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 Graham Capital Management, founded in 1994 by Ken Tropin and in the multi-strategy macro-oriented hedge fund business. The overall company manages investments for endowments, foundations, sovereign wealth funds, global pensions, investment advisors, and wealthy individuals, among others.
The company's reportable stock portfolio totaled $1.8 billion in value as of March 31.
Interesting developments
So what does Graham Capital's latest quarterly 13F filing tell us? Here are a few interesting details.
The biggest new holdings are Royal Dutch Shell and puts on the SPDR Gold Trust ETF. Other new holdings of interest include Leapfrog Enterprises (LF.DL). Educational multimedia company LeapFrog topped earnings expectations in its latest quarterly report, with revenue up 15% and net losses narrowing. LeapFrog is posting positive free cash flow and sports single-digit P/E ratios for this year and next. Some see it as more attractive than the big toy companies Mattel and Hasbro.
Among holdings in which Graham Capital Management increased its stake was TriQuint Semiconductor (TQNT.DL). The stock recently received an upgrade to "buy" from analysts at Charter Equity, but my colleague Rich Smith thinks the stock is still overvalued. Anyone thinking the stock is on the rich side won't be happy about the company's stock-buyback plans. Its last earnings report was disappointing, but management sees better days ahead due to the introduction of many new products, along with a growing market.
Graham Capital Management reduced its stake in lots of companies, including SandRidge Energy (NYSE: SD). Focused on the Mississippi Lime and Gulf of Mexico regions, the company has been improving its performance on many counts, such as declining well costs. Some are waiting to find out, by the end of the month, whether the company's CEO will remain or depart, with a departure possibly leading to a breakup of the company or other strategies recommended by activists.
Finally, Graham Capital's biggest closed positions included Hess and calls on the SPDR S&P 500 ETF. Other closed positions of interest include Halcon Resources (HK) and Pengrowth Energy (NYSE: PGH). Oil and gas company Halcon, operating in the promising Bakken region, as well as Texas' productive Eagle Ford shale region, among others, posted 2012 net daily production 128% higher than year-earlier levels, and proven reserves up 417%. The stock was punished after a disappointing earnings result last month, despite surging revenue. Free cash flow has moved into the red, though.
Pengrowth has drawn some investors' interest with its dividend yield north of 9%, but that payout has been shrinking in recent years. It has been challenged lately by issues such as rising costs and cut back on its production a bit. Earlier this year, my colleague Sean Williams saw it as a somewhat risky but also very promising portfolio candidate. In its latest earnings report, the company noted that it is selling some non-core assets to raise funds for further investments.
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.
