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, 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 Passport Global Fund has averaged annual gains of about 18% since inception (versus only 2% for the S&P 500 over the same period).
The company's reportable stock portfolio totaled $2.5 billion in value as of March 31.
So what does Passport Capital's latest quarterly 13F filing tell us? Here are a few interesting details.
The biggest new holdings are McGraw-Hill Financial and industrial machinery specialist Gardner Denver. Other new holdings of interest include Kodiak Oil & Gas (UNKNOWN:KOG.DL) and Brocade Communications Systems (NASDAQ:BRCD). Kodiak recently bought 42,000 acres in the productive Bakken region, upping its assets there by 27%, and adding thousands of new barrels of oil to its production levels. Bulls love Kodiak's rapid growth and see more room to grow. Bears worry that it might be too focused on the Bakken and not sufficiently diversified.
Networking storage specialist Brocade recently posted estimate-topping earnings, but disappointing revenue and guidance. Some see value in the stock, though, with its forward P/E below 10, and a buyout is a possibility, too. Brocade faces strong competition, but on the plus side, it has been paying down its debt and ample free cash flow, too.
Among holdings in which Passport Capital increased its stake were Yamana Gold and Solazyme. Passport Capital reduced its stake in lots of companies, including Southern Copper and global steel giant Arcelor Mittal (NYSE:MT), the latter of which has been facing a weak steel market, especially in Europe, and carries a lot of debt, while not producing gobs of free cash flow lately. Still, some see it as promisingly priced now, with a forward P/E near 9, and a global economic recovery likely. Rising auto sales bode well for the steel company, too. Its stock is yielding about 5.6%.
Finally, Passport Capital's biggest closed stock positions included HollyFrontier and eBay. Other closed positions of interest include Amarin (NASDAQ:AMRN) and Riverbed Technology (UNKNOWN:RVBD.DL). Amarin stock has fallen roughly in half over the past year. The company is a late-stage cardiovascular-focused biotech enterprise, with a promising (and FDA-approved) drug to lower triglycerides, fish-oil-based Vascepa. It needs a big partner for Vascepa, though, and one likely suitor recently bought a competitor instead. Meanwhile, the FDA has scheduled an October meeting about the drug, for which Amarin is seeking expanded approval.
Riverbed stock has averaged annual growth of nearly 16% over the past five years, but it has also averaged an annual 31% drop over the past two. The company gobbled up OPNET last year. It recently earned an upgrade to a "buy" rating from Lazard analyst Ryan Hutchinson, based on expected synergies with OPNET and anticipated strength in federal spending. Riverbed offers a lot of promise, but it also carries a lot of uncertainty. Its forward P/E near 15 is far below its five-year average near 118.
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.