Here's What This 758% Gainer Has Been Buying

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 investing giant Daniel Loeb, founder of the Third Point LLC hedge fund. Loeb is a well-known activist investor, famous for publicly airing his opinions about companies in which he invests and not mincing words when he's displeased. Loeb was instrumental in pointing out discrepancies in former Yahoo! CEO Scott Thompson's biography -- paving the way for Yahoo!'s new CEO, Marissa Mayer. More recently, he's looking to break up Sony.

His activity bears watching, because the guy seems to know a thing or two about investing. According to the folks at GuruFocus.com, over the 15 recent years ending in 2012, Loeb racked up a cumulative gain of 758%,  compared with just 94% for the S&P 500.

The company's reportable stock portfolio totaled $5.3 billion in value as of March 31, 2013.

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

The biggest new holdings are Virgin Media and Tiffany. Other new holdings of interest include TIBCO Software (NASDAQ: TIBX  ) , a Big Data operator that posted mixed results recently as it invests in a more cloud-computing-oriented future. It's been adding recurring-revenue contracts and some speculate that it may end up acquired by another.

Third Point reduced its stake in lots of companies, including Murphy Oil and Yahoo! Among holdings in which it increased its stake were AbbVie (NYSE: ABBV  ) and ARIAD Pharmaceuticals (NASDAQ: ARIA  ) . AbbVie was split off from Abbott Labs (NYSE: ABT  ) and kept the pharmaceutical business. Detractors don't like its heavy debt or the impending patent expiration of its rheumatoid arthritis drug Humira, which is expected to generate more than $10 billion in annual sales. It has other drugs on the market and in its pipeline, tackling Hepatitis C, among other conditions. (A Hep C treatment just received FDA breakthrough designation.) It also sports a 3.5% dividend yield, and its chief scientific officer is retiring, which should interest investors.

ARIAD received FDA approval for its leukemia drug Iclusig, though its launch hasn't been as strong as some had hoped. The company's bone-tumor drug ridaforolimus was rejected in Europe, but it might still prove effective against other cancers. ARIAD needs some more success from its pipeline. Investors are hoping for European approval for Iclusig and eventual approvals for other treatments.

Finally, Third Point's biggest closed positions included Tesoro and Morgan Stanley. Other closed positions of interest include Herbalife (NYSE: HLF  ) and Abbott Labs. Herbalife has some high-profile critics, such as David Einhorn of Greenlight Capital and Bill Ackman of Pershing Square Capital Management, though others, such as Carl Icahn, have been buyers. The company has been reporting solid results, with its first quarter featuring revenue up 17%, net profit up 10%, and expectations for double-digit, near-term growth. Some worry about its multilevel-marketing strategy, but those who believe and are patient can collect a dividend yield near 2.5%.

Meanwhile, Abbott Labs is now focused on medical, diagnostic, and nutritional products. Its 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. Wall Street analysts such as David Roman of Goldman Sachs have upped the company's rating recently.

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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  • Report this Comment On May 29, 2013, at 11:46 PM, Cado05 wrote:

    " Iclusig, though its launch hasn't been as strong as some had hoped"- Can you tell me JUST ONE analyst who forecasted $6.4 million in the first quarter???? +another $3.3 million in revenue for shipments that had not been received by clients at the end of the quarter, and $2.1 million of the drug was shipping in France through an early-access program. Your article is funny without the knowledge of facts .Everybody can read "13F"filings but not anyone can get the good lesson from this. So if Daniel Loeb, founder of the Third Point LLC hedge fund increased his holding in Ariad it means something big coming to Ariad and Abbvie. Look what happened with Tesla stocks recently, and who bought tesla stock before went $100 from $30!!!

    Shares bought during Q1:

    Morgan Stanley Investment Management: 3.343 million shares. Now own 4.6% of Tesla’s outstanding shares. (Of note: Stock-equity analysts at Morgan Stanley on May 14 jacked up their Tesla price target to $103 a share from $47).

    Baillie Gifford & Co.: 2.351 million shares. This is a new position. Now own 2% of Tesla.

    Wellington Management Co.: 1.447 million shares. A major increase from prior stake. Now own 1.38% of Tesla.

    So be Smart like others funds who bought Ariads stock during the first quarter and will be profiting from the huge surge.

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