The latest 13F season is here, when many money managers issue required reports on their holdings. It can be worthwhile to pay attention, as you might get an investment idea or two by seeing what some major investors have been buying and selling.
For example, consider Lone Pine Capital, founded by Steve Mandel in 1997. Prior to that, Mandel was a managing director at Tiger Management. Lone Pine is one of the biggest hedge-fund companies and has reportedly outperformed the S&P 500 handily since inception. Like many value investors, Mandel is known to dig deep into companies, aiming to buy undervalued ones. Lone Pine's reportable stock portfolio totaled $23.2 billion in value as of Dec. 31, 2013.
Lone Pine Capital's latest 13F report shows that it reduced its position in Michael Kors Holdings (CPRI -1.67%) by 36%, leaving it as the 16th-largest holding, while selling all its shares of eBay (EBAY 0.31%) and Pandora (P).
"Affordable luxury" retailer Michael Kors reported solid third-quarter results last month, with revenue soaring 59% over year-ago levels and earnings per share surging 73%. Fashion is a competitive business, but Michael Kors is achieving fat profit margins in an environment when many rivals are blaming their weak performances on a tough winter and lackluster consumer spending. Michael Kors has plenty of room for expansion, both in the U.S. and in global markets, especially if demand remains as hot as it is. Management believes it has room for hundreds of additional global retail stores versus a recent total of 395 company-owned locations. It sees a lot of potential in regions such as Europe and China.
Vast online marketplace eBay reported a strong fourth quarter in January, with revenue and earnings up 13% and 16%, respectively, over year-ago levels. The company has been making significant investments, such as in a major Indian online marketplace, and has been morphing from being more of an auction house to more of a buy-it-now market -- somewhat more like Amazon.com, though without the costly warehouses. About 70% of purchases recently were buy-it-now transactions, rather than auctions. Meanwhile, activist investor Carl Icahn has been agitating for eBay to spin off its highly successful PayPal business (which generates about 40% of its revenue) -- and differences between him and the company have escalated recently. Many are not eager to see PayPal spun off, though, seeing the marketplace and transaction businesses working well together. Bulls love eBay's light business model and double-digit net margins -- though those margins have been shrinking a bit in recent years. But the company's free cash flow is sizable and growing, topping $3.7 billion annually.
Internet radio giant Pandora's stock has surged more than 150% over the past year, yet it has many doubters. Bears don't like its strong -- and growing -- competition, such as Sirius XM Radio and Spotify, as well as smart-device threats like Apple's iTunes Radio and CarPlay and Samsung's Milk Music. Bulls point out Pandora's 70% share of the Internet radio market and its solid revenue growth, and some see it as "best positioned to profit from the various shifts from terrestrial radio to streaming, and on air to mobile advertising."
