Here's What This Big Value Investor Has Been Buying and Selling

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 Diamond Hill Capital Management, founded  in 2000, and based in Ohio. It has explained  that:

Our research is predominantly a bottom-up process beginning with fundamental analysis of a company's profitability and market position, financial and competitive position, management quality, valuation, and growth components of valuation.

Like other value-oriented investors respected by The Motley Fool, Diamond Hill seeks undervalued investments and margins of safety.

The company's reportable stock portfolio totaled $8.7 billion  in value as of December 31, 2012.

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

The biggest new holdings are Progressive and TJX Companies. Other new holdings of interest include online auctioneer Liquidity Services (NASDAQ: LQDT  ) , which is also a Motley Fool Stock Advisor recommendation. With a relatively capital-light business model and solid profit margins , it specializes in surplus, wholesale, and salvage assets, and has been enjoying double-digit revenue and earnings growth over the past five years. Bears worry about slowing growth and competition, though. The company just reported its first-quarter results , and they featured revenue up 15%, earnings per share up 11%, and lowered  expectations for 2013, due to economic uncertainty.

Among holdings in which Diamond Hill increased its stake was Apple (NASDAQ: AAPL  ) . Many are panicking, or at least worrying, about Apple, as it's trading near $450 per share from a 52-week high near $700. It recently reported sales that were somewhat disappointing, and shrinking margins, as well. Still, the quarter featured profits of $13 billion, along with 28% more iPhones, and 48% more iPads sold than in the year-earlier period. That's not too shabby, and some think the stock is now a bargain.

Diamond Hill reduced its stake in lots of companies, including Diamond Foods (NASDAQ: DMND  ) and Huntington Bancshares (NASDAQ: HBAN  ) . Diamond Foods had a tough 2012, losing out on a bid for Pringles, and having to restate financial results, among other challenges. Diamond has negative free cash flow  and negative net income, along with meager cash and rising debt; therefore, you should delve deeply into the company before investing in it. It may turn itself around, but it seems to have some work to do.

Huntington Bancshares, meanwhile, has been aggressively reducing its loan-loss provisions, while its business has been growing, thanks to talented management. Its 2.3% dividend yield might not be tantalizing, but it was quadrupled  in 2011, and the company does sport a lot of room to grow – organically and via acquisitions. Its CEO recently bought nearly $300,000 worth of shares, too, which is a bullish sign.

Finally, Diamond Hill's biggest closed positions included Amgen and Fluor (NYSE: FLR  ) . Heavy construction and industrial specialist Fluor is trading near a 52-week high, and its P/E ratio is a bit above  its five-year average, with free cash flow having dropped  some in recent years. Thus, it doesn't look quite as bargain-licious as many other stocks, right now. Still, there are promising long-term factors, such as sound ethics and global economic softness, that will reverse at some point.

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.

There's no doubt that Apple is at the center of technology's largest revolution ever, and that longtime shareholders have been handsomely rewarded with over 1,000% gains. However, there is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy, and reasons to sell, Apple, and what opportunities are left for the company (and more importantly, your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.


Read/Post Comments (2) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 31, 2013, at 11:39 PM, TimKnows wrote:

    How do you pump a stock that trades at 52 week lows and has nothing new to offer consumers for all of 2013??? Apple is a screaming sell.

  • Report this Comment On February 01, 2013, at 1:53 AM, OracleofOmahaha wrote:

    Tim knows nothing. You should spend your time trying to pump up your RIMM stock.

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8/22/2014 4:00 PM
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