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 Thornburg Asset Management, which was founded in 1982, and is based far from Wall Street in Santa Fe, New Mexico. It manages seven equity funds, nine bond funds, and separate portfolios for select institutions and individuals. Morningstar has praised the company's performance, its managers, and the fact that they eat their own cooking. (It does note that costs could be lower.)
The company's reportable stock portfolio totaled $21.5 billion in value as of December 31, 2012.
So what does Thornburg's latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are BP and Banco Santander. Other new holdings of interest include LinnCo (UNKNOWN:LNCO.DL), an oil-and-gas-related company, with a dividend yield topping 7%. It also exists to own units of Linn Energy and convert distributions into dividends. Linn Energy is admired for its successful long-term hedging, and seen by some as a very promising investment.
Among holdings in which Thornburg increased its stake was Chinese search-engine giant Baidu (NASDAQ:BIDU), which has had its stock pressured by China's slowing growth rate, though the company is still growing at a good clip, with revenue and earnings sporting five-year average annual growth rates of more than 60%. And much of China and Asia has yet to get online, representing huge growth potential. Meanwhile, a forward P/E of only about 17 makes it well worth considering.
Thornburg reduced its stake in lots of companies, including mortgage REIT Annaly Capital Management (NYSE:NLY), and telecom concern Level 3 Communications (NYSE:LVLT). Annaly's profitability is threatened by changes in interest rates and, as the company has been making some acquisitions to address some of its risks, it's turning into a different kind of company than the one many of its investors originally liked. It does sport a fat dividend yield above 12%, but some mREITs have reduced their dividends, and more cutting may be ahead. Annaly's has been inching downward recently.
Level 3 Communications, long burdened with a mountain of debt, shrank by 10% over the past year. The company is expanding its services around the world, for example, boosting its video broadcasting in Latin America. Many investors are steering clear, though, not liking its falling free cash flow or lack of a dividend. It recently got a nod from the folks at Pivotal, who like its increased bookings and project a return to positive free cash flow in 2013.
Finally, Thornburg's biggest closed positions included Huntington Bancshares and Gap. Other closed positions of interest include semiconductor equipment maker Mellanox Technologies (NASDAQ:MLNX). Mellanox was riding high not so long ago, investing heavily in cloud computing and topping Wall Street estimates. The stock has fallen lately, though, as the company reported an inventory accumulation. Management remains bullish, though.
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.