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 GMT Capital, a private investment company founded by Thomas Claugus in 1990 that manages several hedge funds and other accounts. Its reportable stock portfolio totaled $3.8 billion in value as of Dec. 31. You don't generally grow that large without doing some things right. Last year, Bloomberg named the company's Bay Resource Partners hedge fund one of the richest 100. In its first 15 years, it averaged a 20% annual return, almost twice that of the S&P 500.
Interesting developments
So what does GMT Capital's latest quarterly 13F filing tell us? Here are a few interesting details.
The biggest new holdings are American International Group and Check Point Software Technologies. Other new holdings of interest include Questcor Pharmaceuticals (NASDAQ: QCOR), which has a multiple-sclerosis drug, Acthar, that has been selling well and also has many more indications. The stock yields 3.1%, and its dividend was recently raised by 25%. Questcor has its risks, though, such as an investigation into its marketing practices, as well as competition. In its just-reported fourth quarter, revenue more than doubled, though Acthar sales for MS retreated a bit. The stock is heavily shorted.
Among holdings in which GMT Capital increased its stake was Superior Energy Services (SPN +0.00%). Oil and gas drilling specialist Superior Energy has lost value, on average, over the past five years, leading some to now see it as a bargain, with its P/E ratio near 10 and forward P/E around 8. Its fourth-quarter report was mixed, with its U.S. business weak but international business growing. Management expects its international business to grow by 25% over 2013 and is more uncertain about demand in the United States.
GMT Capital reduced its stake in lots of companies, including Canada-based uranium specialist Cameco (CCJ 2.58%). Bulls expect the company's business to improve as gas and coal prices eventually rise, and because of new nuclear plants being built. Southern has permission to build two, and SCANA also plans to build two. My colleague Sean Williams likes Cameco's transparency, expects higher uranium prices, and notes that China is also expected to demand more uranium over time.
Finally, GMT Capital's biggest closed positions included Fushi Copperweld, which was taken private, and Coeur d'Alene Mines. Other closed positions of interest include Magnum Hunter Resources (NYSE: MHR) and 8x8 (EGHT 8.61%). More than a handful of natural-gas-related companies struggled over the past year. Energy concern Magnum Hunter has been heavily shorted, in part because of significant debt and a substantial focus on low-priced natural gas in its operations. Some don't appreciate its shift toward oil and liquids, though, and its diversification across several promising shale fields. The company recently announced a delay in the filing of its year-end report, with management apologizing and calling its own excuses unacceptable. (That's refreshing candor, actually.)
Oddly named 8x8 is a specialist in high-margin voice-over-IP software. It was whacked last month, when its third-quarter earnings report wasn't quite as stellar as hoped, though it does have many strong and growing numbers, such as revenue per customer. Some see it as underappreciated and wonder whether it will end up acquired. Its recent P/E ratio of 7 is appealing, too. The stock is up 70% over the past year and has averaged 40% annual growth over the past decade.
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, and 13F forms can be great places to find intriguing candidates for our portfolios.
