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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 investment advisory firm Douglass Winthrop Advisors. It's of interest because it employs a Foolish (in a good way) "low-turnover, buy and hold strategy" -- and it has been served well by that, too. Since its inception roughly a decade ago, its equities investments have averaged annual gains of 9.2%, versus 8% for the S&P 500. Management noted in a recent letter to shareholders, "As committed long-term investors we keep our clients invested through good days and the inevitable bad ones. While this makes for some queasy moments, our clients understand that what really matters are long-term returns net of fees and taxes."
The company's reportable stock portfolio totaled $844 million in value as of March 31.
So what does Douglass Winthrop's latest quarterly 13F filing tell us? Here are a few interesting details.
The biggest new holdings include Merck. Other new holdings of interest include Seadrill (NYSE: SDRL ) and Banco Santander (NYSE: SAN ) . Seadrill, a deepwater drilling specialist, sports a huge dividend yield of about 8.5%. It has been "executing perfectly," but it worries some with its aggressive financing and high debt. Still, it sports a massive work backlog that tops $20 billion, and its fleet is more modern than those of its peers. The stock has grown by nearly 11% annually, on average, over the past five years yet still sports a forward P/E of just 11.
Banco Santander has also been yielding 8.5% recently. It has faced a tough environment in Europe, but it does a lot of its business in Latin America, where it benefits from faster growth rates. It may be a while before all its operating regions are healthy, but while investors wait, they can collect a hefty payout. Some value-oriented investors see it as undervalued, as well, and its most recent quarter improved on results from the previous quarter.
Among holdings in which Douglass Winthrop Advisors increased its stake was Sirius XM Radio (NASDAQ: SIRI ) . Sirius did post disappointing earnings recently, but revenue and earnings are still growing at a double-digit rate, which remains attractive. A strong report from Ford is promising for Sirius, as its radios are embedded in many vehicles. Bulls like the company's new personalized radio service, MySXM, too, and the stock recently hit a 52-week high.
Douglass Winthrop Advisors reduced its stake in lots of companies, including Abbott Labs (NYSE: ABT ) . Abbott has just split its pharmaceutical business from its nutrition and devices businesses. The new pharmaceutical entity is AbbVie, while Abbott retained the strong nutritionals business and vascular businesses. The company's first-quarter results were solid, with the nutrition division especially strong, particularly in emerging markets. Its devices business was less strong, but it has just had a new stent approved.
Finally, Douglass Winthrop's biggest closed positions included Mueller Water Products. Other closed positions of interest include Freeport McMoRan Copper & Gold (NYSE: FCX ) . The world's largest publicly traded copper producer has seen its stock struggle lately, though it does offer a dividend yield of 3.8%. The company has diversified its operations considerably, by buying a pair of oil and gas producers. It was hurt by the falling price of copper and slowing growth in China. The business also faces challenges such as labor strikes and accidents (a tunnel recently collapsed in Indonesia, for example).
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, and 13F forms can be great places to find intriguing candidates for our portfolios.
After putting together a blockbuster deal to expand into the oil and natural gas industry, Freeport-McMoRan will have plenty on its plate as it tries to adapt to the new industry, as expanding into oil and gas carries plenty of inherent volatility. FCX had a profitable copper business, and on top of this foray into a new industry it still has to contend with mining industry bellwether BHP Billiton. To help investors determine if Freeport-McMoRan is a buy or a sell, The Motley Fool has compiled a premium research report on the company. Simply click here now to access your copy today.