Every quarter, many money managers have to disclose what they've bought and sold. Their latest moves can shine a bright light on smart stock picks.
Today, let's look at one of the biggest hedge fund companies, Eton Park, founded by Eric Mindich in 2004. Mindich had spent 15 years at Goldman Sachs before that, becoming, at age 27, its youngest partner. Mindich invests in both long and short positions on stocks and in private equity investments, and he specializes in merger arbitrage. He reportedly nearly tripled the value of Eton Park in its first seven years, but the fund has posted some bumpy results lately, leading some shareholders to pull out.
The company's stock portfolio totaled almost $7 billion in value as of December 31, 2011.
Interesting developments
So what does Eton Park's latest quarterly 13F filing tell us? Here are a few interesting details:
New holdings include Bank of America (NYSE: BAC). It's despised by many, but also offers investing promise -- especially if long-term interest rates rise. The company is boosting its presence in Asia and other regions, which bodes well as developing economies develop.
Among holdings in which Eton Park increased its stake were El Paso (NYSE: EP) and Medco Health Solutions. Energy concern El Paso is being acquired by Kinder Morgan, and its exploration and production business is being sold off. Medco Health Solutions is in the process of trying to merge with Express Scripts. If the deal goes through, the new entity will control about a third of the pharmacy benefits management business. The merger may be nixed by the FTC, though -- and more than a few states are looking into the deal and considering legal action to stop it.
Eton Park reduced its stake in lots of companies, including Williams (NYSE: WMB), which owns and runs a natural gas pipeline more than 13,000 miles long. Pipelines can deliver reliable income, and with natural gas prices relatively low lately, it's in demand. The company recently agreed to buy a pipeline in the large Marcellus Shale basin. Having spun off its exploration and production business, it's focusing on pipelines and processing and has been hiking its dividend significantly.
Finally, Eton Park unloaded several companies entirely, such as E*TRADE Financial (Nasdaq: ETFC) and oil explorer Cobalt International Energy (NYSE: CIE). E*TRADE has been busy improving its credit quality and has been hiring lots of financial consultants to serve its customers (and collect fees from them). It's not a pure play on brokerages as it also offers banking services and made a lot of mortgage loans, but it's still a major brokerage, poised to benefit as the stock market heats up again eventually. Cobalt may intrigue some with its good results in Angola, but it has long been in the red, is burning through a lot of cash, and recently announced a big share offering, which will likely be dilutive for shareholders.
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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. 13-F forms can be great places to find intriguing candidates for our portfolios.
