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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 Daniel Loeb, founder of the Third Point hedge fund. Loeb is a well-known activist investor, famous for publicly airing his opinions about companies in which he invests and not mincing words when he's displeased. Loeb was instrumental in pointing out discrepancies in former Yahoo! CEO Scott Thompson's biography. Yahoo! now has a new CEO.
His activity bears watching, because the guy seems to know a thing or two about investing. According to the folks at GuruFocus.com, over the 15 years ending in 2011, Loeb racked up a cumulative gain of 1,022%, compared with just 124% for the S&P 500.
Third Point's reportable stock portfolio totaled $3.3 billion in value as of June 30, 2012. At that time, Yahoo! shares made up 34% of the overall portfolio's value, while Delphi Automotive made up 9%.
So what does Third Point's latest quarterly 13F filing tell us? Here are a few interesting details:
New holdings include Ariad Pharmaceuticals (Nasdaq: ARIA ) and Vertex Pharmaceuticals (Nasdaq: VRTX ) . Ariad has more than doubled over the past year, as its leukemia drug ponatinib is seen as approaching FDA approval. Its cash burn has some worried, though, and its rising share count has diluted the value of shares. On the plus side, Ariad recently got cleared for an accelerated assessment of ponatinib by Europe's drug regulatory agency, and it's seeking the same with the FDA, based on very promising phase 2 trial results. FDA approval is never certain, and the process is long, but Ariad has other treatments in its pipeline, addressing conditions such as prostate cancer, breast cancer, lung cancer, tumors, and more.
Some see Vertex as a potential monster stock of the future, with its promising cystic fibrosis treatment, Kalydeco. Its sales are growing briskly, and approval in Europe is expected soon. It's also working on hepatitis C treatments, though it has strong competition on that front. The company got a bit of bad news recently, though, when some young rats treated with Kalydeco developed cataracts. It's not clear if this will happen to humans, but the FDA has issued an alert and has called for further investigation.
Among holdings in which Third Point increased its stake was Apple (Nasdaq: AAPL ) , which is expected by many to have a strong September, as it introduces its iPhone 5. Some see a mini iPad launching soon, as well, which can challenge Google's Nexus 7 and Amazon.com's Kindle Fire. Apple has even initiated a dividend payment, making its first one recently, and currently yielding about 1.6%. There's speculation that the company might split its stock and end up as one of the 30 companies in the bellwether Dow Jones Industrial Average, too.
Third Point reduced its stake in Weatherford International (NYSE: WFT ) , which has sunk by almost 30% over the past year. The oil-and-gas services and equipment specialist recently reported rising revenue, but it's also being investigated for possible improper accounting and behaviors in other countries and has estimated that settlement costs might be $100 million. It has also moved to lower its tax bill by relocating to Switzerland. Third Point did spend some of the proceeds buying call options on Weatherford, suggesting that Third Point still sees upside potential in the stock.
Finally, Third Point unloaded several companies, such as Genworth Financial (NYSE: GNW ) . The company has been struggling recently, partly due to low interest rates, the lackluster economy, and a sluggish housing market. But it hinted of a recovering mortgage market, when reporting a strong jump in insurance-policy volume. Some see the stock as a bargain, with a recent P/E ratio of 8 and a forward P/E of 4.
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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