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 the New York-based hedge fund company TPG-Axon Management, co-founded and led by Dinakar Singh in 2005 and known for its activism. The company serves wealthy investors, pension funds, and banking institutions. (Singh has been active in the biotechnology world, too, for personal reasons.)
The company's reportable stock portfolio totaled $1.6 billion in value as of September 30, 2012.
So, what does TPG-Axon's latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are GNC Holdings (NYSE:GNC) and Dollar General (NYSE:DG). Other new holdings of interest include Tronox (NYSE:TROX), the largest fully-integrated producer of titanium ore and titanium dioxide. The stock dropped recently due to a very disappointing third-quarter earnings report, while favorable valuation comments from Barron's boosted the stock. The company is hoping for more stability by becoming more vertically integrated, and a housing recovery will also help, as its products are used in paint pigments.
Among holdings in which TPG-Axon increased its stake was SandRidge Energy (UNKNOWN:SD.DL) and Elan (NYSE: ELN). SandRidge has been a lousy investment for most investors, and with TPG-Axon now owning more than 6% of the company, Dinakar Singh is pushing for some big changes, such as the ouster of the company's CEO and a more coherent strategy. Many investors are wisely steering clear, but some see significant potential value, if the company can get its act together.
Ireland-based biotech company Elan has a strong MS drug on the market, and its third-quarter results featured revenue up 10%. The company recently spun off much of its drug discovery business as the Prothena (Nasdaq: PRTA) company.
TPG-Axon reduced its stake in several companies, including Sirius XM Radio (NASDAQ:SIRI), which has gained more than 60% over the past year. Some worry that streaming music competition will sink Sirius, but it has been growing its subscribership and monthly price despite that. My colleague Rick Munarriz thinks Sirius might want to buy rival Pandora (NYSE:P). Sirius recently announced a special dividend and a boost in its share-buyback plans, and Goldman Sachs (NYSE:GS) initiated bullish coverage of the company, seeing a $3.50 price in its future.
Finally, TPG-Axon's biggest closed positions included Express Scripts (NASDAQ:ESRX) and United Continental Holdings (NASDAQ:UAL). Other closed positions of interest include Zhongpin (NASDAQ: HOGS). The Chinese food supplier is being taken private by the company's CEO and his partners for about $500 million. (The company specializes in pork – thus the ticker symbol HOGS.) Investors who were in the company at the right time enjoyed a nice bump due to the buyout's premium price.
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. Therefore, 13-F forms can be great places to find intriguing candidates for our portfolios.