Money managers must disclose what stocks they've bought and sold every quarter via 13F filings. Their latest moves can shine a bright light on smart stock picks. Today, let's look at SAC Capital Advisors.
Earlier this year, many investors became familiar with SAC Capital when the company was found guilty of a decade-long insider-trading scandal. As a result, the hedge fund, whose stock portfolio totals $18.5 billion, agreed to pay a record $1.8 billion settlement. While SAC Capital certainly isn't a model citizen of corporate ethics, we can still learn from its stock comings and goings.
Here are a few highlights from its latest quarterly 13F filing.
Buys and sells
Some noteworthy moves that SAC Capital made include establishing a new position in fast-casual restaurant Panera Bread (NASDAQ: PNRA) and selling out of its stakes in pet-centric retailer PetSmart (NASDAQ: PETM) and biotech Onyx Pharmaceuticals (NASDAQ: ONXX).
Panera boasts several decades of smart growth, building on its solid corporate reputation on its fresh products, healthy menu offerings, and compassion for its customers and community. The company offers a healthy alternative to burgers and fries, which some studies have shown can increase foot traffic. In fact, after Panera started posting calorie information a few years ago, it noted that 20% of its consumers started ordering lower-calorie menu items and same-store sales soared. Yet, more recently, the company has struggled to keep hold of its differentiation and uniqueness. Panera boasts very little debt on its balance sheet and enjoys solid cash flows, allowing it to make capital expenditures, buy back shares, and expand into new markets. Currently, less than 1% of Panera's restaurants are located outside the U.S, signaling vast international growth opportunities.
Until recently, PetSmart's historical growth rate had been like a scratch behind investors' ears. The pet-centric retailer's net sales have increased 9% on average annually during the past five years, outpacing the industry. Yet third-quarter same-store sales grew 2.7%, down from the prior quarter's 3.4%. Meanwhile, sales for PetSmart's important services segment, which includes grooming, boarding, training, and veterinary services, were up 5.2%, compared to 7.3% growth in Q2. Having grown 60% in the past five years, these very profitable services are the main differentiating factor for this pet-centric retailer and what set it apart from traditional big-box stores and e-tailers. Yet sales from services are slowing. While PetSmart shares have returned nearly 400% over the past five years, investors question how long the company can continue its growth trajectory.
Onyx Pharmaceuticals engages in the development and commercialization of therapies that target cancer-causing molecules. In order to bolster its product portfolio and pipeline, Amgen (NASDAQ: AMGN) acquired Onyx Pharmaceuticals for $9.7 billion, or $125 per share in cash, on Oct. 1, 2013. Onyx's Kyprolis was approved last year for a rare blood cancer. In addition to Kyprolis, Onyx sells liver and kidney cancer therapy Nexavar and stomach cancer treatment Stivarga. The Onyx acquisition fills a hole for California-based Amgen in a product line that largely contains drugs to support -- rather than treat -- cancer patients. The acquisition signals Amgen's acknowledgement that the oncology market is becoming more important as the population ages.
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