We recently learned from SEC 13-F filings — the filings made by hedge funds that reveal their positions — that several big-name fund managers have added shares of Verizon (NYSE:VZ) to their portfolios. These managers include John Paulson, Warren Buffett, and Dan Loeb. As a result, shares of Verizon rose over 2.3 percent on Friday on what was otherwise a non-eventful day for the market averages.
Furthermore, 2.3 percent is a relatively large move for a stock such as Verizon, considering it is a relatively defensive name that doesn’t have a lot of beta (i.e., price movement) that attracts traders or “hot money.” Thus, the buying we saw can likely be attributed to buying by longer-term holders who like the stock for its valuation.
Does this means that you should be buying, too?
Verizon is one of the few value stocks left in the market. Shares trade at about 11 times earnings which is extremely low relative to the S&P 500, which according to iShares S&P 500 ETF (NYSEARCA:IVV) homepage, trades at nearly 22 times earnings. It also pays a 4.3 percent dividend yield, which dwarfs the S&P 500’s 1.8 percent dividend yield.