Records show smart money can still find value stocks

Some investors use their conviction to stick with companies through thick and thin.

MARKET WATCHJune 15, 2013 

SAN FRANCISCO - When thinking of value investors, Hewlett-Packard Co. comes to mind. The stock traded at 10-year lows last summer as people lacked faith the computer and printer giant had a viable turnaround plan. Value-bent investors thought otherwise, scooping up the stock.

They've been rewarded for their fortitude. HP shares are the top Dow Jones gainer this year, with a 74 percent increase, more than five times the Dow's gain.

Top value investors have gravitated to the technology sector, according to InsiderScore, which tracks quarterly 13F-HR filings of 38 hedge and mutual funds. But since value investors are known for long-term buy-and-hold strategies, MarketWatch looked at three stocks they hunted during the first quarter.

DirecTV: DirecTV is the No. 2 U.S. satellite television provider, with 20 million subscribers. The company is investing heavily in Latin America in a major push, and its revenue is projected to grow at a faster rate in 2013 and 2014 than the average for the S&P 500. On a trailing price-to-earnings basis, DirecTV is trading at 13.4 times the consensus earnings estimate of analysts.

Warren Buffett's Berkshire Hathaway continued to bolster its DirecTV stake in the first quarter, buying 3.2 million shares. DirecTV stock is up 24 percent for the year.

Mondelez International: It counts Oreo cookies, Ritz crackers and Cadbury chocolates among its well-known brands, and although it hasn't performed the way many had expected after the company was split from Kraft's grocery unit last October, Nelson Peltz of Trian Fund Management and Ralph Whitworth of Relational Investors were huge buyers of the stock during the first quarter. Shares are up 17 percent since Jan. 1.

Chesapeake Energy: Shares are up 32 per-cent this year, and Chesapeake has been selling land and wells in an effort to unload between $4 billion and $7 billion of assets to cut debt and shore up cash flow. Bruce Berkowitz of Fairholme Capital Management and the Fairholme Fund is known for hunting in the financial sector, so his purchase of 13.4 million shares raised eyebrows - and paid off.

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