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 Fred Alger Management, founded in 1964 and managing mutual funds, pension funds, and more. The company explains , "We have remained steadfast to our philosophy and proprietary, bottom-up, fundamental research process, which we believe is the blueprint for our long-standing success." It was devastated on Sept. 11, 2001, when the majority of its employees, who worked at One World Trade Center, were killed. It remains in business, and has since regrouped.
Fred Alger's reportable stock portfolio totaled $15.9 billion in value as of Sept. 30, 2012.
So what does Fred Alger Management's latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are Ryman Hospitality Properties (NYSE:RHP) and Lindsay (NYSE:LNN). Other new holdings of interest include Five Below (NASDAQ:FIVE), a retailer targeting teens and preteens that used to go by the name of Cheap Holdings. The company has great growth plans, but some question whether it's really a bargain now, near its 52-week high.
Among holdings in which Fred Alger Management increased its stake was American Capital Agency (NASDAQ:AGNC), with a gravity-defying dividend yield above 17%. There are concerns that the dividend may get reduced, but that might not happen for a while. You might still want to be wary, though, as there are some aspects of the company that aren't too appealing. The Fed's quantitative easing is also putting pressure on profits.
Fred Alger Management reduced its stake in lots of companies, including Freeport McMoRan Copper & Gold (NYSE:FCX). Freeport has been hurt by low copper prices, higher costs of production, and global economic slowdowns, such as in China. On the plus side, though, it's a low-cost producer of copper and molybdenum, positioned to benefit quickly from upturns in metals pricing. Freeport has a balance sheet that's unusually strong, and an attractive valuation. It has a lot to offer patient investors, including a 3.7% dividend yield, and it's looking to expand into new revenue-generating areas, in part by buying oil and gas concerns Plains Exploration & Production (NYSE: PXP) and McMoRan Exploration (NYSE: MMR).
Finally, Fred Alger Management's biggest closed positions included HealthNet (UNKNOWN:HNT.DL) and Endurance Specialty Holdings (NYSE:ENH). Other closed positions of interest include Westport Innovations (NASDAQ:WPRT) and MAKO Surgical (UNKNOWN:UNKNOWN). Westport designs low-emissions engines that run on natural gas, among other things. After being a high-flyer for a while, it's down 22% over the past year, and recently lowered near-term projections. Its future is potentially bright, though, thanks to a growing interest in alternative fuels and currently low prices for natural gas, which may rise. New government mandates for vehicle makers to boost their average fuel efficiency can also boost Westport. In the meantime, however, it remains unprofitable.
MAKO Surgical focuses on orthopedic procedures and its stock has been crushed more than 50% over the past year, though, as it faces big competitors and tries to grow its way into profitability. Meanwhile, the company is raising capital by issuing more stock and bulls have been pleased to see its recent earnings report exceeding expectations.
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.