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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 the California State Teachers' Retirement System (CalSTRS), a major pension fund that's celebrating its 100th anniversary in 2013. It's the largest educator-only pension fund in the world, serving more than 860,000 members, and its total assets recently topped $176 billion. About half its assets are in global equities, with sizable chunks also in fixed-income securities, private equity, and real estate.
The company's reportable stock portfolio totaled $33.6 billion in value as of Sept. 30, 2013.
So what does the latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are Twenty-First Century Fox and News Corp. Other new holdings of interest include Gigamon (NYSE: GIMO ) and Noodles & Co. (NASDAQ: NDLS ) . Networking technology specialist Gigamon is a newly issued stock, specializing in "Big Data" transfers, among other things. The company's third quarter featured estimate-topping results, but investors haven't been thrilled with lowered near-term projections and news of additional share issuances that dilute the value of existing shares. Analysts at Pacific Crest recently recommended Gigamon, liking its market position.
Noodles & Co. is another fast-growing recent IPO, though with lower profit margins than some peers. Noodles and Co.'s growth rate is exciting, but its stock no longer seems a bargain, and some see it as overhyped. The company has posted 16 consecutive quarters of same-store sales growth, but its third quarter featured revenue a bit below expectations. Still, net income and revenue were up 45% and 15%, respectively, over year-ago levels. Noodles & Co.'s menu offers a range of pasta dishes, such as Asian-inspired ones and its most popular Alfredo MontAmore. It's venturing into Latin American cuisine, too, with a pork adobo flatbread.
Among holdings in which CalSTRS increased its stake were Galena Biopharma (NASDAQ: GALE ) and OPKO Health (NASDAQ: OPK ) . Galena Biopharma has seen its shares more than double over the past year, as it excites investors with its pipeline. For example, its breast cancer therapy NeuVax is in phase 3 of clinical trials, and in phase 2 of trials in combination with the approved and leading breast cancer drug Herceptin. NeuVax is also being tested against prostate cancer, and Galena Biopharma has a vaccine against cancer recurrence in the works, too. On the other hand, Galena Biopharma is still without much revenue and has been posting losses, though its FDA-approved Abstral sublingual tablets for cancer pain seems to be selling well and can soon change that. Another concern has been that Galena's share count has more than quintupled over the past few years.
OPKO Health has also more than doubled over the past year as it develops diagnostic tests for Alzheimer's disease and a bunch of cancers. It also has pharmaceutical, nutraceutical, and veterinary products on the market in Europe and Latin America. OPKO has been buying companies and growing rapidly, but it's also posting net losses and negative free cash flow. And unlike many biotechs, it's also generating significant and growing revenue -- in its last quarter, revenue nearly doubled, though losses widened, too. In the quarter, it finalized the acquisition of one biopharmaceutical company, PROLOR Biobech and took stakes in two others, Zebra Biologics and Arno Therapeutics. Gaining FDA approvals will help boost investor confidence.
CalSTRS's biggest closed positions included BMC Software and Smithfield Foods. Other closed positions of interest include Power-One. Solar energy inverter maker Power-One was acquired by Switzerland-based power and automation technology giant ABB (NYSE: ABB ) . Solar energy believers are excited about storage issues waning and think the alternative power's future is bright due in part to global population growth.
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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