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 Gabelli Funds, the mutual fund and closed-end fund arm of GAMCO Investors and familiar to many because of Mario Gabelli, the well-known value investor. Indeed, the folks at Institutional Investor named him Money Manager of the Year in 2011, citing an average annual return of 16.3% for his GAMCO Investors since its inception in 1977. That's darn impressive.
The company's reportable stock portfolio totaled $14.9 billion in value as of Dec. 31, 2012.
So what does Gabelli Funds' latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are ADT and Ryman Hospitality Properties. Other new holdings of interest include Energy Transfer Partners (NYSE:ETP). Recently yielding 7.6%, Energy Transfer boasts roughly 24,000 miles of natural gas pipelines as well as oil pipelines and other assets it got via its acquisition of Sunoco last year. The company is vulnerable to drops in natural gas prices and carries a lot of debt. It recently topped analyst expectations for earnings and revenue.
Among holdings in which Gabelli Funds increased its stake were Freeport McMoRan Copper & Gold (NYSE:FCX) and Corning (NYSE:GLW). Freeport recently posted strong gains in sales of copper and gold, and is cutting its costs as well. It's also expanding its scope, moving into oil and gas exploration. The stock looks attractive at recent levels and sports a 3.9% dividend, partly because it has fallen some recently, along with the price of gold. Some have sold fearing interest rate hikes from the Fed, which will make some alternatives to gold more attractive.
Corning, which recently yielded 2.9%, is 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 also promising -- and might end up in Apple's new iWatch. Also boding well is an expected uptick in TV sales and possible inclusion in Apple TVs one day. There's a solid case to be made that the stock is attractively priced at recent levels and a good long-term investment.
Gabelli Funds reduced its stake in lots of companies, including SUPERVALU (NYSE:SVU), which is in the tough supermarket business, where profit margins are thin and competition tight. The company has drawn a $3.3 billion bid from a private equity firm, in a deal where SUPERVALU gives up its big-name supermarkets and ends up focusing more on its wholesale business and remaining chains, such as Save-A-Lot.
Finally, Gabelli Funds' biggest closed positions included Cooper Industries (which is being bought by Eaton) and Kenexa (bought by IBM). Other closed positions of interest include Intuitive Surgical (NASDAQ:ISRG). Intuitive is the leader in robotic surgical equipment, and has been growing rapidly in recent years. There's much to like about it, such as its repeating revenue from service contracts and supplies. A red flag, though, is that some studies are suggesting that robot-assisted surgeries may not be much more effective than traditional ones. (Some of these studies ignore the faster recovery times for less-invasive procedures.) The company has been trying to appeal more directly to doctors and hospitals lately. The new tax on medical devices may sting Intuitive a bit, but it has the earnings to handle it -- the tax is likely to hurt its less profitable or unprofitable peers more.
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.