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 money managers Douglas C. Lane & Associates, founded in 1994 and based in New York City. The firm devotes a high-profile section of its website to its unofficial mascot, the turtle, chosen for its willingness to stick its neck out and its perseverance, among other things. A profile in Barron's summarized its investment strategy by noting that "the firm invests long-only, aims for low portfolio turnover, and takes a long-term view -- typically three to five years -- of securities." Between 1994 and now, the money it manages for clients has grown from $300 million to about $3 billion, which suggests that the firm is doing something right.
The company's reportable stock portfolio totaled $2.6 billion in value as of June 30.
Interesting developments
So what does Douglas C. Lane's latest quarterly 13F filing tell us? Here are a few interesting details.
The biggest new holdings are Visteon and Yahoo!. Other new holdings of interest include National Oilwell Varco (NOV 0.16%), a top maker of oil and gas drilling and oilfield services equipment. Bulls like its big and growing backlog and its massive market share as a supplier of rig equipment. It recently doubled its dividend (now yielding 1.4%) and is poised to profit as recent shale oil finds lead to production growth. Analyst Stephen Gengaro of Stern, Agee & Leach reiterated his buy rating on the stock a few weeks ago, citing drillship orders received by Seadrill that can result in hundreds of millions of dollars for National Oilwell Varco.
Among holdings in which Douglas C. Lane increased its stake were VeriFone Systems (PAY) and American Tower (AMT -0.59%). VeriFone has seen its stock nearly halved over the past year, as it has repeatedly posted disappointing quarterly results and weak guidance. Indeed, results reported in June sent shares down some 20%. A board member recently bought about half a million dollars worth of shares though, signaling confidence, and bulls like a recent deal with China. With a single-digit forward P/E ratio, VerFone is seen as attractive by some, and as a possible acquisition target. Others, though, are wary, fearing that competitors will eat VeriFone's lunch.
With wireless communications facilitator American Tower's stock averaging 23% annual gains over the past decade and a forward P/E ratio near 30, you can argue that the real estate investment trust is overvalued. Some disagree, though, seeing opportunity and expecting growing demand for the company's towers. Another plus is the company's rising dividend, which yields 1.5%. The company's international growth has been particularly strong lately, too. American Tower stock took a hit recently when the activist short-selling firm Muddy Waters Research slapped a "sell" rating on it, citing questions about accounting and even questioning the company's viability. The company has rebutted the report.
Douglas C. Lane reduced its stake in lots of companies, including telecom company CenturyLink (LUMN). The company sports a tempting 6% dividend yield, and that's after it cut its payout by about 25%, in part to focus more on share buybacks. The company landed a hefty Pentagon contract in April, with a possible 10-year value of $750 million and has been moving into promising arenas such as cloud computing (via its purchase of SAVVIS). CenturyLink carries more than $19 billion in debt, but it's also generating significant free cash flow, near $3 billion annually. Its revenue growth has been accelerating in recent years and has long been in double digits annually.
Finally, Douglas C. Lane's biggest closed positions included Western Union and bonds in General Motors. Other closed positions of interest include Annaly Capital Management (NLY 0.61%). Annaly, a mortgage REIT, has many investors drooling over its 13.4% dividend yield. But it also has investors worried about rising interest rates and that the company might take on more risk by expanding beyond agency-backed securities. Some even worry about nepotism in the company and outsized compensation. Many are choosing to watch and wait. Annaly stock has sunk by more than 20% over the past year.
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 13-F forms can be great places to find intriguing candidates for our portfolios.
