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Every quarter, many money managers have to disclose what they've bought and sold, via "13-F" filings. Their latest moves can shine a bright light on smart stock picks.
Today let's look at the Ruane, Cunniff, & Goldfarb company, founded by the late William Ruane, a student of value investing giant Benjamin Graham, along with Warren Buffett. Ruane founded the Sequoia (SEQUX) mutual fund in 1970, and its performance will show you why you might want to pay attention to the fund company's investments: Since inception and through the end of September 2012, the fund gained a cumulative 27,921%, versus 6,736% for the S&P 500. Annualized, that's 14.3% versus 10.5%. Over the past decade, which has been a challenging one for the stock market, Sequoia averaged 7.3% annually, versus 8% for the S&P 500.
Ruane, Cunniff, & Goldfarb's overall reportable portfolio (which may contain holdings other than those of the flagship Sequoia fund) totaled $13.2 billion in value as of Sept. 30, 2012.
So what does Ruane, Cunniff, & Goldfarb's latest quarterly 13-F filing tell us? Here are a few interesting details:
The biggest new holdings are Timken (NYSE: TKR ) and Apache (NYSE: APA ) . Other new holdings of interest include J.C. Penney (NYSE: JCP ) . The retailer had many folks hopeful when it named a talented new CEO, but that may not be enough. Long-term debt is down but still far outweighs cash, and cash flows from operations have been shrinking. The company is trying to turn itself around by appealing to younger consumers and employing new technologies, but its future remains uncertain.
Among holdings in which Ruane, Cunniff, & Goldfarb increased its stake were World Fuel Services (NYSE: INT ) and Union Pacific (NYSE: UNP ) . World Fuel sells fuel to commercial airlines, private aircraft, tanker fleets, cruise ships, and the military. Over the past three years, its revenue growth averaged 50% annually, and EPS growth averaged 12%. The company is likely to benefit if oil prices rise further, and there's a lot of potential in serving the shipping industry, too. Meanwhile, it's growing, in part, via acquisitions, such as its purchase of CarterEnergy assets.
Union Pacific, like other railroads, stands to benefit as our economy heats up again -- but it has already been doing rather well, sporting three-year average annual growth rates of 13% and 26% for revenue and earnings, respectively, and a five-year average annual dividend growth rate of 27%. It also has a lower debt level than some peers and is boosting its business by transporting more lumber and homebuilding supplies.
Ruane, Cunniff, & Goldfarb reduced its stake in several companies, including Lockheed Martin (NYSE: LMT ) . The company has been performing well lately, despite worries about cutbacks in military spending. Its Electronic Systems division has been a particularly powerful contributor to its bottom line, and international growth bodes well, too. One worry has been its wrangling with the Pentagon over orders for its F-35 fighters, but that's getting closer to resolution.
Finally, Ruane, Cunniff, & Goldfarb's biggest closed positions included C.H. Robinson Worldwide (Nasdaq: CHRW ) and athenahealth (Nasdaq: ATHN ) . Other closed positions of interest include Duke Energy (NYSE: DUK ) , which has been investing in wind power and other renewable projects. It's planning a massive solar farm in North Carolina, too. The company is digesting its acquisition of Progress Energy, is rejiggering its leadership, and sports an attractive 4.8% dividend yield.
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.
J.C. Penney has been a train wreck whose comeback always seems just around the next earnings corner, but people are beginning to doubt whether CEO Ron Johnson can weave the same magic he did at Apple. For investors wondering whether J.C. Penney is a buy today, you're invited to claim a copy of The Motley Fool's new must-read report on the company. Learn everything you need to know about JC Penney's turnaround -- or lack thereof -- and as a bonus, you'll receive a full year of expert guidance and updates as key news develops. Simply click here now for instant access.