Every quarter, many money 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 investing giant Daniel Loeb, founder of the Third Point LLC hedge fund. Loeb is a well known activist investor, famous for publicly airing his opinions about companies in which he invests and not mincing words when he's displeased. Loeb was instrumental in pointing out discrepancies in former Yahoo! (Nasdaq: YHOO ) CEO Scott Thompson's biography. That's why Thompson's now the former CEO.
Loeb's activity bears watching, because the guy seems to know a thing or two about investing. According to the folks at GuruFocus.com, over the 15 years ending in 2011, Loeb racked up a cumulative gain of 1,022%, compared with just 124% for the S&P 500.
Third Point's stock portfolio totaled $4 billion in value as of March 31, 2012. At that time, Yahoo! shares made up 26% of the overall portfolio's value, while Delphi Automotive made up 10%.
So what does Third Point's latest quarterly 13F filing tell us? Here are a few interesting details:
New holdings include Weatherford International (NYSE: WFT ) . Oilfield-services specialist Weatherford has seen its stock slide some 33% (partly due to a restatement of earnings), but is experiencing accelerating revenue growth. As my colleague Aimee Duffy has explained, as complex technology becomes more necessary for oil and gas exploration, Weatherford should see its prospects improve -- though if and when energy prices fall significantly, it might not be worth investing heavily to get to hard-to-reach reserves. Meanwhile, Weatherford has tempered its near-term expectations.
Among holdings in which Third Point increased its stake was Yahoo! The company has endured many rounds of layoffs in recent years, but it would be premature to ring any death knells. Its new Axis browser has gotten some good reviews and might help the company in the long run. The folks at Business Insider reported on the company's current strategy, which includes greater focus on mobile computing, more sports- and finance-related offerings, and essentially turning the company into a media enterprise. Cash is not a near-term problem for Yahoo!, thanks to the sale of its stake in Alibaba, which will generate about $7 billion.
Third Point reduced its stake in lots of companies, including Genworth Financial (NYSE: GNW ) . The stock took a big hit recently, when the company said it was delaying the IPO of its poorly performing Australian mortgage-insurance business. Of course, the stock's fall now has some folks seeing it as a compelling bargain.
Finally, Third Point unloaded several companies, such as WPX Energy (NYSE: WPX ) and PotashCorp (NYSE: POT ) . WPX, spun off from Williams, recently generated $306 million by selling some natural gas fields to Kohlberg Kravis Roberts. For those interested in investing in natural gas, Williams may be more attractive with its focus on pipelines, as the exploration business of WPX is more risky.
PotashCorp is a global fertilizer giant, and though its recent earnings report was lackluster, it has high hopes for its coming months. The company has diversification on its side, as it also produces a lot of phosphate and nitrogen. The recent warm winter is also a factor, leading to a longer farming season. Meanwhile, demand for potash seems to be picking up, and PotashCorp is one of three members of a cartel that has inked a major contract with China.
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, and 13-F forms can be great places to find intriguing candidates for our portfolios.
If you don't expect oil prices to fall much anytime soon, that's good news for Weatherford. It's also good for some other compelling candidates for your portfolio. Check out our special free report, "3 Stocks for $100 Oil," to meet them. Or read about "The Only Energy Stock You'll Ever Need."