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 Caxton Associates, founded in 1983 by Bruce Kovner (who stepped down in 2011). The investment company is known for relatively few years with negative returns, and also for average annual gains of about 20% since its inception several decades ago. That's a powerful record.
Caxton is also known for charging clients dearly for the privilege of going along for the ride. In an industry known for routinely charging 2% of assets annually while also taking 20% of profits, Caxton had long charged 3% and 30%, though that was reduced some last year.
The company's reportable stock portfolio totaled $1.6 billion in value as of March 31, 2013.
So what does Caxton Associates' latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are Assured Guaranty and the SPDR Select Financial Sector ETF. Other new holdings of interest include Micron Technology (NASDAQ:MU) and Level 3 Communications (NYSE:LVLT). The struggling PC market has hurt Micron, but bulls are hopeful that growth in tablets and smartphones will boost demand for memory chips. Micron's purchase of Japanese manufacturer Elpida has some investors quite optimistic, as it boosts Micron's capacity and its relationship with Apple. Micron has been losing market share, though, and some worry about the commoditization of memory and Micron's debt levels. Several analysts increased their price targets for the stock recently.
Level 3 Communications, long burdened with substantial debt, is expanding its services around the world, for example boosting its video broadcasting in Latin America. Many investors are steering clear, however, not liking its hefty debt, net losses, and negative free cash flow. (Its recent losses were smaller than analysts had expected, though.)
Among holdings in which Caxton Associates increased its stake was R. R. Donnelley (NYSE:RRD). Commercial printer Donnelley provides labels, packaging, and more to the private and public sector. It prints many thousands of forms for the SEC, too, and bought Edgar Online. Bears worry about its steep debt load, though the company is free-cash-flow positive. Some also worry about a possible reduction of its dividend, which recently yielded nearly 8%. To succeed, the company needs to do more digital business. To that end, it recently sealed an eBook deal with Harlequin.
Caxton Associates reduced its stake in lots of companies, including Georgia-based Synovus Financial (NYSE:SNV). Synovus has been posting strong return-on-equity (ROE) numbers. In May, it acquired $54 million in deposits from the failed Sunrise Bank. Bears worry about the bank's significant residential real estate business and the current low interest rate environment. It has also been working to pay off its TARP obligations.
Finally, Caxton Associates' biggest closed positions included Sprint Nextel and JPMorgan Chase. Other closed positions of interest include India-based ICICI Bank (NYSE:IBN). In April, the bank reported double-digit profit increases and rising ROE. Analysts at Zacks downgraded the bank earlier this month, though, citing deterioration of its credit quality and expected steep operating expenses.
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, whom you can follow on Twitter, owns shares of JPMorgan Chase, as does The Motley Fool. 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.