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 $7.3 billion in value as of Dec. 31, 2012.
Interesting developments
So what does Gardner, Russo & Gardner's latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are Heineken and American International Group (AIG 1.62%). With a recent P/E ratio near 3 and a forward one near 10, AIG looks attractive to many. But it has also turned off many investors by considering a lawsuit against the U.S. government that bailed it out not so long ago. Its stock has averaged annual losses of about 8% over the past 20 years, but is up 45% over the past year and is near a 52-week high. AIG recently cut a deal with HSBC to sell insurance products in Europe and parts of the Middle East.
Among holdings in which Gardner, Russo & Gardner increased its stake were Bank of America (BAC 1.64%) and Oracle (ORCL +0.26%). Bank of America has been selling off non-core assets and strengthening its financial condition. It has also been shutting down lots of ATMs as it beefs up its mobile-transaction apps. Meanwhile, lawsuits related to its toxic mortgage loans continue, but there seem to be some macroeconomic headwinds helping the company. The stock is up more than 50% over the past year.
Oracle has also recently hit a 52-week high, as it shifts its focus from hardware to the cloud computing realm. It's been posting double-digit revenue and earnings growth rates over the past few years, though revenue has shown some signs of softness. The company's hardware business hasn't been doing as well as software recently, but it will be expanding, thanks to its purchase of telecom infrastructure company Acme Packet.
Gardner, Russo & Gardner reduced its stake in lots of companies, including Corning (GLW +0.61%). The venerable blue chip, recently yielding 3%, is also a high-tech giant, producing glass for LCD displays and smartphones and fiber for telecom networks, among other things. Demand for its Gorilla Glass is strong, generating more than $1 billion in 2012 revenue, and its flexible new Willow Glass is promising, too. Also boding well is an expected uptick in TV sales. Some see the stock as attractively priced at recent levels.
Finally, Gardner, Russo & Gardner's biggest closed positions included Baidu and KeyCorp. Other closed positions of interest include Yahoo! (NASDAQ: YHOO). Yahoo!, helmed by new arrival Marissa Mayer, has been surprising many by turning in some impressive results recently. Mayer has redesigned the company's email service, increased employee perks, improved Flickr's usability, and is generally paying more attention to the mobile world.
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.
