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 highly regarded value investor David Einhorn and Greenlight Capital, which he founded. Einhorn's investing success and his advocacy of financial transparency and accountability have attracted many fans. Although he isn't afraid to short stocks, he prefers going long and looks for situations where he feels a stock is mispriced.
The company's reportable stock portfolio totaled $6.4 billion in value as of Dec. 31, 2012.
So what does Greenlight's latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are calls on Apple and shares of Google. Other new holdings of interest include Vodafone (NASDAQ:VOD) and Western Digital (NASDAQ:WDC). The U.K.-based telecom giant Vodafone has bulls excited about the projected growth of 4G technology, its Smart II low-cost, mass-market smartphone, and its entry into the promising mobile payments market. Others are wary of uncertainty. The company is huge, with more than 400 million customers, and its 45% interest in Verizon Wireless is a big plus, generating billions in cash.
Western Digital, along with Seagate Technology (NASDAQ:STX), controls about 90% of the hard-disk drive market. While Greenlight bought into Western Digital, though, it reduced its stake in Seagate. My colleague Jim Mueller is bullish on the industry, despite worries about a shrinking PC market, because he sees massive and growing need for storage and points out that hard-disk drives are inexpensive solutions for that. Both companies are growing, but Western Digital has been posting stronger numbers, including more than half a billion dollars in free cash flow in its last quarter. Seagate has nearly quadrupled its dividend over the past five years, and recently yielded 4.4% vs. Western Digital's 2.1%.
Among holdings in which Greenlight increased its stake was Marvell Technology (NASDAQ:MRVL). The company's stock seems cheap these days, with the company whacked by weak PC sales. Its potential to profit from the growth of cloud computing is promising, as is its new processor for low-cost smartphones and tablets is a fast-growing part of the online market. In the meantime, there's a new dividend, recently yielding 2.6%, as well as stock repurchases .
Finally, Greenlight's biggest closed positions included Starz and Huntington Ingalls Industries. Other closed positions of interest include Genworth Financial (NYSE:GNW), which has been trying to turn itself around, in part by distancing itself from its mortgage insurance business. Its long-term care insurance is also not a great profit driver lately, despite some competitors having exited that market. And it has stopped selling retail and group variable annuities as well. With a recent forward P/E below 6, it's drawing some interest as a possible value investment.
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.