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 Passport Capital, founded by John Burbank in 2000 and known for combining macroeconomic analysis and fundamental research. Burbank himself is famous for having called the subprime mortgage crisis and reportedly earned a 220% return on it in 2007 -- though he lost 50% the following year.
The company's reportable stock portfolio totaled $2.9 billion in value as of March 31, 2012.
So what does Passport Capital's latest quarterly 13F filing tell us? Here are a few interesting details:
New holdings include Dendreon (Nasdaq: DNDN ) , which has sunk some 80% over the past year. It does have its troubles, but the drop is enough for some investors to see it as a bargain now. Dendreon debuted a promising prostate-cancer drug a while back, but ran into trouble when many doctors balked at prescribing it due to its steep price, and then when demand rose, the company had trouble keeping up with it. There's new competition from a Johnson & Johnson drug, Zytiga, but depending on how trials go, the two might coexist profitably, perhaps even in a cocktail combination form.
Among holdings in which Passport increased its stake was VIVUS (Nasdaq: VVUS ) , which has an anti-obesity drug, Qnexa, which seems to be nearing FDA approval, though that's not guaranteed. If successful, the drug could be a blockbuster, since obesity is such a prevalent problem. Some worry about competition from Arena's lorcaserin, but others give the edge to Qnexa.
Passport reduced its stake in a lot of companies, including metal miner Nevsun Resources (NYSE: NSU ) , which has been reporting higher gold sales recently and sports a new dividend, yielding 2.8%. It's also sitting on copper reserves, which can prove profitable when copper prices rise. But intrigued investors should remember that it's a relatively small penny stock, and they can be exceptionally volatile or risky.
Finally, Passport unloaded several companies, such as First Solar (Nasdaq: FSLR ) and ArcelorMittal (NYSE: MT ) . First Solar has lost close to 90% of its value over the past year, and while some have left it for dead, others see possible value in breaking up its thin-film-module business and its rich pipeline of projects in development. The stock got a boost when unexpected demand led to the delay of a plant closure in Germany, but the closure will likely still happen eventually.
Steel giant ArcelorMittal might look attractive to some, but in the face of slumped demand in Europe, it has been cutting its production capacity, which doesn't bode well for future results. Meanwhile, China steelmakers have lowered prices, and India's GDP growth is slowing, further boosting the bearish case on steel.
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 industrial stocks interest you, check out our special free report, "3 Stocks To Own For The New Industrial Revolution," which details a new technology that might shift the "Made in China" trend back toward "Made in America."