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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 Passport Capital, founded by John Burbank in 2000, and known for combining macroeconomic analysis and fundamental research. Burbank himself is famous for having called the subprime mortgage crisis, and reportedly earned a 220% return on it in 2007-- though he lost 50% the following year. The company's Passport Global Fund has averaged annual gains of about 18% since inception (vs. only 2% for the S&P 500 over the same period).
The company's reportable stock portfolio totaled $3.0 billion in value as of June 30, 2013.
So, what does Passport Capital's latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are shares of Chinese search-engine giant Baidu, and put options on the iShares MSCI Emerging Markets Index ETF. Other new holdings of interest include Micron Technology (NASDAQ: MU ) and Johnson Controls (NYSE: JCI ) . Micron has surged more than 150% over the past year, and still seems to have room to grow, with its forward P/E near 11. The company has been successfully adapting to a changing market, and has boosted its capacity, its pricing power, and its relationship with Apple via its acquisition of Japanese manufacturer Elpida. Micron bears worry about competition, though, and the company's debt. Micron beat expectations for both revenue and earnings in its last quarter, and is downsizing its workforce by about 5% -- but its earnings have recently been in the red, and its margins shrinking. Interested investors should keep the industry's cyclicality in mind. One odd upside for Micron is a fire at a competitor's plant.
Johnson Controls isn't well-known, but it's well represented across the nation, as it's a "Tier One" supplier to the auto industry. As of just a few months ago, its doubters weren't impressed with how it was failing to benefit much from recovering auto sales. But the stock has been having a good year, despite lots of numbers not looking too rosy. Still, as global economies pick up, Johnson Controls should benefit. The company has won part of a massive $7-billion Pentagon contract, and is forming an auto-fabric joint venture in China. For patient believers, the stock yields 1.9%, and the company has been paying dividends since 1887!
Among holdings in which Passport Capital increased its stake were ITT and Calpine. Passport reduced its stake in lots of companies, including Yamana Gold, and renewable oils manufacturer Solazyme (NASDAQ: TVIA ) . Solazyme shares took a hit in June on news that the company was dissolving one of its partnerships, but things may not be as bad as they may appear. In its second-quarter report, the company noted revenue down, and losses growing, but production facilities on track or ahead of schedule. Solazyme has many bulls, but some worry that its recent price may be somewhat steep.
Finally, Passport Capital's biggest closed positions included Hunstman and PennyMac Mortgage Investment. Other closed positions of interest include Kodiak Oil & Gas (UNKNOWN: KOG.DL ) and Roundy's (UNKNOWN: RNDY.DL ) . Kodiak recently bought 42,000 acres in the productive Bakken region, upping its assets there by 27%, and adding thousands of new barrels of oil to its production levels. The company offers rapid growth (such as triple-digit revenue growth rates), and seems to have more room to grow, with its forward P/E near 11. Bears worry that it might be too focused on the Bakken, and not sufficiently diversified, and they don't like its debt, but bulls like its focus on efficiency and growth.
Wisconsin-based grocer Roundy's is tempting with its 5.6% dividend yield, but that payout was halved last year and could fall further. It has been losing market share, for one thing. Its second-quarter results featured revenue down 1.7%, and net income down 28.6%, with the CEO putting a lot of faith in its Mariano's chain (which bears his name): "Despite the weaker than anticipated performance of our core stores, our Mariano's banner continues to show strong sales and profitability trends."
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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