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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 Moore Capital Management, managed by billionaire Louis Moore Bacon. Bacon is known for employing a global macroeconomic focus in his investing, and has been among the top 20 money earners since the 1990s, per GuruFocus.com. Bacon's fund has turned in some spectacular performances, but also some lackluster ones, and, after poor results in 2011, he returned $2 billion to shareholders, citing the fund's size as an obstacle. Still, Bacon seems to have solid investing chops, with his flagship fund reportedly averaging nearly 19% in annual gains since its inception in 1989 (as of 2012).
The company's reportable stock portfolio totaled $4.2 billion in value as of June 30, 2013.
So, what does Moore's latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are calls options on the SPDR S&P 500 ETF and the PowerShares QQQ Trust ETF. Other new holdings of interest include Nuance Communications (NASDAQ: NUAN ) and American Capital Agency (NASDAQ: AGNC ) . Nuance is a major developer of speech-recognition software, with its technology housed in many Apple devices (think "Siri"). (Thus, its fortunes are somewhat tied to Apple's.) While some see the stock as undervalued now, others are bailing, not liking its recent performance or the CEO's compensation package. The company's future is quite uncertain, but bulls see potential, such as in the health-care industry's looming deadline to update its coding system. Nuance is digging in to the health-care industry, fitting its technology with the Epic software used by many in health care. Nuance is also working with Echo Nest to develop more music and entertainment offerings.
American Capital Agency is a mortgage REIT with a tantalizing dividend yield recently above 17% -- though that reflects a 16% dividend cut earlier this year. American Capital's stock has been volatile, shedding about 25% over the past year, but still averaging 29% annual gains over the past five. The company's CEO is well-respected, but some worry about rising interest rates, the easing of quantitative easing, and mortgage REITs losing a valuable tax advantage. The company has been moving more into 15-year mortgages, and decreasing its focus on 30-year ones. The shorter loans are less volatile, but they also offer lower yields.
Among holdings in which Moore Capital Management increased its stake was Synovus Financial (NYSE: SNV ) . Georgia-based Synovus recently repaid its $968 million TARP debt, in part by issuing more stock. Its credit quality has been improving, and it has been posting strong return-on-equity (ROE) numbers. It just reported its fourth-profitable quarter in a row, too. Management aims to cut at least $30 million in costs this year, and has cut much more in recent years. Analysts at Zacks upgraded Synovus in July to a Strong Buy, noting, "A decline in non-interest expense, improvement in credit quality and strong capital ratios depict the scope of sustainable profitability in the forthcoming quarters." Analysts at Drexel Hamilton downgraded the stock in August, though, on valuation concerns. The stock yields 1.2%.
Moore Capital Management reduced its stake in lots of companies, including Amarin (NASDAQ: AMRN ) , a late-stage cardiovascular-focused biotech enterprise, with a promising (and FDA-approved) drug to lower triglycerides -- its fish-oil-based Vascepa. It needs a big partner for Vascepa, though, and one likely suitor bought a competitor instead. Amarin recently collected its 30th patent for Vascepa, upping its ultimate commercial potential -- though some see that potential significantly threatened by competition. Bears also see fish oil as a controversial and, therefore, problematic offering.
Finally, Moore's biggest closed positions included Bank of America and calls on the iShares Russell 2000 ETF. Other closed positions of interest include Sequenom (NASDAQ: SQNM ) , which makes molecular and genetic diagnostic tests. My colleague Alex Planes has noted that the company sports some impressive numbers -- for an unprofitable company that faces stiff competition. Its last quarter featured revenue up 91%, but net losses, too, in part due to billing-code changes that delayed payments. The company is cutting costs, in part by laying off some 75 workers. One of Sequenom's tests can check for Down syndrome in a non-invasive manner, which should be of interest to many older women. Future tests might address conditions such as macular degeneration.
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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