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 Kynikos Associates, founded in 1985 by investing giant Jim Chanos, which sported a reportable stock portfolio of $118 million as of March 31, 2012. Chanos is known for being an early spotter of trouble at Enron , betting against it and profiting while others got crushed.
The company's reportable stock portfolio totaled $293 million in value as of Sept. 30, 2012.
So what does Kynikos Associates' latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are Starbucks (Nasdaq: SBUX ) and Occidental Petroleum (NYSE: OXY ) . Occidental's revenue and earnings have been growing briskly in recent years, but it might be challenged by a gradual decrease in demand for oil, in part due to more energy-efficient vehicles and its not being as diversified as some peers. In the meantime, though, it has been quite successful in the oil-rich Permian Basin. It recently yielded close to 3%, too, and has been hiking its payout significantly in recent years.
Among holdings in which Kynikos increased its stake was VMWare (NYSE: VMW ) , which is majority owned by storage giant EMC (NYSE: EMC ) . The two recently announced plans to combine their cloud-computing application and "big data" offerings. VMWare, unlike some rivals, is focusing more on "private" cloud services, which are of interest to corporations, for example. Some analysts are bullish on the company's prospects, such as in the area of software-defined networking ("SDN"), though EMC might be the better bargain right now.
Kynikos reduced its stake in companies such as Chicago Bridge & Iron (NYSE: CBI ) and Deere (NYSE: DE ) . The former provides services to the energy and natural resources sectors, working on projects related to water, hydrocarbon, and nuclear industries. The company is buying Shaw Group (NYSE: SHAW ) , which has some worried about additional debt while others are unhappy about Shaw's nuclear energy operations. A plus, though, is Shaw's big backlog.
Forestry and agricultural equipment giant Deere (NYSE: DE ) has been growing its revenue and earnings at an accelerating pace over the past few years. Its heavy exposure to global economies, especially fast-growing emerging markets, is promising. The company's strategy is to profit from macro trends such as growing global population and income as well as global infrastructure work. Its 2% dividend is also a draw, especially since it has been upped by an annual average of about 14% over the past five years. Some think its rival Caterpillar (NYSE: CAT ) is the better buy right now, though.
Finally, Kynikos closed out its position in just one company, Whole Foods Market (Nasdaq: WFM ) . Opinions are divided on the company, known for its social responsibility, among other things. Bulls like that, as well as its growth rates, growth potential, pricing power, and healthy balance sheet. Bears worry that it might be growing too aggressively, and that after rising about 40% over the past year, it's not a bargain right now.
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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