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 investing giant Donald Yacktman, who founded Yacktman Asset Management in 1992. He isn't as well known as investors such as Buffett, Soros, Berkowitz, and the like, but his track record is right up there with them. Yacktman is a value investor, aiming to achieve the highest possible risk-adjusted long-term return on his investments. According to the folks at GuruFocus.com, Yacktman gained about 175% cumulatively over the past decade, compared with just 35% for the S&P 500.
The company's reportable stock portfolio totaled $16.6 billion in value as of Sept. 30, 2012.
So what does Yacktman latest quarterly 13-F filing tell us? The main takeaway is that the managers there are confident and focused. There are only a few dozen holdings, despite the billions managed, and there often aren't many changes from quarter to quarter.
New holdings include health insurer WellPoint (NYSE:ANTM), which is buying Amerigroup (NYSE: AGP) for close to $5 billion, in order to greatly boost its Medicaid business. With President Obama re-elected, Obamacare is likely to take hold, generating many more customers for insurers. The stock is down about 19% over the past year, with the company not performing as robustly as many would like. Membership, for example, is down a bit over year-ago levels.
Among holdings in which Yacktman increased its stake were Research In Motion (NYSE:BB) and Cisco Systems (NASDAQ:CSCO). Smartphone pioneer Research In Motion has fallen on tough times, with its dominance in the business sector threatened by Apple's (NASDAQ: AAPL) iPhone. There are a lot of hopes pinned on its upcoming BlackBerry 10, but some already expect it to fail. One ray of hope for it is that it has received government security clearance, paving the way for use by government agencies.
Cisco Systems' future is looking much brighter lately, as it has posted very strong quarterly results and even hiked its dividend ... by 75%! (It now yields 3.3%.) Bulls are excited about growth in data-center spending and think it also bodes well for Cisco that networking traffic is expected to surge in the coming years. The company has partnered with VMware (NYSE: VMW) on cloud computing. It's reporting its latest results on Tuesday, and a JPMorgan Chase analyst has already downgraded the company, expecting IT spending to still be weak.
Yacktman reduced its stake in credit-rating agency Equifax (NYSE:EFX). One concern might be uncertainty about how regulations from the newly created Consumer Financial Protection Bureau (CFPB) might affect the company. Last month the company reported quarterly earnings up 17% and revenue up 11%.
Finally, Yacktman unloaded all its shares of UnitedHealth Group (NYSE:UNH). The company's advocates like its $4.9 billion merger with Brazilian health insurer Amil Participacoes, which boosts its geographical diversification. (Brazil's faster economic growth is another plus.) Upcoming health-care reforms should benefit the company. Even though it has been growing relatively briskly, even management is tempering near-term expectations because of a still-weak business climate.
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.