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Every quarter, many money managers have to disclose what they've bought and sold, via "13F" filings. Their latest moves can shine a bright light on smart stock picks.
Today, let's look at Tudor Investment, founded in 1980 by Paul Tudor Jones and featuring the flagship Tudor BVI fund. Jones, featured in Jack Schwager's Market Wizards: Interviews with Top Traders, was one of the few to foresee the 1987 market crash (and he made many millions on it, as well). Known for focusing on short-term trading, equity, venture capital, debt, currency, and commodity markets, he has recently been employing a more conservative strategy, resulting in some performances that have been less spectacular than usual.
The company's reportable stock portfolio totaled $2.7 billion in value as of June 30, 2012.
What does Tudor Investment’s latest quarterly 13F filing tell us? Here are a few interesting details:
New holdings include EnCana (NYSE: ECA ) , which has been selling off its more mature properties, and thereby positioning itself to benefit more from its gas liquids business. A glut of natural gas has hurt many companies, but our analysts think the glut may shrink in the near future. EnCana offers investors a dividend yield of about 3.5%, as well. There are investigations afoot, though, into whether it participated in any collusion with competitors in regard to land leases. To reassure investors, EnCana recently announced that its Board of Directors had an independent investigation performed, which found no wrongdoing.
Among holdings in which Tudor Investment increased its stake was Nuance Communications (Nasdaq: NUAN ) . Nuance has profited handsomely by supplying its speech-recognition software to Apple devices -- think Siri -- and other devices, and the debut of the iPhone 5 is likely to spur sales further. Many are bullish over its new business applications, too, such as ones for the medical field, and voice biometric technology that can identify customers without passwords or questioning. Nuance recently reported record sales of its Dragon Medical offerings. Its move into the auto industry has been a success, too, with its technology now in some 70 million vehicles.
Tudor Investment reduced its stake in lots of companies, including Heckmann (NYSE: HEK ) , which specializes in delivering and processing water. It serves the growing fracking activities of natural-gas companies, but the low price of the gas has put a damper on that. Heckmann is turning more attention to more profitable shale oil projects, and is also buying the oil recycler Thermo Fluids. There's plenty to like about Heckmann, but right now it carries a lot of debt and is cash-flow negative. That debt load will rise, too, due to a recent purchase of Power Fuels, but many are bullish about the acquisition. The company also turned its bottom line from red to black recently.
Finally, Tudor Investment unloaded several companies, such as Dendreon (Nasdaq: DNDN ) and Entropic Communications (Nasdaq: ENTR ) . Dendreon launched a promising prostate-cancer drug a while back, but ran into trouble when many doctors balked at prescribing it, due to its steep price. Then, when demand rose, the company had trouble keeping up with it. Another concern is the recent FDA approval of Medivation's prostate-cancer drug, Xtandi. The company has announced a restructuring plan, but some just hope it will be bought out by another company.
Entropic, focusing on semiconductor technology for the home entertainment niche, has bought the set-top business of bankrupt Trident Microsystems, and is working to get into the Internet-TV business as well. Bulls like its double-digit revenue growth and its balance sheet, while bears fret over its volatility, falling margins, potential overdependence on a few customers, and competing technologies. The MoCA chips it sells to customers such as Verizon are selling well, and the company recently upped its earnings projections.
We should never blindly copy any investor's moves, no matter how talented the investor. But it can be useful to keep an eye on what smart folks are doing. And 13-F forms can be great places to find intriguing candidates for our portfolios.
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