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This $12 Billion Hedge Fund Bought Cisco, Microsoft, and Xerox

Fool.com – The latest 13F season is here, when many money managers issue required reports on their holdings. It can be worthwhile to pay attention, as you might get an investment idea or two by seeing what some major investors have been buying and selling.

For example, consider Bridgewater Associates, one of the world’s largest hedge fund companies. According to its recently released 13F statement, the company has increased or initiated positions in Cisco Systems, (NASDAQ: CSCO  ) , Microsoft Corporation, (NASDAQ: MSFT  ) , and Xerox Corp (NYSE: XRX  ) .

Cisco Systems’s stock has averaged 16% annual gains over the past 20 years, but only 6% over the past five. Once a rapid grower, the company has experienced shrinking gross margins and lumpy earnings in recent years. Cisco’s networking equipment business has been challenged by software-defined networking (SDN), and the company is investing heavilyin cloud-computing and the “Internet of things,” though it faces serious competition there. Its last quarter was mixed, with revenue and earnings topping expectations but both still declining year over year and emerging-markets revenue declining. Cisco’s stock yields 3.1%, and it has been upping that payout aggressively. Shareholders can also benefit via stock buybacks: The company has spent some $2 billion on them and is ready to spend $10 billion more. It seems undervalued, too, with its forward P/E near 11.

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