Kyle Bass: Six Flags
Our final guru today is hedge fund manager and fellow Dallas resident Kyle Bass, principal of Hayman Advisors. Though he does trade equities, Bass is a macro investor better known for making large bets in the credit and currency markets; he made his investors a small fortune betting against subprime mortgage securities in the run-up to the 2008 meltdown.
Bass’s equity portfolio is completely dominated by Six Flags Entertainment (NYSE:SIX), the owner and operator of theme parks. Six Flags makes up nearly 40% of his equity holdings.
With a current yield of 4.1%, Six Flags certainly qualifies as a dividend stock. But readers should consider this stock a riskier bet than IBM or Johnson & Johnson. Theme parks are sensitive to the state of the economy, and the stock trades at a nosebleed valuation of 32 times expected 2013 earnings. There is a lot of optimism built into the price at current levels.
All of this said, Bass certainly has done well by owning Six Flags — it’s up more than 100% during the past year — and he clearly has a high level of conviction in the stock if he’s make it nearly 40% of his equity portfolio.
Charles Lewis Sizemore, CFA, is the editor of the Sizemore Investment Letter, and the chief investment officer of investments firm Sizemore Capital Management. Sizemore Capital is long JNJ. Sign up for a FREE copy of his new special report: “Top 3 ETFs for Dividend-Hungry Investors.”