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 Farallon Capital Management, founded by Thomas Steyer in 1986, which employs a bottom-up fundamental investing strategy.
The company's reportable stock portfolio totaled $4.8 billion in value as of March 31, 2012.
So what does Farallon's latest quarterly 13F filing tell us? Here are a few interesting details:
New holdings include Ultra Petroleum (NYSE: UPL ) and priceline.com (Nasdaq: PCLN ) . Ultra Petroleum has been a mixed bag for investors, averaging 18% annual gains over the past decade, but also 18% annual losses over the past five years. Like its peers, it has been whacked by a natural-gas glut and the related low prices, and therefore it has cut back on production. But demand should eventually pick up, and it should do well at that point, as it's a low-cost producer.
Priceline.com has long seemed overpriced, while continuing to grow and frustrate doubters. Unbeknownst to many, it generates much of its revenue outside our borders -- more than half from troubled Europe alone. Imagine how much better it can do when Europe eventually gets its bearings back. Its profit margins are also huge -- and growing, with gross margin recently topping 72%, and net margin near 25%.
Among holdings in which Farallon increased its stake was Fuel Systems Solutions (Nasdaq: FSYS ) , which has seen its net margin shrink to less than 1% over the past few years. It specializes in alternative-energy equipment and systems, and is poised to do well in an environment of low natural gas prices. The stock took a dive when the company unexpectedly reported a net loss due to increased research and development costs, among other things. But R&D can pay off for a company, and Fuel Systems is looking to expand in Asia and Latin America, too, which have faster-growing economies than ours.
Farallon reduced its stake in a lot of companies, including BP (NYSE: BP ) . Bulls like the possibility of it selling its stake in the Russian joint venture TNK-BP, which could net many billions of dollars that could be deployed elsewhere. Bears remain troubled about possible additional financial hits from its part in the huge Deepwater Horizon oil spill. BP has been selling off various assets and focusing on core operations. For patient investors, the stock was recently yielding a solid 5%.
Finally, Farallon unloaded several companies, such as satellite imagery company GeoEye (Nasdaq: GEOY ) . With much of the company's revenue coming from domestic government contracts, bears are worried about cutbacks in military spending. Bulls, though, point out that other countries can use its valuable satellite mapping, and intelligence agencies will likely keep needing it, as well. Contrary to that take, though, the U.S. National Geospatial Intelligence Agency recently announced that it wouldn't be renewing some contracts due to budget cuts.
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.
As good as Ultra Petroleum's odds may be, there is one energy stock that could boost your portfolio even more. In fact, it could be the only energy stock you'll ever need. It's a well-positioned equipment provider that's poised to make investors today rich off the next energy spike. Read more about it.