Every quarter, many money managers have to disclose what they've bought and sold, via 13-F filings. Their latest moves can shine a bright light on smart stock picks.
Today let's look at Kleinheinz Capital Partners, founded in 1996 by John Kleinheinz. Kleinheinz considers himself a contrarian, opportunistic, and value-oriented investor, and is most savvy about the telecom, health care, and energy industries. Kleinheinz has reportedly averaged 22% annual gains since 1996, which is a strong performance.
The company's reportable stock portfolio totaled $1.5 billion in value as of June 30.
Interesting developments
So what does Kleinheinz's latest quarterly 13-F filing tell us? Here are a few interesting details.
New holdings include Amarin (Nasdaq: AMRN) and TriQuint Semiconductor (Nasdaq: TQNT). Amarin, a late-stage cardiovascular-focused biotech company, has bulls excited about its newly approved drug, Vascepa, and the possibility of a partnership with a big pharmaceutical company or an outright acquisition. There could be more good news if the drug is approved for other treatments. Just last week, the U.S. Patent and Trademark Office ruled favorably for two Vascepa-related patent applications. A bit of uncertainty was recently introduced, though, via new studies questioning the value of fish oil, on which Vascepa is based.
TriQuint's main attractive feature at the moment is its position as a supplier to Apple. The huge sales volume for the new iPhone 5 bodes well for TriQuint, but bears worry about competition -- from the likes of Skyworks Solutions -- and they also don't like the fact that so much of TriQuint's fortune rests with one customer. Bolstering the company's performance are its less-focused-on networking and defense operations.
Among holdings in which Kleinheinz increased its stake was natural-gas specialist Cheniere Energy (NYSE: LNG). Its bulls are excited about its plans to build a liquid natural gas export terminal to ship gas procured relatively inexpensively here to regions where it fetches a much higher price. They also like the stability that the company's planned long-term contracts should offer. Bears worry about competition abroad that might threaten Cheniere's business.
Kleinheinz reduced its stake in lots of companies, including Level 3 Communications (Nasdaq: LVLT), which has long struggled under a mountain of debt. Troubles in Europe have put pressure on performance, as it continues digesting its Global Crossing acquisition. It's expanding its services around the world, for example boosting its video broadcasting in Latin America. Many investors are steering clear, not liking its falling free cash flow or lack of a dividend. Even analysts are split, with some liking its increased bookings and others seeing it headed downward.
Finally, Kleinheinz unloaded several companies, such as LED lighting specialist Cree (Nasdaq: CREE), which has been expanding in China and growing its free cash flow. The company is also boosting its capacity, leaving it positioned to profit as LED lighting gains share from incandescent lighting. The main knock against it might be its valuation, as P/E and forward P/E ratios are well above market averages, leaving the stock with little margin of safety. It has faced headwinds because of somewhat sluggish consumer demand for LED products in our weak economic environment, but that won't last forever. Analysts at JPMorgan Chase, for example, think LED long-term prospects are strong, especially for LED lighting.
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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