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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 Robeco Investment Management, which is a U.S.-focused subsidiary of major Netherlands-based financial institution Rabobank and which has three primary divisions: Boston Partners (value equity), Sage Capital (multimanager strategies), and Weiss, Peck & Greer (fixed income, equity, and alternatives). It has been in the news a bit lately, with Rabobank trying to sell its investment management business and some suitors, such as Australia's Macquarie Group, not wanting all of the U.S.-based business.
Robeco Investment Management touts its flat management structure and focus on value equity investing. The company's reportable stock portfolio totaled $27.3 billion in value as of Dec. 31, 2012. Companies rarely get that big without doing some things right.
So what does Robeco's latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are Valero Energy and Express Scripts. Other new holdings of interest include Silver Bay Realty Trust (NYSE: SBY ) , spun off by Two Harbors Investment, a mortgage REIT (real estate investment trust). As a REIT, it's likely to pay out significant dividends, though it's still too young to have a dividend track record. The company will focus on single-family homes, profiting from foreclosures. It's worth watching, especially with a housing recovery seemingly under way.
Among holdings in which Robeco increased its stake was Phillips 66 (NYSE: PSX ) , the nation's largest independent oil refiner, spun off from ConocoPhillips. Phillips has been taking advantage of cheap crude for its refineries, and has arranged to ship some to a New Jersey facility as well, as it deals with capacity constraints further west. It's also boosting its production and capacity and recently reported a strong fourth quarter.
Robeco reduced its stake in lots of companies, including Heckmann (NASDAQOTH: NESC ) and RF Micro Devices (UNKNOWN: RFMD.DL ) . Wastewater treatment and disposal specialist Heckmann is attracting fans in part because of its work serving the controversial fracking industry and its presence in just about every shale field. The company has been unprofitable, but it has been turning that around and recently earned a Wall Street upgrade.
RF Micro Devices, meanwhile, has not been turning things around quickly, as its free cash flow has been shrinking and its bottom line is in the red. Bulls have found it undervalued and like that it supplies iPhones, but the stock has risen considerably in recent months and is not the bargain it may once have been. Still, it has potential in its Wi-Fi business and smartphone chips, among other things.
Finally, Robeco's biggest closed positions included Meadwestvaco and Western Union. Other closed positions of interest include Atmel (UNKNOWN: ATML.DL ) , which makes touchscreen controllers. Its earnings have been shrinking, though free cash flow does remain positive. It's a supplier for Kindles and Surface tablets, but those are not exactly leading the pack. An advantage, though, is that although its offerings are more expensive than many alternatives, they're also seen as higher quality.
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.