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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 Fred Alger Management, founded in 1964, and managing mutual funds, pension funds, and more. The company explains, "We have remained steadfast to our philosophy and proprietary, bottom-up, fundamental research process, which we believe is the blueprint for our long-standing success." It was devastated on Sept. 11, 2001, when the majority of its employees who worked at One World Trade Center were killed, but it remains in business, having regrouped.
The company's reportable stock portfolio totaled $17.3 billion in value as of March 31, 2013.
So, what does Fred Alger Management's latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are pharmaceutical company Actavis and fertilizer specialist Mosaic. Other new holdings of interest include Zoetis (NYSE: ZTS ) . If you haven't heard of Zoetis, that may be because it was just spun off by Pfizer earlier this year. It's a major enterprise, though – the world's largest animal-health company, and a new addition to the S&P 500. Its dividend is on the puny side at the moment, but with a low payout ratio, it has much room to grow.
Among holdings in which Fred Alger Management increased its stake were Two Harbors Investment (NYSE: TWO ) and National Oilwell Varco (NYSE: NOV ) . The company reduced its stake in lots of companies, including Questcor and Weatherford. Two Harbors is a mortgage REIT, or "mREIT," recently yielding a gargantuan 11.4%. It's a "hybrid" mREIT, though, investing in both government agency-backed mortgages and ones that are not so backed. Thus, it has more flexibility than some of its peers. Some worry about rising interest rates and prepayments on loans, but Two Harbors has apparently hedged against some of that. Insiders and institutions have been buying shares in recent months.
National Oilwell Varco, a top maker of oil and gas drilling and oilfield services equipment, has been a strong performer, averaging stock growth of 20.5% annually over the past decade, and up 9% over the past year. There's much to like about the company, such as its record backlog of nearly $13 billion, its operations in productive shale fields, and its 60% market share as a supplier of rig equipment. Those who passed up its previously unimpressive dividend might want to know that it doubled its payout recently, and now yields about 1.5%, with more room to grow. The drilling specialist has even been providing thousands of pumping stations to areas where people are living without sufficient access to clean water. The stock doesn't seem too expensive, either.
Finally, Fred Alger Management's biggest closed positions included QLIK Technologies and Triumph Group. Other closed positions of interest include 3D Systems (NYSE: DDD ) and American Capital Agency (NASDAQ: AGNC ) . Many have high hopes for 3D Systems, but it hasn't been growing organically as quickly as some might like. The company's last earnings report was a bit mixed, with revenue up 31%, and net income dropping. But 3-D printing is still in its infancy, with much promise. Some see the shares as a bit rich now, though, and there has been insider selling. Another concern is that fellow 3D specialist Stratasys is buying MakerBot -- though there's a case to be made that the real future of 3D printing is in the commercial arena, not retail. Meanwhile, 3D Systems has been making some acquisitions of its own.
American Capital Agency is a mortgage REIT with a tantalizing dividend yield recently above 17% -- though that reflects a recent 16% dividend cut. The company's CEO is well respected, but some worry about rising interest rates, and mortgage REITs losing a valuable tax advantage. Analysts at Barclays recently downgraded the stock, which is down about 19% over the past year, despite racking up average annual gains of roughly 27% over the past five years.
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. Therefore, 13-F forms can be great places to find intriguing candidates for our portfolios.
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