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 Tudor Investment, founded in 1980 by Paul Tudor Jones and featuring the flagship Tudor BVI fund. Jones, featured in Jack Schwager's Market Wizards: Interviews with Top Traders, was one of the few to foresee the 1987 market crash (and he made many millions on it, as well). He's known for focusing on short-term trading, equity, venture capital, debt, currency, and commodity markets. More recently, he's known for confounding comments he made, suggesting that women with children shouldn't be trading stocks.
The company's reportable stock portfolio totaled $1.3 billion in value as of March 31.
So what does Tudor Investment's latest quarterly 13F filing tell us? Here are a few interesting details.
The biggest new stock holdings are Pfizer and Agilent Technologies. Other new holdings of interest include Cliffs Natural Resources (NYSE: CLF ) . Cliffs' stock is down more than 60% over the past year, and its 3.4% dividend yield is what's left after a 76% dividend cut earlier this year. The coal market has been struggling lately, in part because low natural gas prices are making it less competitive, but some are optimistic, seeing coal prices rebounding and demand growing, especially abroad. The stock has fallen so far that some see it as attractive now, but others worry about significant debt and negative free cash flow. Indeed, last month more than 30% of the stock's float had been shorted. On the plus side, though, Cliffs just inked a long-term iron-ore-pellet deal.
Among holdings in which Tudor Investment increased its stake was motion-sensor specialist InvenSense (NYSE: INVN ) . The stock popped up 8% recently, partly on bullish comments by Piper Jaffray analyst Auguste Richard. Bulls like its innovative technology that's finding its way into many iDevices and think its stock is reasonably or attractively priced, too, with a forward P/E of just 19. Its last quarter featured revenue and earnings increasing by double and triple digits, respectively.
Tudor Investment reduced its stake in lots of companies, including Nuance Communications (NASDAQ: NUAN ) . Nuance, specializing in speech-recognition software, took a dive in April after posting disappointing earnings. The company is threatened by weak demand, shrinking margins, and intensifying competition, as well as a change in how it's compensated, with more focus on usage. The stock's low valuation, with a forward P/E near 13 comparing favorably with its five-year average P/E of 42, makes it look attractive, but some doubt how quickly Nuance can grow. Notable investor Carl Icahn sees potential in it, though, perhaps intrigued by its potential in the health-care field, helping doctors create or update electronic health records.
Finally, Tudor Investment's biggest closed positions included Apple and the iShares MSCI Emerging Market Index Fund ETF. Other closed positions of interest include Frontier Communications (NASDAQ: FTR ) and BGC Partners (NASDAQ: BGCP ) . Frontier, recently yielding more than 9%, is a rural telecom specialist. It's weighed down with considerable debt, and is shifting its business focus, favoring business customers more. It's been posting declining revenue lately, though, and its credit rating took a hit in recent months, also. Some worry that its acquisition of landline business from Verizon may not be as lucrative as expected, and fear a dividend cut.
BGC Partners, a brokerage mainly serving the wholesale and real-estate markets, has been diversifying its business by expanding more into commercial real estate. It also offers a huge dividend, recently yielding more than 8% -- but its payout currently exceeds its earnings, suggesting that it may not be sustainable unless something changes for the better. The stock surged 42% in April, on news of the company selling its electronic Treasury trading platform to Nasdaq OMX Group.
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.