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 investing giant Seth Klarman, who founded the Baupost Group hedge fund company back in 1982. Klarman is a successful investor with a lot to teach us. He sticks to his value-investing principles so much that at times he has a large chunk of his assets in cash, not finding sufficient bargains.
Why should you look at Baupost's moves? Well, according to the folks at GuruFocus.com, it has averaged gains of close to 20% annually since its inception, beating the S&P 500.
The company's reportable stock portfolio totaled $3.8 billion in value as of June 30, 2012.
The portfolio's top holdings, making up a whopping 41% of its value, are BP, Hewlett-Packard, and Oracle (Nasdaq: ORCL ) .
So what does Baupost's latest quarterly 13F filing tell us? Here are a few interesting details:
New holdings include Genworth Financial (NYSE: GNW ) , Oracle, and Hess (NYSE: HES ) . Insurer Genworth has been struggling recently, partly due to low interest rates and the lackluster economy and sluggish housing market. It did get a boost, though, back in June, when Boston's Highfields Capital Management reported taking a huge stake in the company.
Database titan Oracle impresses some investors with CEO Larry Ellison's enormous stake in the company, which should align his interest with theirs. But others worry about his judgment and character, though, as he recently bought the Hawaiian island of Lanai, for more than half a billion dollars. Worriers may be reassured, though, by his embracing cloud technology and positioning Oracle to benefit from its growth.
With a forward P/E ratio of just seven, compared with about 14 for the S&P 500, some see energy giant Hess as undervalued. It has been disappointing analysts in several recent quarters with its earnings, but it does hold a lot of potential, particularly in natural gas. It's aggressively expanding its development efforts, particularly in the Bakken field.
Among holdings in which Baupost increased its stake was NovaGold Resources (NYSE: NG ) . It seems like a risky move, with the company having sold off parts of itself in order to focus more on a Donlin Creek joint venture with Barrick Gold that Barrick is no longer very interested in. The stock has fallen by more than 50% over the past year, making some think it's a bargain, but as the company might say on Facebook, "It's Complicated."
Finally, Baupost unloaded several companies, such as Alere (NYSE: ALR ) , a maker of patient diagnosis, monitoring, and health management products. The stock dropped 20% in a single day in May, on news of an investigation by the Food and Drug Administration (FDA). To some, that was an overreaction, but the dust hasn't settled yet. In its second quarter, the company reported revenue up 24% over year-ago levels, but still a net loss. Management cited solid growth in Asia, but expects a slowdown in Europe and noted that it's working on the plan it agreed to with the FDA.
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.
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