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 Oaktree Capital, founded by value investors Howard Marks and Bruce Karsh in 1995. The folks at Oaktree invest substantially in alternatives to common stock, such as distressed debt, corporate debt, convertible securities, and real estate. They do invest in stocks, as well, though. The company's reportable stock portfolio totaled $6.1 billion in value as of March 31, 2012.
Those interested in learning more about Marks' investment thinking should check out his well-regarded book, The Most Important Thing. This blurb for it by Warren Buffett may heighten your interest: "When I see memos from Howard Marks in my mail, they're the first thing I open and read. I always learn something, and that goes double for his book."
So what does Oaktree's latest quarterly 13F filing tell us? Here are a few interesting details:
New holdings include GenOn Energy (NYSE: GEN ) , which has been quite beaten down, averaging losses of more than 40% annually over the past five years. A sizable chunk of its energy is produced by coal-powered plants, worrying some who expect further environmental crackdowns on coal. On the plus side, the company also has natural-gas plants.
Oaktree reduced its stake in a lot of companies, including Melco Crown Entertainment (Nasdaq: MPEL ) and Vale (NYSE: VALE ) . Melco Crown is a major casino operator in the major gambling arena of Macau. Bears are fretting, though, because Macau's gambling growth rate has slowed -- to the lowest level in three years. Bulls point out that it's still growing, though, and that Melco's stock has fallen to attractive levels.
A slowdown in China, meanwhile, has put pressure on Brazilian iron ore producer Vale, enough to make it, too, look tempting, with its price not too far from a 52-week low and a dividend yield near 6%. Iron ore isn't likely to see low demand for long, as emerging markets are building up their infrastructure. The company is also a major fertilizer player, and our growing global population will keep agricultural offerings in demand.
Oaktree also unloaded several companies, such as Petrobras (NYSE: PBR ) and Cia Energetica de Minas Gerais (NYSE: CIG ) . Brazil's Petrobras, with massive and growing oil reserves and heavy activity in deepwater drilling, has been shedding value over the past few years, so that it also looks attractive to many now. Its investments in building up its capacity are quite promising, but some would like to see faster growth. Others worry about Brazil's aggressive lawsuits over oil spills.
Cia Energetica de Minas Gerais, otherwise known as Cemig, is a Brazil-based electrical energy utility. It has averaged 10% annual gains for investors over the past five years, and though it generates much energy from hydroelectric power, it has recently invested in natural-gas operations. The company reported double-digit gains in revenue and earnings in its last quarter.
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'd like to invest in a very promising energy stock, but aren't totally sold on GenOn, Cemig, or Petrobras, check out our special free report, "The Only Energy Stock You'll Ever Need." It will introduce you to a compelling contender for your portfolio.