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 Westfield Capital Management, an investment advisor serving institutions and wealthy investors. It employs deep fundamental research as it seeks out stocks that are underloved by the market, and its funds have outperformed their benchmarks, on average, since inception.
The company's reportable stock portfolio totaled $13.8 billion in value as of Dec. 31, 2012.
Interesting developments
So what does Westfield's latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are Kraft Foods and Mondelez International, recently spun off from Kraft. Other new holdings of interest include American Capital Agency (AGNC -0.11%), which recently offered investors a mind-boggling dividend yield above 15%. There are concerns that the dividend may get reduced, but that might not happen for a while. In the meantime, the company recently benefited from an increased interest rate spread that was higher than some high-profile peers, and has boosted the proportion of its portfolio that isn't likely to suffer from borrowers refinancing and prepaying mortgages. In 2012, it delivered a total economic return of 32% to shareholders. You might still want to be wary, though, as there are some aspects of the company that aren't too appealing.
Among holdings in which Westfield increased its stake were Cirrus Logic (CRUS 2.42%) and Skyworks Solutions (SWKS 1.83%). Semiconductor chip designer Cirrus depends on Apple for much of its revenue, as its chips are in almost every iProduct. While Apple stock has been whacked recently, however, Cirrus is up for the year, recently blowing past earnings estimates and offering robust projections as well.
Skyworks Solutions, which makes components for smartphones, is also rather dependent on Apple, but it, too, has been posting strong performance numbers lately. It's debt-free, cash-rich, and with strong profit margins, it seems able to do well even without Apple. It's worth noting that it actually serves many other markets, too, such as automotive, medical, avionics, and the military as well as other manufacturers.
Westfield reduced its stake in lots of companies, including Weatherford International (NYSE: WFT). It's estimated that Weatherford will pay millions in settlements to multiple U.S. agencies investigating possible improper practices abroad. The company has been plagued with accounting-related problems as well, and remains challenged by low gas prices and low margins related to an Iraqi contract. Its forward P/E ratio of 10 might be tempting, but it might be wise to wait for the dust to settle before thinking about investing.
Finally, Westfield's biggest closed positions included MasterCard and Informatica. Other closed positions of interest include Eaton (ETN 1.90%), a power management company, has been profiting from a shift in focus from international projects to more U.S.-based ones. Management recently projected revenue growth of 42% in 2013 and that operating earnings will set a record. Eaton is also growing via acquisition, recently gobbling up Cooper Industries for more than $11 billion. It has also started seeing its inventories of heavy equipment start to shrink, which is promising. It yields about 2.6%.
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.
