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 investing giant Carl Icahn, who has made billions, partly by taking large positions in companies and pushing for change in them. These companies have included Texaco, RJR Nabisco, and Imclone. He's also drawn to companies in or near bankruptcy, wanting to make them more valuable in order to sell them at a higher price.
The company's reportable stock portfolio totaled $12.9 billion in value as of Dec. 31, 2012. Its top three holdings, Icahn Enterprises L.P., CVR Energy, and Forest Laboratories, make up nearly 70% of the overall portfolio's value.
So what does Icahn Associates' latest quarterly 13F filing tell us? Here are a few interesting details:
The only major new holding is Transocean (NYSE:RIG). The company has been living under a cloud of uncertainty in recent years due to its involvement in the massive Gulf oil spill and investors not knowing how much it would ultimately pay for that. The dust is starting to settle, though, with the company recently agreeing to pay more than $1 billion in penalties. Meanwhile, criminal charges in Brazil related to another oil spill were recently dropped, though civil charges remain. Ultra-deep drilling is looking promising to many, and that bodes well for Transocean.
Among holdings in which Icahn Associates increased its stake were Navistar International (NYSE:NAV), Chesapeake Energy (NYSE:CHK), and Netflix (NASDAQ:NFLX). Navistar, known for its trucks, buses, engines, and items for commercial and military markets, has dropped some 43% over the past year and has averaged annual losses of about 13% over the past five years. Production and quality problems have played a part in its struggles, as management offered many excuses. Icahn has suggested he'd like to see Navistar combined with Oshkosh (NYSE:OSK), for which he made an unsuccessful bid. He has also referred to Navistar as a "poster child for abysmal business decisions and poor corporate governance."
Chesapeake Energy has arguably topped most other companies when it comes to poor corporate governance. CEO Aubrey McClendon is finally departing, though, and news from Chesapeake isn't all bad. In its latest quarter, the company took a writedown due to low natural gas prices, but it also beat expectations for earnings, and posted an increase in production. However, it's not reducing its hefty debt load as quickly as some have hoped.
Netflix is not such a typical troubled company. It has certainly been up and down sharply in recent years, with many investors losing faith. But it's up about 66% over the past year and offers plenty of causes for optimism. One smart move was to develop its own original programming, with "House of Cards" proving quite popular. The company is developing kid fare now as well, and its competitive position seems stronger than many think.
Icahn Associates closed out its stakes in Commercial Metals and Oshkosh. Oshkosh doesn't seem like a bargain now, with its recent P/E ratio of 15 well above its five-year average of 11. Its defense operations are vulnerable to military spending cutbacks, but it also has non-military operations, such as in fire and emergency equipment. In its last quarter, it topped earnings estimates, though revenue was down.
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.
Longtime Fool contributor Selena Maranjian owns shares of Netflix. The Motley Fool recommends and owns shares of Netflix. It also owns shares of Transocean and has the following options: long Jan 2014 $20 calls on Chesapeake Energy, long Jan 2014 $30 calls on Chesapeake Energy, and short Jan 2014 $15 puts on Chesapeake Energy. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.