See What This 149-Bagger Has Been Selling

You might also want to sell -- or buy! -- some of them.

Jun 5, 2014 at 5:46PM

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 Appaloosa Management, founded by investing giant David Tepper and known for investing in the debt of companies in distress. In a letter to shareholders last year, Tepper noted that had one invested $1 million in his hedge fund in 1993, it would have grown to $149 million over the past 20 years. Investing in the S&P 500 instead would have left you with $5.3 million. Tepper's performance reflects an average annual net gain of 28%. Wow.

Appaloosa Management's latest 13F report shows that it has decreased or eliminated its positions in MGM Resorts International (NYSE:MGM), Trinity Industries Inc (NYSE:TRN), and United Continental Holdings Inc (NYSE:UAL).

MGM Resorts International has been at a bit of a competitive disadvantage to its peers, as it has had a bigger exposure to the slowly growing Las Vegas gambling market and a smaller exposure to the fast-growing Macau market. It will soon be doubling its capacity in Macau, though, which bodes well for business. MGM Resorts' first quarter was solid, with revenue rising 12% year over year and revenue from China surging 26%, while costs fell. Overall revenue has been growing steadily in recent years, as has free cash flow, though its bottom line has been in the red. The company carries a lot of debt, but given its growth and cash flow, its leverage seems manageable. Meanwhile, it appears that the Las Vegas market may be turning around, too. MGM Resorts presents an intriguing investment opportunity, but its rivals bear examination, too, as some are growing more rapidly.

Trinity Industries gets most of its earnings from making railcars and is likely to see that business grow thanks to new regulations calling for safer railcars. The company's first quarter was terrific, with revenue and earnings growing 57% and 188%, respectively, year over year. The company's main problem, arguably, is how it will keep up with demand, as its railcar order backlog keeps growing, recently hitting a record level of 42,630 units with a record value of $5.2 billion. Trinity's stock has more than doubled in the past year, and profit margins have been steadily climbing in recent years. With a forward P/E ratio near 12, Trinity Industries' stock seems far from overvalued. Its dividend yield is merely 0.50%, but management recently hiked its payout by 33%, and it has more room to grow. Bulls like Trinity Industries' diversification, as it is also involved in railcar leasing, barge manufacturing, construction services, and more. It's even a major wind tower maker.

The airline industry may have a terrible long-term record, but United Continental has been pleasing shareholders over the past five years, with average annual gains of 56%. Its stock doesn't seem wildly overvalued, either, with a forward P/E near 10 and a price-to-sales ratio below the industry average. Still, all is not rosy with the company, as its last quarter featured a big net loss, and its performance has been lagging that of its peers -- even in customer service. One significant plus for investors is that the company's CEO recently bought $800,000 worth of shares, and owns a stake worth about $20 million, very much aligning his interests with theirs. Though there are reasons to consider adding United Continental to your portfolio, consider its peers, as well, because some of them, such as Delta Air Lines, are more compelling.

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Selena Maranjian Longtime Fool specialist Selena Maranjian, whom you can follow on Twitter, has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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