As investors, we are always looking for an edge, and there are many to be found. One of the greatest edges we have as small, individual investors is that we don't have to disclose our positions in companies. This is not true for large institutional investors, who must report their holdings to the SEC each quarter. These filed reports, known as 13-F's, are required for funds with over $100 million under management. A look at some of these holdings allows us to follow in the footsteps of some of the best.
The Klarman Edge
Seth Klarman's Baupost has been a force since its beginnings over 25 years ago. From 1983 to 2008, the fund returned 16.5% a year, beating the S&P index by more than six percentage points each year. Klarman has become better known recently for his dour feelings on the state of the global economy. At a recent (and rare, for him) speech at The CFA Institute in Boston, he said, "I'm more worried about the world broadly than I've ever been in my whole career." Despite his morose feelings, though, Klarman is still investing a lot of money. So let's look at his top holdings as of March 31, and do some of our own research to see if they would fit in our own portfolios.
News Corp.
Rupert Murdoch's media conglomerate is best known for the Fox television network's broadcasting prowess. The company is the largest holding in Klarman's portfolio, and seems to be a peculiar pick as the broadcast industry has had its share of troubles. News Corp. is also the owner of troubled social networking site MySpace. Murdoch mentioned in a recent conference call that he is confident that the social networking site will be successful in the future. If it can provide any completion for Facebook, MySpace could become a strong area of growth for the company.
ViaSat
ViaSat works with the federal government as well as private businesses as a provider of satellite and wireless communications systems. The company works closely with government contractors such as Boeing
Theravance
Theravance is an innovative pharmaceutical company that focuses mainly on respiratory diseases, gastrointestinal disorders, and bacterial infections. What could drive the stock price in the coming months is a potential blockbuster drug to treat chronic obstructive pulmonary disorder (COPD). Theravance is working in a joint venture with GlaxoSmithKline
Domtar
Domtar is the world's second largest paper producer, beaten in size only by International Paper
Breitburn Energy Partners
Breitburn Energy Partners is a master limited partnership (MLP), which offers investors the tax benefits of a partnership along with the ease of a publicly traded investment. The company develops natural gas and oil properties and produces oil and gas from those properties. Breitburn's shares have already increased by more than 60% this year, but investors can still take advantage of a dividend yield over 9%.
How often do you follow a guru's stock picks? Do you agree with Klarman's top picks? Let us know in the comment box below.