Invest Like John Hussman: Walt Disney Co (DIS), McDonald's Corporation (MCD), Broadcom Corporation (BRCM)

By Shira Gonen

John Hussman, a Stanford University graduate, is a successful hedge fund manager who founded Hussman Strategic Advisers Inc. He is best known for predicting the 2008-2009 recession. In the fourth quarter, the $705.45 million hedge fund returned 3.05% to investors. Let's take a look at some of Hussman's activity in the fourth quarter, including Walt Disney Co DIS, McDonald's Corporation MCD, and  Broadcom Corporation BRCM.

Hussman reduced his stake in Broadcom in the fourth quarter by 9%, now making up 2% of his total holdings. Broadcom's most notable event in the fourth quarter was its acquisition by fellow semiconductor company Avago, effective February 1, 2016. Other fourth quarter highlights include a better than expected Q3 earnings release, posting above consensus revenues and EPS, product released such as its open network programming interface OpenNSL 2.0, and its $207 million business park purchase in north San Jose.

It seems that Hussman's reduction is in line with analyst consensus, as only 3 out of 4 analysts who have rated the company in the past 3 months gave a Hold rating, according to TipRanks.

In the fourth quarter, Hussman added Disney to his portfolio, purchasing 50,000 shares for a total of $5.25 million, now representing 0.75% of his total holdings. In December, Disney released its much anticipated filmStar Wars: The Force Awakens, which broke records as the biggest worldwide opening weekend, grossing $529 million worldwide. Despite this massive gain in revenue, analysts were more focused on ESPN, as company CEO Bob Igor commented in its Q4 earnings release that he expects subscriber numbers to decline in the next quarter due to "cord cutting" with cable providers. Merchandise relating to the film also drove Black Friday sales for the company. Other fourth quarter events include a price increase for the Disneyland annual pass, a $400 million dollar investment in Vice Media, and the launch of DisneyLife in the U.K, the company's own streaming service.

Hussman and analysts agree on Disney, as 10 out of 21 analysts who have rated the company in the past 3 months gave a Buy rating, according to TipRanks.

McDonald's was another company Hussman added to his portfolio this quarter, purchasing 25,000 shares for $2.95 million, now representing 0.42% of his portfolio. It seems that Hussman added this stock as a result of the successful execution of its turnaround plan, with the company releasing all day breakfast in early October. In its Q3 earnings release, the company posted same store sales growth for the first time in 7 quarters and beat consensus for EPS and revenues, releasing new menu items and posting in international growth, especially in China. As part of its turnaround plan, McDonald's launched its taste crafted menu and table service in some Southern California restaurants. Other quarter events included plans to release its 2 for $2 menu in January and an EU probe over favorable tax arrangements. In the fourth quarter, the stock rose over 15% to $114.45.

Like Hussman, analysts are bullish on McDonald's. According to TipRanks' statistics, out of the 16 analysts who have rated the stock in the past 3 months, 10 gave a Buy rating.