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 $14.7 billion in value as of March 31, 2013.
So what does Westfield's latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are Actavis and Axiall. Other new holdings of interest include AbbVie (NYSE: ABBV ) . AbbVie is half of the split-up of Abbott Labs, retaining the pharmaceutical business, while Abbott focuses on medical, diagnostic, and nutritional products. Some worry about its heavy debt or the impending patent expiration of its blockbuster drug Humira, which is on track to become the first drug to generate more than $10 billion in annual sales. On the plus side, though, AbbVie generates about $18 billion in annual revenue and more than $5 billion in annual free cash flow. It has other drugs on the market, too, and more in its pipeline, tackling Hepatitis C, among other conditions. (A Hep C treatment just received FDA breakthrough designation.) It also sports a 3.6% dividend yield.
Among holdings in which Westfield Capital Management increased its stake was American Capital Agency (NASDAQ: AGNC ) . American Capital Agency is a mortgage REIT with a tantalizing dividend yield above 16%. The company's CEO is well respected, but some worry about rising interest rates and mortgage REITs losing a valuable tax advantage.
Westfield Capital Management reduced its stake in lots of companies, including NXP Semiconductors (NASDAQ: NXPI ) , which specializes in near-field communications (NFC) chips. Some of its chips aid digital video surveillance, while others can help cars talk to each other. NXP's NFC business has been growing briskly, and while there is competition from other firms, management sees that as a good sign and recently offered rosy projections.
Finally, Westfield's biggest closed positions included Ralcorp and Vertex Pharmaceuticals. Other closed positions of interest include Dynavax (NASDAQ: DVAX ) and JDS Uniphase (NASDAQ: JDSU ) . Dynavax shares fell sharply upon an FDA rejection of its hepatitis B vaccine Heplisav. The FDA left open the possibility of a more limited approval, but Dynavax now has more work to do, and it's burning cash while its revenue has been shrinking. Fortunately, it does seem to have have ample cash to keep it afloat for a few years. Investors are right to worry about share dilution, too. Dynavax has partnered with GlaxoSmithKline on Heplisav, and its new CEO hails from GlaxoSmithKline as well.
JDS Uniphase topped earnings estimates in its second quarter, but then disappointed investors in its third. Bulls are optimistic about fiber-optic demand but others see the stock flatlining on "anemic" sales. Management recently touted the company's innovation, though, noting that products less than two years old generated 64% of the company's core network-related revenue.
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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