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 Tudor Investment, founded in 1980 by Paul Tudor Jones and encompassing the flagship Tudor BVI fund. Jones, featured in Jack Schwager's Market Wizards: Interviews with Top Traders, was one of the few to foresee the 1987 market crash (and he made many millions on it, as well). He's known for focusing on short-term trading, equity, venture capital, debt, currency, and commodity markets. More recently, he got some flack for the confounding comments he made suggesting that women with children shouldn't trade stocks.
The company's reportable stock portfolio totaled $2.4 billion in value as of Sept. 30, 2013.
So what does Tudor Investment's latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are call options on the iShares MSCI Emerging Markets Index ETF and the SPDR S&P 500 ETF. Other new holdings of interest include SandRidge Energy (NYSE: SD ) and Tower Group International (NASDAQ: TWGP.DL ) . SandRidge Energy is down about 22% over the past year, and shares are flirting with penny-stock territory. It's looking like a bargain to some now, especially after the company posted estimate-topping quarterly earnings and management upped its guidance. That management is a bit new, too, with the company's lavishly compensated founder ejected earlier this year. Bulls are hopeful that SandRidge might be sitting on a gusher in the Gulf of Mexico, and they like its profitable operations in the Mississippi Lime region.
Tower Group International is a small insurance company -- but it hasn't always been so small, as its stock is down some 74% over the past year and has averaged 26% annual losses over the past five years. It is in penny-stock territory, recently at risk of being delisted from the Nasdaq market. Tower Group also has had to restate several years' worth of earnings, which has some unsettled, and a restructuring has lowered its ultimate profit potential. Still, its last quarter topped expectations, and with Tower Group lowering costs via a major 10% downsizing, some are hopeful.
Tudor Investment increased its stake in holdings including Sirius XM (NASDAQ: SIRI ) and Micron Technology (NASDAQ: MU ) . Sirius XM can boast that it's being included in 70% of new cars and that it sees an even brighter future in used vehicles. Still, bears worry about competition from free and Internet radio services such as Pandora. Sirius is rewarding shareholders with massive share buybacks of up to 10.6% of its outstanding shares. It has more than 25 million subscribers and takes in close to $4 billion annually. Some see a recent earnings disappointment as a good buying opportunity, and they like its growing margins.
Micron Technology shares have more than tripled over the past year and are near a 52-week high. Micron's purchase of the Japanese company Elpida has been widely praised, as it has made it the world's second-largest DRAM maker. The new company has twice Micron's previous memory capacity, more pricing power, and a bigger relationship with Apple. DRAM spot prices have risen recently, boding well for Micron Technology. The company has announced a new, higher-performing processor architecture that's likely to compete with Intel, and its fourth quarter was solid, topping expectations. With Micron's forward P/E ratio near 10, many still see good value in the stock -- an analyst at Needham recently initiated coverage on Micron with a buy rating. Investing legends such as Seth Klarman and David Einhorn have been buying, too. Some investors would like to see its dividend of yore resurrected.
Tudor Investment reduced its stake in many companies, including Corning (NYSE: GLW ) . Corning saw its stock surge 25% to a two-year high in October on news of a major deal with Samsung. Bulls see much potential in Corning. Its Gorilla Glass, installed in more than 1 billion mobile devices, has been a great contributor to the company, which has recently released a thinner, stronger version of the product. Its curved glass could prove useful to the solar-energy industry. In less than three years, Corning has doubled its dividend, which now yields 2.3%. It has been buying back billions of dollars' worth of shares, too.
Finally, Tudor Investment's biggest closed positions included the SPDR Select Financial Sector ETF and call options on American International Group.
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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