Here's What This $22 Billion Hedge Fund Has Been Buying

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 SAC Capital Advisors, run by Steven Cohen. SAC is one of the biggest hedge funds around, with a reportable stock portfolio totaling more than $22 billion in value as of March 31, 2012. A fund doesn't easily grow that large without performing well, and indeed, Cohen has reportedly averaged returns of roughly 30% annually over two decades.

SAC Capital's top holdings as of March 31 were Ensco plc, SPDR S&P 500, and Murphy Oil. Together they represent just 3.4% of the overall portfolio, though, since SAC encompasses more than 1,700 holdings.

Interesting developments
So what does SAC Capital's latest quarterly 13F filing tell us? Here are a few interesting details:

New holdings include WPX Energy (NYSE: WPX  ) , an oil and gas exploration company spun off from Williams. The stock has been beaten down from its 52-week high of $23 to roughly $14, suffering from the low price of natural gas and, more recently, the slumping price of oil, as well. The company has been bolstering its balance sheet and shifting its focus to oil and natural gas liquids, which may serve it well down the road.

Among holdings in which SAC Capital increased its stake were Sirius XM Radio (Nasdaq: SIRI  ) and Sandridge Energy (NYSE: SD  ) . Sirius fans like its steadily rising revenue and earnings and its net margins of roughly 15%, but detractors worry about threats such as Verizon's new interest in streaming automotive entertainment. There's also a hostile overture by Liberty Media, which owns a big chunk of Sirius, to consider.

Sandridge Energy, meanwhile, is another oil and gas company thwarted by the low price of natural gas. Like others, it's shifting its attention to oil, but some remain skeptical about its prospects, especially given its steep debt load. The company spun off two royalty trusts in order to generate cash, and is investing that aggressively in more assets.

SAC Capital reduced its stake in lots of companies, including Heckmann (NYSE: HEK  ) , a company providing water and wastewater services for the oil and gas industries. It, too, has been hurt recently by falling oil prices, and is involved in the controversial practice of fracking. Some think it might end up being bought out by a bigger fish.

Finally, SAC Capital unloaded several companies, such as Acme Packet (Nasdaq: APKT  ) , which has fallen some 67% over the past year. The communications equipment company, which is a session border controller leader, is suffering partly because of a slower-than-expected transition among wireless carriers to voice over Internet protocol. Still, it's developing new and better offerings, and patient investors may be rewarded.

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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Longtime Fool contributor Selena Maranjian, whom you can follow on Twitter, owns shares of Verizon, 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 Heckmann and Ensco plc and has sold shares of SPDR S&P 500 short. Motley Fool newsletter services have recommended buying shares of Acme Packet. 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.


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