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 Passport Capital, which was founded by John Burbank in 2000 and known for combining macroeconomic analysis and fundamental research. Burbank himself is famous for having called the subprime mortgage crisis and reportedly earned a 220% return on it in 2007, though he lost 50% the following year.
The company's reportable stock portfolio totaled $2.6 billion in value as of Dec. 31, 2012.
So what does Passport Capital's latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are Williams and calls on Schlumberger. Other new holdings of interest include Amarin (NASDAQ:AMRN) and Exelixis (NASDAQ:EXEL). Amarin is a late-stage cardiovascular-focused biotech company with a promising (and FDA-approved) drug to lower triglycerides, Vascepa. It also has strong support on Wall Street, despite a significant number of shares sold short. My colleague Brian Orelli has wondered why bigger companies haven't signed on as partners with Amarin. Some wonder whether the company will be acquired by a big pharmaceutical company.
Exelixis, meanwhile, has received FDA approval for its thyroid cancer drug, Cometriq, and has just launched it. That drug may also get approved to treat prostate cancer, and Exelixis is looking at treating more kinds of cancers with it, which could drive more profits. While the company's future seems promising, its present has led theStreet to downgrade it because of "feeble" EPS growth and lackluster return on equity and operating cash flow.
Among holdings in which Passport Capital increased its stake was Cliffs Natural Resources (NYSE:CLF), an iron and coal specialist that recently slashed its dividend by 76%, while announcing the issuance of 9 million new shares (6% of its current share count). Those moves might boost its long-term health, but they're not thrilling some shareholders, who see greatly reduced income and share dilution. With its stock down roughly 60% over the past year, though, some wonder whether it's a good buy now. Cliffs recently announced plans to idle a Quebec iron ore pellet plant, and management is bullish, expecting growth in demand from China and overall pricing improvements.
Passport Capital reduced its stake in lots of companies, including Riverbed Technology, which has been hurt by sluggish IT spending. Many have lost faith in the company, with its shares down 46% over the past year, but its disappointing fourth-quarter results weren't that bad, with double-digit revenue growth and some strength in its recently acquired OPTNET business. The company does face serious competition, though.
Keryx investors were hit with disappointing trial results a year or so ago for the company's experimental colorectal cancer drug perifosine. But in January they got word of very promising results for Keryx's Zerenex, targeting complications due to end-stage renal disease. That propelled the stock, only to have it fall some on news of a secondary stock offering to raise funds. Still, bears point to a dearth of other contenders in the company's pipeline and wonder if Zerenex will be able to fend off competition.
Vical makes its money via vaccine technology, among other things, that it can license to others. It has more in its pipeline than Keryx, including some drugs in phase 3 trials. At a recent conference, management noted the company's strong financial position, with ample cash and an absence of debt. Some worry, though, about the prolonging of its melanoma-drug trials -- and FDA approval is rarely certain.
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.