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 Gardner, Russo & Gardner, a hedge fund company with a record that speaks for itself. Over the past 25 years, according to the folks at GuruFocus.com, it has posted a cumulative gain of about 2,341% vs. 830% for the S&P 500. Over the past 10 full years, it gained 122%, vs. 35% for the S&P 500.
The company's reportable stock portfolio totaled $6.9 billion in value as of September 30, 2012.
So what does Gardner, Russo & Gardner's latest quarterly 13-F filing tell us? Here are a few interesting details:
New holdings include the SPDR S&P 500 ETF (NYSEMKT:SPY), which represents the S&P 500. It's a terrific investment for beginning and seasoned investors alike, as it instantly (and inexpensively) has you invested in all 500 companies that make up the benchmark index for the U.S. stock market.
Among holdings in which Gardner, Russo & Gardner increased its stake was energy giant Schlumberger (NYSE:SLB). Demand for oil and gas isn't likely to evaporate any time soon, and Schlumberger is in the business of helping companies find and extract them. In addition, President Obama's re-election may also boost business if fracking becomes more regulated. That's because Schlumberger is the second-largest fracking supplier , and its technology and offerings may help frackers be kinder to the environment.
Gardner, Russo & Gardner reduced its stake in lots of companies, including Procter & Gamble (NYSE:PG) and Walgreen (NASDAQ:WBA). Procter & Gamble's revenue has been growing very slowly and its net income shrinking in recent years, though its most recent quarter offered some promising results. That's good news, as the company is being challenged by activist investor William Ackman. P&G is also exploring new income possibilities, such as a partnership with Teva Pharmaceutical (NYSE:TEVA) to sell over-the-counter drugs. It recently received approval for that from European regulators. For patient investors, it offers a 3.4% dividend yield.
Walgreen (NASDAQ:WBA) has reconciled with pharmacy benefits manager Express Scripts, but damage has been done, as it cost Walgreen gobs of customers and billions of dollars. (It's working to woo them back, though, such as via loyalty programs.) The company recently reported same-store sales down almost 6%, citing growth in generics as a reason. Walgreen's 3.4% dividend is a big draw for investors, and some are hopeful about its expansion abroad, such as via its $6.7 billion investment in Europe's Alliance Boots drugstore chain.
Finally, Gardner, Russo & Gardner unloaded several companies, such as Chesapeake Energy (OTC:CHKA.Q), which sports a corporate governance record so troubling that my colleague Alyce Lomax has called the stock "vile." It doesn't help that it's a huge natural-gas player at a time when natural-gas prices are very low. (That means they're likely to rise in coming years, though.) Meanwhile, the company is selling billions of dollars worth of assets, and focusing on developing the assets it has, while increasing its higher-margin activities. One auspicious factor is a fair amount of insider buying in recent months, and some speculate that the company could be bought out, too.
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.