Here's What This 2,341%-Gainer Has Been Buying and Selling

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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 Gardner, Russo & Gardner, a hedge fund company with a record that speaks for itself. Over the past 25 years, according to the folks at, it has posted a cumulative gain of about 2,341%, versus 830% for the S&P 500. Over the past 10 full years, it gained 122%, versus 35% for the S&P 500.

To get a sense of the company's investment style, look at its well-respected partner, Thomas Russo. He's known for favoring companies with strong free cash flow, robust balance sheets, and hefty returns on assets. He's also a value guy, aiming to buy such companies at undervalued prices.

Gardner, Russo & Gardner's stock portfolio totaled $6.2 billion in value as of Dec. 31. The company's biggest holdings, representing more than 30% of total assets, were Philip Morris International, Nestle, and Berkshire Hathaway. (Note that the company's holdings are not in just one fund, but spread out over various funds and accounts.)

Interesting developments
So what does Gardner, Russo & Gardner's latest quarterly 13F filing tell us? Here are a few interesting details:

New holdings include TJX (NYSE: TJX  ) , operator of T.J.Maxx, Marshalls, and HomeGoods. The company has been growing revenue at about 6% annually over the past few years, which isn't bad for a large retailer. Better still, earnings have been growing at a faster clip, suggesting improvements in efficiency and profit margins. The company's dividend is small, but it, too, has been growing briskly. Expectations for the second quarter are strong, as sales at stores open more than a year grew by 8% in May over year-ago levels.

Among holdings in which Gardner, Russo & Gardner increased its stake was Bank of America (NYSE: BAC  ) , which is down about 37% over the past year and has averaged annual losses of more than 30% over the past five years. It was part of a multibillion-dollar settlement with the Department of Justice and will be informing some 200,000 borrowers that they might be eligible for principal forgiveness on their mortgages. On the recovering-from-the-mortgage-mess front, it's lagging its peers -- leaving some investors thinking that things can only improve from here. One of the bank's strategies is hiring more bankers to serve small businesses, as they're the lifeblood of our economy.

The hedge fund company reduced its stake in lots of companies, including General Electric (NYSE: GE  ) . Some might find this premature, as GE finally announced what many were waiting for -- that its GE Capital unit has resumed paying dividends to its parent company. That not only signals improved health, but it will also put more cash in GE's pocket, for dividends to shareholders, acquisitions, or other beneficial allocations. GE has been investing in alternative energies, transportation, and emerging markets, among other initiatives.

Finally, Gardner, Russo & Gardner unloaded several companies, such as Ford (NYSE: F  ) and Las Vegas Sands (NYSE: LVS  ) . Now that car sales have finally picked up, Ford has been experiencing a sales surge -- but also faces a vexing problem: It's struggling to keep up with demand. Las Vegas Sands, meanwhile, has been a powerhouse in Macau, one of the most profitable gambling sites around. But growth is slowing in Macau (to nearly a three-year low), and Sands recently gave up on appealing a land-rights rejection there. Still, even slower growth remains strong growth, and Las Vegas Sands is one of the most successful gambling specialists around.

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 13F forms can be great places to find intriguing candidates for our portfolios.

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Longtime Fool contributor Selena Maranjian, whom you can follow on Twitter, owns shares of Berkshire Hathaway and Ford Motor, but she holds no other position in any company mentioned. Click here to see her holdings and a short bio. The Motley Fool owns shares of Bank of America, Ford, and Berkshire Hathaway. Motley Fool newsletter services have recommended buying shares of Berkshire Hathaway and Ford, as well as creating a synthetic long position in Ford. The Motley Fool has a disclosure policy.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (1) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 06, 2012, at 1:46 PM, cp757 wrote:

    Selena I love it. You are so right about LVS. They are up over 3,000% from 03/09/2009 to now. The growth story is the biggest deal in the sector but this idea of a slow down is overblown .Its true if you are talking about going from 40% growth to 20% growth but one large drawback is the lines at the boarder gates that cause 4 hour wait times. China will open those gates 24 hours a day now that Cotai Central is open. Las Vegas Sands (NYSE: LVS ) is currently completing Sands Cotai Central, and they will have 12,968 rooms with the addition of the rooms on Lot 3 which will be the last new casino there until 2017. With 12,968 rooms and a 50 to 60 billion dollar market by 2017 I think LVS is the best positioned casino in Macau. They also have over 23 billion dollars in assets and only 5.8 billion in net debt so they are also the best positioned financialy. With over 6 billion in free cash for 2013 they will also raise dividends or even better give out a special dividend as they mentioned two days ago.

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