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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 Passport Capital, founded by John Burbank in 2000 and known for combining macroeconomic analysis and fundamental research. Burbank himself is famous for having called the subprime mortgage crisis and reportedly earned a 220% return on it in 2007-- though he lost 50% the following year.
The company's reportable stock portfolio totaled $2.2 billion in value as of Sept. 30, 2012.
So what does Passport Capital's latest quarterly 13-F filing tell us? Here are a few interesting details:
The biggest new holdings are Las Vegas Sands (NYSE: LVS ) and CONSOL Energy (NYSE: CNX ) . Other new holdings of interest include rare-earth minerals specialist Molycorp (NASDAQOTH: MCPIQ ) and Spectrum Pharmaceuticals (NASDAQ: SPPI ) . Molycorp made news recently, with the abrupt departure of its CEO. Its vertical integration is a plus, but the company, which has built up its production, is still at the mercy of pricing dictated by supply and demand.
Spectrum Pharmaceuticals (NASDAQ: SPPI ) , meanwhile, is riding on the success of its colorectal cancer drug, Fusilev -- but that success is partly due to a supply shortage faced by competition. The company recently announced a special dividend, and some see it sporting an attractive valuation, despite concerns.
Among holdings in which Passport Capital increased its stake was SandRidge Energy (UNKNOWN: SD.DL ) . Bears don't like the company's debt levels and are skeptical about its acquisition of Dynamic Offshore Resources, but the company has been addressing its debt, recently selling off its Permian Basin assets. Investors did seem pleased with the announcement of a joint venture with Spain's Respol that boosts SandRidge's dominance in the Mississippi Lime field, but there remains some shareholder agitation.
Passport Capital reduced its stake in lots of companies, including Cliffs Natural Resources (NYSE: CLF ) , which has been yielding more than 8%, because its stock plunged. Some worry that the dividend isn't sustainable, as Cliff struggles along with the coal industry. Still, its fortunes should change once the auto industry and others are recovering more strongly, as Cliffs' metallurgical coal is used in making steel. For long-term investors, Cliffs seems attractively priced, and should pay you well to wait.
Finally, Passport Capital's biggest closed positions included put options on the iShares Russell 2000 (NYSEMKT: IWM ) and SPDR Select Industrials (NYSEMKT: XLI ) ETFs. Other closed positions of interest include telecom specialist Alcatel-Lucent (UNKNOWN: ALU.DL ) , which was a new holding last quarter. My colleague Anders Bylund is not alone seeing the company in dire straits, as it struggles to keep operating. All may not be lost, though, as it just landed a valuable contract to provide equipment to Spanish telecom giant Telefonica (NYSE: TEF ) .
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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