Here's What This $42 Billion Hedge Fund Company 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 the D. E. Shaw company, founded by David E. Shaw, and with a reportable stock portfolio totaling $42.0 billion in value as of September 30, 2012.

Shaw is known as a math wizard, and a quantitative investing pioneer. His firm is reportedly extremely selective, hiring less than 1% of applicants -- and Amazon.com (NASDAQ: AMZN  ) CEO Jeff Bezos once made the cut.

Interesting developments
So what does D. E. Shaw's latest quarterly 13F filing tell us? Here are a few interesting details:

The biggest new holdings are Johnson & Johnson (NYSE: JNJ  ) and Capital One Financial (NYSE: COF  ) . Other new holdings of interest include Turquoise Hill Resources Ltd. (NYSE: TRQ  ) and VirnetX Holding (NYSEMKT: VHC  ) . Turquoise Hill is majority-owned by U.K.-based mining giant Rio Tinto (NYSE: RIO  ) and focuses primarily on mineral mining in central Asia and Australia. Its Oyu Tolgoi mine in Mongolia, which was 96% completed at the end of last quarter, is set to become one of the world's largest copper producers. If you're wondering why you haven't heard of this $7 billion company, until recently, it used to go by another name, Ivanhoe Mines.

VirnetX is an Internet software company with valuable patents, but it also spends a lot of time in court, worrying some investors. That time has been paying off, though, such as via a $370 million patent-infringement award it's getting from Apple (NASDAQ: AAPL  ) . Bulls like its potential in the growing 4G LTE market, despite its risks.

Among holdings in which D. E. Shaw increased its stake was priceline.com (NASDAQ: PCLN  ) . The company has been experiencing strong growth internationally, with growth in Asia and the U.S. making up for weakness in Europe. Its stock has been a huge winner for Motley Fool Stock Advisor investors, though some see it as having gotten ahead of itself lately, while others think it has plenty of room to run, liking its fat profit margins and rapid growth rates. Its recent purchase of Kayak seems a plus, but debt has risen.

D. E. Shaw reduced its stake in lots of companies, including Alpha Natural Resources (NYSE: ANR  ) . Alpha Natural Resources had some investors worried recently when it was accused of violating EPA regulations, but the company doesn't expect much of an impact from that. Meanwhile, it recently exceeded Wall Street expectations, and those bullish on coal should take notice.

Finally, D. E. Shaw's biggest closed positions included ONYX Pharmaceuticals (UNKNOWN: ONXX.DL  ) and Goodrich (UNKNOWN: GR.DL  ) . Other closed positions of interest include NXP Semiconductors NV (NASDAQ: NXPI  ) , a primary maker of near-field communications (NFC) chips. 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: GOOGL  ) Google Wallet service. It does have competition, though. One of the company's latest offerings is a chip for digital video surveillance.

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

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  • Report this Comment On December 07, 2012, at 8:45 AM, Paulson545 wrote:

    Here's the rest of the story..Billionaires T Boone Pickens bought 275,700 shares of Arch Coal and George Soros bought 4.4 million shares of Peabody Energy. Are these two Billionaires calling the bottom in these two coal stocks ? jmho

  • Report this Comment On December 07, 2012, at 3:00 PM, Sirgarfield wrote:

    The axiom has always been follow the money. Coal is not dead, those with the money know that. Exelon just completed the sale of 3 coal fired power plants to Raven Power which is owned by Riverstone LLC who has partnered with the Caryle Group. Lots of money following a coal play. Raven is an Alaskan power company. Is this the start of a new play to sell coal to China by converting it to electricity and transmitting it under the North Pole without all the expenses involved in transporting the coal or building new power plants in China.

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