 million adjusted EBITDA for 2012, the company will have a pro forma leverage ratio of ~4.5 ($240/$53) . As I mentioned, the dividend will be $9/share.

The transaction was supposed to be completed by November 5th. However, nothing has happened. So, there might be some issues with the recapitalization.

Why worth a look?

The stock has recently dropped from $17.81 in October 16th to $14.37 as of yesterday. It now trades at pre strategic alternatives announcement price. At this price, the company trades at a fair valuation and still has upside if the company is sold or recapitalized.

Valuation

For 2012, the company is on target to earn $.95/share or $16 million. It will have depreciation expense of around $20 million. About $10 million of capitalization expenditures is maintenance capitalization. So, BAGL has about $26 million in FCF. A rough multiple of 10 gives a market capitalization of $260 million. At $14.37, BAGL trades under a market capitalization of $250 million. It is by no means cheap, but it is not expensive here.

It also has other things going for it:

  • David Einhorn holds a majority stake. So, he is going to do everything in his power to increase value.
  • $.50 dividend or ~3.5% yield. 
  • Revenue and earnings have been steadily increasing over last couple of years.
  • Bagels are good and store concept is bright and clean.
  • Growing through not only company store expansion, but also through licensing and franchising.
  • Opportunity for growth. Only 783 restaurants nationwide.

Recapitalization Valuation

 Einstein Noah Restaurant Group Post Recapitalization Earnings

Based on my calculations, there is up to a $5 upside if the company is recapitalized. $9 divided and a $10/share post recapitalization value based on 10 times FCF of $17.5 million.

I want to get in at below $14.5 for an initial small position and add to the position if it goes below $14.

Follow me on Twitter  or like on Facebook for latest trade updates.

Disclosure: I do not own BAGL. 

Dean, Susser, CommonWealth, News Corp

Dean Foods

Dean Foods (DF) earnings are coming out tomorrow. The hope is that they disclose the potential sale of Morningstar in the report. The stock has been slowly going down. I still think it is undervalued. 

Interestingly, there is support on the stock today as a Barrons article came out with a favorable article. Their argument looks very similar to mine. Basically, it is undervalued if you factor out WhiteWave. Check out the article here.

Here is my valuation of Dean. The only difference is that I feel Dean will not use the full proceeds from the Morningstar sale to pay off debt. 

Susser Holdings

Susser Holdings Corporation (SUSS) came out with earnings that beat expectations. The market obviously likes the results and forward guidance.  The shares up more than a dollar on a down day. Read the earnings here.

I continue to hold a small position in the company with a target price around $47. I think the spin-off of Susser Petroleum Partners LP (SUSP) will accelerate the growth over the coming years. However, it is a volatile business so i am keeping limited exposure. 

My article on Susser is here.

Commonwealth REIT

Commonwealth REIT (CWH) came out earnings that beat expectations. The shares are down a little today. 

The company is very undervalued, but I do not trust management. I have been very critical about management and wrote a scathing piece on SeekingAlpha about the need to switch management. 

I have been in touch with smaller investors as well as bigger firms that hold millions of shares about possibly doing something to increase shareholder value. If you are a shareholder get in touch with me personally. 

I participated in this mornings conference call hoping to ask a question or two. However, I never got the opportunity. Anyway, I suggest investors read the call transcript as it was very funny. Lots of frustrated investors. I will post a link on the comments once it is up. 

The best way to play CommonWealth is buying long term call options. Read the article here.

News Corporation

News Corp (NWSA), one of the stock picks of HypeZero10, came out with earnings that beat expectations and is up today. News Corp is top holding of Donald Yacktman. His firm holds 80,556,339 share of the company as of September 30, 2012. He did reduce his position by 300,000 from June 30. 2012.

It is spinning-off its publishing unit and buying back shares. Here is the info about the spin-off:

On June 28, 2012, News Corporation announced that it intends to pursue the separation of its publishing and its media and entertainment businesses into two distinct publicly traded companies. The global publishing company that would be created through the proposed transaction would consist of the Company’s publishing businesses, its education division and other Australian assets. The global media and entertainment company would consist of the Company’s cable and television assets, filmed entertainment, and direct satellite broadcasting businesses. Following the separation, each company would maintain two classes of common stock: Class A Common and Class B Common Voting Shares. The separation is expected to be completed in approximately one year from the date of announcement. In addition to final approval from the Board of Directors and stockholder approval, the completion of the separation will be subject to receipt of regulatory approvals, opinions from tax counsel and favorable rulings from certain tax jurisdictions regarding the tax-free nature of the transaction to the Company and to its stockholders, further due diligence as appropriate, and the filing and effectiveness of appropriate filings with the SEC. There can be no assurances given that the separation of the Company’s businesses as described will occur.

Here are the quarterly results

Disclosure: I am long DF, SUSS, CWH. I do not own NWSA.