Every quarter, 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 Eagle Asset Management, a massive money-management arm of Raymond James Financial (NYSE: RJF ) . Tracing its history back to 1976, the company provides investment services via individual managed accounts as well as mutual funds.
The company's reportable stock portfolio totaled $21.9 billion in value as of Sept. 30, 2013.
So what does Eagle Asset Management's latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are United Parcel Service (NYSE: UPS ) and Aegerion Pharmaceuticals (NASDAQ: AEGR ) . Other new holdings of interest include Xerox (NYSE: XRX ) . With a forward P/E near 8.5 and a 2.2% dividend yield (the payout was hiked by 35% earlier this year), Xerox seems a solid value. The woman-led company (its CEO is Ursula Burns) has been retooling itself in recent years, aiming for higher margins via services. In its latest quarter, services made up 55% of revenue and grew by 5%, on average, versus just 1% for overall revenue.
Xerox has inked some long-term government contracts -- e.g., processing Medicaid claims for all of California -- and is working on Obamacare health-care exchanges, too. It recently made a deal worth about $100 million with the Texas Department of Transportation. Xerox is already generating more than $2 billion in free cash flow annually. An SEC investigation was recently launched into accounting practices at an outsourcing business that Xerox bought, but it's not expected to have a major effect on Xerox.
Among holdings in which Eagle Asset Management increased its stake was IAMGOLD (NYSE: IAG ) , which has plunged some 71% over the past year as the price of gold has fallen. IAMGOLD's second-quarter report showed that it achieved 55% of its cost-cutting goals, which will help it boost profit margins. (In a September presentation in Denver, the company's CEO noted that the past year has been all about cost reduction.) The company has been diversifying its base and is hoping it won't face higher taxes from Canada. It has also been moving toward being more of an owner-operator, as that gives it more control over its operating cost. Goldman Sachs (NYSE: GS ) initiated coverage of IAMGOLD last month with a sell rating. The stock recently yielded a hefty 5.7%.
Eagle Asset Management reduced its stake in lots of companies, including Synovus Financial (NYSE: SNV ) . The 125-year-old Georgia-based bank has 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 numbers. It has reported four profitable quarters in a row, and it reports its latest quarter on Tuesday. Analysts at Zacks upgraded Synovus Financial recently to "outperform," praising its cost-cutting and "strong capital position." They also noted some risks, though, such as "regulatory issues, a low interest environment and significant exposure to residential real estate markets." The stock yields 1.2%.
Finally, Eagle Asset Management's biggest closed positions included Francesca's Holdings (NASDAQ: FRAN ) and Ryland Group (NYSE: RYL ) . Other closed positions of interest include Direxion Small-Cap Bear 3X ETF (NYSEMKT: TZA ) and Walter Energy (NASDAQOTH: WLTGQ ) . Walter Energy is a pure play in metallurgical coal, which is needed by the steel industry. But demand and pricing have been weak lately, and Walter's stock is down about 60% over the past year, in part because it slashed its dividend by 92% a few months ago to help address its debt. Those who expect an uptick in demand for metallurgical coal might want to consider the company, but it's not likely to be very profitable in the near future.
The Direxion small-cap ETF has lost more than 60% of its value over the past year, betting against the market with a lot of leverage. That's a risky thing to do, as the market's overall long-term trend is upward. (Thus, funds such as these are often used on a short-term basis, making them little more than gambling tools.) My colleague Dan Caplinger has suggested that investors might do well to simply watch this ETF instead of investing in it. Even the Federal Reserve is not a fan.
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. 13F forms can be great places to find intriguing candidates for our portfolios.
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