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 Eagle Asset Management, a massive money management arm of Raymond James Financial. Tracing its history back to 1976, the company provides investment services via individual managed accounts as well as mutual funds.
The company's reportable stock portfolio totaled $15.1 billion in value as of June 30, 2013.
So what does Eagle Asset Management's latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are SeaWorld Entertainment and OpenTable. Other new holdings of interest include Pinnacle Foods (NYSE:PF). Pinnacle Foods is a recent IPO with a new dividend, which yields about 2.8%. Its brands include Birds Eye, Aunt Jemima, Hungry-Man, Van de Kamp's, Armour, Lender's, Mrs. Paul's, Vlasic, Log Cabin, Mrs. Butterworth, and Duncan Hines, among others. The company has a significant debt load, so some have worried about its interest in acquiring Unilever's Wish-Bone salad dressing brand and Del Monte Foods' canned foods. Bulls like its strong brand lineup and see it as a solid income play. Its last quarter featured revenue down a smidge but earnings up, helped by cost-cutting.
Among holdings in which Eagle Asset Management increased its stake was CenturyLink (NYSE:CTL). Telecom concern CenturyLink yields an appealing 6% (which reflects a dividend cut of about 25% as the company focuses more on share buybacks). The company landed a hefty Pentagon contract in April, with a possible 10-year value of $750 million, and has been moving into promising arenas such as cloud computing (via its purchase of SAVVIS). Having merged with Qwest, CenturyLink has substantial debt, topping $19 billion, but also significant free cash flow of nearly $3 billion annually. Its earnings per share has been rising in the past few years, but revenue growth is mixed. The company is closing in on union contract agreements with 39% of its workers.
Eagle Asset Management reduced its stake in lots of companies, including Two Harbors Investment (NYSE:TWO) and Sirius XM Radio (NASDAQ:SIRI). Two Harbors is a mortgage REIT, or mREIT, recently yielding a gargantuan 12.3% -- though its payouts don't get the lower tax rates of other dividends. It has more flexibility than some of its peers because it's a "hybrid" mREIT, investing in both government agency-backed mortgages and ones that are not so backed. Some worry about rising interest rates and prepayments on loans, but Two Harbors has hedged against some of that. Insiders and institutions have been buying shares in recent months.
Sirius XM Radio has come a long way since the merger between Sirius and XM five years ago, adding millions of subscribers, more than $1 billion in revenue, and solidly turning the corner into profitability. The company boasts more than 25 million subscribers, and revenue and earnings have been growing at double-digit rates. Growing auto sales bode well for Sirius, as its radios are embedded in many vehicles. It recently refinanced a lot of debt at a lower rate, has been aggressively buying back shares, and has struck a deal with AT&T, though the latter may turn out to be more of a rival.
Finally, Eagle Asset Management's biggest closed positions included Obagi Medical Products and WellCare Health Plans. Other closed positions of interest include the promising oil and gas company Halcon Resources (NYSE:HK), operating in the lucrative Bakken region (where it's focusing on cutting its costs), and elsewhere, such as in Texas. It just posted disappointing revenue but estimate-topping earnings numbers. Some see it as a likely acquisition target.
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.