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Every quarter, fund managers have to disclose what they've bought and sold. Their latest moves can shine a bright light on smart stock picks.
Today let's look at Whitney Tilson (a former Fool writer) and Glenn Tongue, who founded T2 Partners in 2004. Tilson has been dubbed "the best investor you never heard of" and is known for his contrarianism, his dedication to value investing, and his respect for Warren Buffett and Charlie Munger.
Why should you care about T2 Partners' moves? Well, because while its performance has been volatile, its managers have posted some strong numbers in the past, and if you believe in the power of contrarian plays and value investing, you can see they stand a good chance of doing so again. In their year-end letter to investors for 2011, Tilson and Tongue note that their total return since inception (in 1999) has been 114% -- vs. just 29% for the S&P 500.
In its SEC filing, T2 said its stock portfolio was worth about $296 million as of December 31, 2011. The fund's top holdings, representing about 16% of the total portfolio value, were Berkshire Hathaway, Dell, and Howard Hughes.
So what does T2's latest quarterly 13F filing tell us? Here are a few interesting details:
For starters, there are no new holdings.
Among holdings in which T2 increased its stake were Apple (Nasdaq: AAPL ) and SanDisk (Nasdaq: SNDK ) . Why any investor might be drawn to Apple is no mystery, since -- despite its huge success -- it still looks like a bargain. Yet there are still lots of doubters, citing tussles with the Department of Justice and some disappointments with the voice-recognizing assistant, Siri. Solid-state-memory specialist SanDisk has bright long-term prospects, given expected growth in everything from smartphones to laptops and tablets. Its stock price has been held back a bit in our sputtering economy, as some of its customers have been holding back on orders. But it sports a diverse customer base and has been growing its revenue despite drops in prices for memory.
T2 reduced its stake in various companies, including Cisco Systems (Nasdaq: CSCO ) . That's not surprising, as many have grown disillusioned with the company. Indeed, my colleague Anders Bylund has referred to Cisco's decision to build Unix system servers (and thereby turn some of its biggest customers into competitors) as a "ridiculous gambit." Bylund also notes, though, that Cisco CEO John Chambers is a smart guy, and not one to rashly bet against.
Finally, T2 unloaded several companies, such as Chimera Investment (NYSE: CIM ) and TransAtlantic Petroleum (AMEX: TAT ) . The mortgage REIT Chimera is appealing, with its dividend yield recently near 15%. But it has invested in riskier (and higher-yielding) assets than many of its peers -- more than 80% of its assets were recently unrated or rated as junk. Still, it has also taken on less debt than plenty of its peers, and for those who can handle risk, Chimera is positioned to take advantage of opportunities out there, such as those brought on by trouble in Europe. By selling out of TransAtlantic, T2 avoided a 12% drop that occurred in January, when the company's COO stepped down. Bulls like how it focuses on drilling in remote spots, and that by selling off its oil-services division, it will be able to pay off its debt.
We should never blindly copy any investor's moves, no matter how talented that investor. But it can be useful to keep an eye on what smart folks are doing. Those 13F forms can be great places to find intriguing candidates for our portfolios.
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