Here's How the Guy Who Called Enron Has Been Investing

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 Kynikos Associates, founded in 1985 by investing giant Jim Chanos. Chanos is known for being an early spotter of trouble at Enron, betting against it and profiting while others got crushed.

The company's reportable stock portfolio totaled $318 million in value as of June 30.

Interesting developments
So what does Kynikos Associates' latest quarterly 13F filing tell us? Here are a few interesting details:

The biggest new holdings are Charles Schwab and Workday (NYSE: WDAY  ) . Other new holdings of interest include Whole Foods Market (NASDAQ: WFM  ) . Cloud-computing specialist Workday made a big splash last year when it IPOed, and in its last reported quarter, it posted revenue up a solid 72%, losses narrower than expected, and subscriptions up by 92%. On the down side, the company is still unprofitable and burning cash, though it does have ample cash and short-term investments to burn. It's seen as overvalued by some, with others, such as analyst Stephen Simpson, also seeing much potential.

Whole Foods Market has enjoyed average annual gains of about 17% over the past 20 years, as demand for organic foods has taken hold and been growing briskly. It has also enjoyed substantial pricing power, but with more conventional supermarkets now offering organic fare, it faces competition and pressured profit margins. (Meanwhile, Whole Foods and its peers are presenting competitive headaches to restaurants, with their prepared foods.) The company's last quarter was strong, featuring rising profit margins and earnings growth continuing to outstrip revenue growth.

Kynikos Associates reduced its stake in companies such as Visa and KKR. Among holdings in which it increased its stake were SanDisk (NASDAQ: SNDK  ) and Deere (NYSE: DE  ) . Memory specialist SanDisk's second quarter was "truly magnificent," topping analyst estimates and featuring revenue up 43% and earnings up some 2,000%. Management added, "We are excited about our pending acquisition of SMART Storage Systems, as it accelerates our growth in enterprise storage." In July, the company initiated a dividend that recently yielded 1.5% and it added $2.5 billion to its stock buyback plans.

Deere topped expectations in its last quarter, but management's projections left many investors dissatisfied. A bright spot is great potential from Latin American sales. Analysts at Morgan Stanley rate the stock as "underweight" though, with expected demand not thought to justifying the stock's valuation. The company is exploring shedding its irrigation unit. Deere faces tough competition, too, such as from Japan, and some are looking for cost-cutting from the company. Deere stock yields 2.5%.

Finally, Kynikos Associates' biggest closed positions included JPMorgan Chase and CNH Global. Other closed positions of interest include VMware (NYSE: VMW  ) , focused on virtualization software and cloud computing, and majority-owned by EMC. Bulls like its smart partnerships and growth prospects, while bears worry about strong competition. Its second quarter topped expectations, with revenue up 11% and management offering rosy projections. Along with EMC, it plans to launch a joint venture called Pivotal, combining their cloud and data analytics services. Pivotal is expected to be spun off as a separate company in the future, and IBM has already given it a vote of confidence.

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.

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