Here's What This 1,022% Gainer Has Been Buying

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 investing giant Daniel Loeb, founder of the Third Point LLC hedge fund. Loeb is a well-known activist investor, famous for publicly airing his opinions about companies in which he invests and not mincing words when he's displeased. Loeb was instrumental  in pointing out discrepancies in former Yahoo! (Nasdaq: YHOO  ) CEO Scott Thompson's biography. Yahoo! now has a new CEO.

His activity bears watching, because the guy seems to know a thing or two about investing. According to the folks at GuruFocus.com, over the 15 years ending in 2011, Loeb racked up a cumulative gain of 1,022%,  compared with just 124% for the S&P 500.


The company's reportable stock portfolio totaled $5.1 billion  in value as of Sept. 30, 2012.

Interesting developments
So what does Third Point's latest quarterly 13F filing tell us? Here are a few interesting details:

The biggest new holdings are Kraft (Nasdaq: KRFT  ) international spin-off Mondelez (Nasdaq: MDLZ  ) and Nexen (NYSE: NXY  ) . Other new holdings of interest include NXP Semiconductors NV (Nasdaq: NXPI  ) and Symantec (Nasdaq: SYMC  ) . NXP Semiconductors is a primary maker of near-field communications (NFC) chips, and sales of NFC-equipped cell phones are expected to triple  this year, to 100 million. NXP's NFC technology helps facilitate mobile payment systems, such as on Google's (Nasdaq: GOOG  ) Google Wallet service. It does have competition, though.

Anti-virus software specialist Symantec (Nasdaq: SYMC  ) hasn't been growing  as rapidly as some of its peers. While many of its bulls rejoiced when it got a new CEO this summer (one with a long history at General Electric (NYSE: GE  ) and a stint at the top of Intuit (Nasdaq: INTU  ) ), others worry about market-share shrinkage and tough competition. Boding well is an increase  in corporate spending on security, but some analysts expect Symantec to be reducing  its workforce soon.

Among holdings in which Third Point increased its stake was American International Group (NYSE: AIG  ) . The company ran into serious trouble in the recent credit crisis, to say the least, but it's been turning itself around and its life insurance and property and casualty insurance businesses have been doing well. To some, it seems quite attractively priced lately. Indeed, its P/E ratio was recently below 3 , and its forward P/E of 9 is below the S&P 500 average.

Third Point reduced its stake in lots of companies, including ARIAD Pharmaceuticals (Nasdaq: ARIA  ) . ARIAD bulls have been hopeful about its leukemia drug ponatinib getting FDA approval. But its bone-tumor drug ridaforolimus was rejected in Europe. All isn't lost for that formula, though, as it might still prove effective against other cancers. The company's recent quarterly results were mixed, with cash burn a concern as losses increase. The company has been spending heavily  on research and development.

Finally, Third Point's biggest closed positions included News Corp. (Nasdaq: NWSA  ) and Capital One Financial (NYSE: COF  ) . Other closed positions of interest include data integration specialist Informatica (Nasdaq: INFA  ) , which has fallen some 40%  over the past year, partly on reduced guidance, weakness in Europe, and some troubling financial stats.

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. 13-F forms can be great places to find intriguing candidates for our portfolios.


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  • Report this Comment On December 01, 2012, at 12:00 AM, EducatedInvestor wrote:

    The 3rd quarter purchases of Loeb and his fund have been reported repeatedly over the last few weeks. Having said that, this particular article does a commendable balance of reporting of the stocks in question rather than simply hyping them up.

    Symantec in particular was well balanced by fairly pointing out the many downside risks with the company versus speculation of some kind remaining upside merely due to a change in CEO. The company has already had numerous layoffs in the last five years and that has not helped matters.. Competition is eating them alive and there are many product and internal challenges to iron around. With two previous CEO's unable to stop the shares from declining, it is a dangerous gamble to think there is further upside following the huge run-up from July. The shares are already over optimistic and ahead of themselves, even in spite of the CEO's own cautious sentiments about the current share levels having baked in a lot of presumptions.

    The closing of the Informatica position was clearly a good call though, as was Capital One.

  • Report this Comment On December 02, 2012, at 1:06 PM, EducatedInvestor wrote:

    After some investigation it appears Loeb's fund began buying Symantec in the $13.xx dollar range with an average total fund position of $16.44. Furthermore, Loeb is known for activist investment and it would be entirely fair to assume he (along with some others) expected Symantec to be broken up when the CEO was ousted. However, this is not going to happen, so I would now expect to see selling come into the shares in the coming months. Individual investors should be on watch for this as I would expect to see the big money quietly start coming out of the shares once it becomes apparent the company outlook is going to be a 3+ year risky transformation of an already struggling company rather than any instant gratification.

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