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 Tocqueville Asset Management, a portfolio manager with a contrarian bent, believing that "the best investment results over time are achieved outside the mainstream consensus" and seeking "undervalued companies that possess long-term earnings power."
The company's reportable stock portfolio was valued at $7.6 billion as of March 31, 2014.
So what does Tocqueville's latest 13F filing tell us? Here are a few interesting details.
New holdings of interest include Chelsea Therapeutics International (NASDAQ: CHTP ) and Intercept Pharmaceuticals (NASDAQ: ICPT ) . Tocqueville is likely pleased with its purchase of Chelsea Therapeutics, though it may wish it had bought more shares. The company is being acquired by the Danish pharmaceutical company H. Lundbeck, and that news sent the stock up by more than 30%. Chelsea's main appeal was likely Northera, its recently approved drug for low blood pressure associated with Parkinson's disease. A Reuters report quoted H. Lundbeck CEO Ulf Wiinberg as saying, "We think Northera has the potential to be the most valuable product that we have in our portfolio."
Intercept Pharmaceuticals, another biotech concern, recently reported very encouraging results from late-stage trials of a drug to fight primary biliary cirrhosis, a liver disease for which there is not yet any particularly effective treatment. The company's shares have soared more than 700% over the past year, and while some fear overvaluation, others see great potential. Intercept recently issued 1 million new shares to generate needed funds. Its first quarter featured widening losses and increased spending on research and development. That is not unusual for a company developing new drugs. Management noted that its financial condition has it able to fund operations through 2016.
Among holdings in which Tocqueville Asset Management increased its stake were Boardwalk Pipeline Partners (NYSE: BWP ) and Windstream Holdings (NASDAQ: WIN ) . Boardwalk Pipeline Partners, specializing in natural-gas transmission, has had a tough year, losing nearly half its market value and cutting its distribution to shareholders by 81%. That has some seeing it as a value play, while others prefer to focus on more certain opportunities. On the plus side, Bank of America Merrill Lynch recently upgraded the stock to neutral on bullishness about its pipeline contracting. There has also been a lot of call option activity for the stock, reflecting confidence from some corners.
Rural telecom specialist Windstream yields a mind-boggling 11.1%. It has struggled as many Americans drop their landline phones, and it has been trying to make up for those losses with enterprise high-speed Internet customers. Bulls like its tower business, its expansion in broadband, and its data centers. But others maintain that there are safer bets out there, and they expect a dividend reduction one day, as the company is carrying a lot of debt. Windstream just posted its first-quarter results, featuring revenue down 2% and operating income dropping 29% from year-ago levels.
Tocqueville Asset Management's closed positions of interest include Sirius XM Holdings (NASDAQ: SIRI ) . Sirius XM Holdings' first-quarter results featured revenue up 11% over the year-ago level and non-GAAP earnings up 54%. It realized a net subscriber gain of 267,000, and CEO Jim Meyer noted, "New car installations and trial conversions set first quarter records." Bulls like the company's exclusive content, see paths to international expansion via streaming, and hold some hope that the company might use its massive new debt offering to reduce its share count via buybacks. Bears, though, worry about rate hikes and competition from free and Internet radio services such as Pandora. (Though Pandora faces its own challenges and has ramped up its advertising, which may turn off some listeners.)
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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