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Earlier this week, my fellow Fool Morgan Housel revealed "7 Traits of Phenomenal Investors," a list that started with the fact that great investors learn from each other.

Specifically, Morgan noted that money managers with more than $100 million under management have to disclose in SEC filings what stocks their funds own. Many top investors use these disclosures as a way of getting ideas from other hotshots.

I recently did something along these lines by looking at a few of the first-quarter buys by the value-focused fund family Davis Funds. With Morgan's "phenomenal investor traits" in mind, I thought I'd take a look at a few more buys from some of my favorite investors.




Position as of 12/31/10

Position as of 3/31/11

The Baupost Group Seth Klarman PDL BioPharma (Nasdaq: PDLI  ) $34.9 million $60.9 million
Third Avenue Marty Whitman Henderson Land Development $285 million $936 million
Longleaf Partners Fund Mason Hawkins Travelers Companies (NYSE: TRV  ) $377 million $451 million
Fairholme Funds Bruce Berkowitz Berkshire Hathaway (NYSE: BRK-A  ) (NYSE: BRK-B  ) $840 million* $1.05 billion*
Greenlight Capital David Einhorn Travelers Companies $119 million $250 million
Pershing Square Bill Ackman Alexander & Baldwin (Nasdaq: ALEX  ) $7 million $163 million

Source: Capital IQ, a Standard & Poor's company.
*Represents combined value of A and B shares.

PDL BioPharma
While I don't know that I'd call Seth Klarman reclusive, you're not going to see him touting his stocks on CNBC too often (to say the least). That leaves me speculating on why he was snapping up PDL. However, PDL offers exactly the kind of quirky special-situation flavor that Klarman tends to jump at. Its business is basically defending patents and collecting royalties on drugs sold by the likes of Novartis (NYSE: NVS  ) and Biogen Idec (Nasdaq: BIIB  ) .

While the patents have a definite lifespan, the company gushes cash right now, and its stock yields a heady 9%. The long-term future of the company is a bit up in the air, but it is currently on the hunt for opportunities to buy additional royalty assets.

Henderson Land Development
Henderson Land Development may not be simple for U.S. investors to buy, since it's not listed on the NYSE or Nasdaq, but as the largest position across Third Avenue's funds, Marty Whitman & Co. are hot on it. In Third Avenue's second-quarter shareholder letter, Third Avenue Value Fund co-manager Ian Lapey made a compelling case for the stock.

He noted that a number of the company's investment properties have seen strong increases in occupancy. He also pointed out that the poor performance of the property development arm may have caused a knee-jerk market reaction that created value in the stock. Longer term, Lapey said he believes the company's development strategy -- which involves redeveloping older buildings rather than competing in government auctions -- will pay off nicely.

Travelers Insurance
While David Einhorn's letters to Greenlight partners are generally available on the Web, I was unable to find any commentary from him on why he went with Travelers in particular. However, I might speculate that this is simply a strong -- if unexciting -- insurer that's trading at just over eight times earnings and is paying a decent dividend. Perhaps it's not a brain-bending thesis.

Longleaf, however, was a little more vocal about its interest in Travelers and other insurers. Hawkins and partner-in-crime Staley Cates wrote in the first quarter letter to shareholders that economic growth and less capital flowing through the system will improve the fortunes of a broad range of insurers. Interestingly, they had this to say about their insurance holdings in general:

The Funds' insurance holdings illustrate one of Southeastern's major advantages in generating superior long-term returns -- time horizon arbitrage. Most analysts make stock recommendations based on the outlook for a company over the next few quarters. For them, a one-year horizon is long-term. Conversely, Southeastern appraises business values which are dependent on multi-year free cash flows. If an industry or a company faces short-term pressures such as a soft pricing cycle, but the strength of the business and its prospects over five years remain intact, we may get the opportunity to buy a high quality company at a substantial discount to its underlying value.

If that's not a value investor's sentiment, then I don't know what is.

Berkshire Hathaway
While I'm not going to rehash all of the reasons Berkshire is a worthwhile investment (that could keep us here all day), I will point out why Berkshire may be an investment to buy now. In a word: valuation.

Berkshire's stock currently trades at 1.2 times its book value. It's not very often that it trades that close to its book value. In fact, prior to the financial crisis gutting the stock market, Berkshire's stock had maintained a premium over book value in the range of 50% to 100%. So right now there's no Buffett premium. There's no Munger premium. There's no Ajit Jain premium. There's no real premium of any sort here.

Need I say more?

Alexander & Baldwin
A&B is a Hawaii-based conglomerate that at first blush doesn't look all that compelling to me. Equity returns are underwhelming, you can't say the company is a serious grower, and its valuation multiples don't exactly scream "value."

However, Ackman is known as an activist investor -- just look at how he shook up Fortune Brands (NYSE: FO  ) -- and he's likely got something up his sleeve when it comes to A&B. Could he be looking to break the company up? Time will tell. For now, Ackman's SEC filing simply says that he wants to "engage in discussions with management, the board and other stockholders."

Time to dig in
A guiding principle in my own investing is that I never buy any stock simply because another investor has -- no matter how smart they are. But we started out by looking for some stock ideas and I think we've got a handful of good ones here. So go ahead and add any or all of these stocks to your watchlist by clicking the "+" next to the ticker. Don't have a watchlist yet? Click here to start one.

The Motley Fool owns shares of Berkshire Hathaway. Motley Fool newsletter services have recommended buying shares of Fortune Brands, Novartis, and Berkshire Hathaway. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Fool contributor Matt Koppenheffer owns shares of Berkshire Hathaway, but does not have a financial interest in any of the other companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.

Read/Post Comments (6) | Recommend This Article (48)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 03, 2011, at 6:39 PM, zorven wrote:

    Do the Position dollars have market fluctuation removed? Would it be better to show # of shares as of each date as well?

  • Report this Comment On June 03, 2011, at 7:20 PM, TMFKopp wrote:

    The position $ are not adjusted for market fluctuations. It was actually tough to decide on the best metric to display. But I will say that I chose the stock for each manager based on % change in shares between Q4 and Q1, so the bulk of the increase is buying activity, not market value change.


  • Report this Comment On June 04, 2011, at 6:26 AM, cbernard73 wrote:

    What is the book value of Berkshire Hathaway?

  • Report this Comment On June 04, 2011, at 8:20 PM, TMFKopp wrote:


    You can feast on Berkshire financial statistics here (10-Q filing):

    Book value is listed as "shareholders' equity" here.


  • Report this Comment On June 05, 2011, at 12:05 PM, geecheegirl wrote:

    I revisited some info on PDLI, which again tempted me here, but I was quickly reminded of why I ignored the temptation the last time it came up as a potential watchlist idea. I recommend that anyone considering adding this stock to a watchlist first read Jim Royal's article dated May 19, 2011 titled '4 Special Dividend Plays -- and They're Huge'.

  • Report this Comment On June 05, 2011, at 4:05 PM, momotrader12 wrote:

    Nice to see two of my own stocks on this list: PDLI and BRK-B.

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