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 Tocqueville Asset Management, a portfolio manager with a contrarian bent, believing that "the best investment results over time are achieved outside the mainstream consensus," and seeking "undervalued companies that possess long-term earnings power."
The company's reportable stock portfolio totaled $7.3 billion in value as of June 30, 2013.
So what does Tocqueville's latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are Cabot and Stillwater Mining. Other new holdings of interest include Questcor Pharmaceuticals (UNKNOWN:QCOR.DL), which surged more than 30% on July 31, after the company posted estimate-trouncing second-quarter earnings, up 72% over year-ago levels, with revenue up 64%. Questcor is largely known for its multiple-sclerosis (MS) drug, Acthar, that has sold well in the past, and is being evaluated for many more indications, such as in pulmonology. Questcor's management is extremely well regarded, and its dividend was hiked by 25% earlier this year. Even with its stock-price rise, it looks attractive.
Among holdings in which Tocqueville Asset Management increased its stake were Sequenom (NASDAQ:SQNM) and Sarepta Therapeutics (NASDAQ:SRPT). Sequenom, which makes molecular and genetic diagnostic tests, is a relatively small company, with a market cap near $350 million. One of the company's tests checks for Down syndrome in a non-invasive manner, which should be of interest to many older women. Future tests might address conditions such as macular degeneration. Meanwhile, the company is expanding its reach abroad, but it's still posting losses along with strong revenue growth. The stock plunged recently, on weaker-than-hoped-for results.
Sarepta stock has nearly quadrupled over the past year, but that includes a pull-back after doubt grew over the ultimate FDA approval prospects for its Duchenne muscular dystrophy drug, eteplirsen (and when the approval might come). Phase-two results for the drug have been good, but the sample size is small. Some see the stock as reasonably or attractively valued, but there are risks to consider. Sarepta may still pay off well for investors, though it might take longer than some had hoped.
Tocqueville Asset Management reduced its stake in lots of companies, including VeriFone (NYSE:PAY). VeriFone has seen its stock nearly halved over the past year, as it has repeatedly posted disappointing quarterly results and weak guidance. Indeed, results reported in June sent shares down some 20%. Several insiders have recently bought hundreds of thousands of dollars worth of shares, which is a clear bullish sign. The company's deal with China is promising, and with a forward P/E ratio near 11, VeriFone is seen as attractive by some, and as a possible acquisition target. Others, though, worry about competition. Its free cash flow has been growing, but its operating and net margins have been falling lately.
Finally, Tocqueville's biggest closed positions included the Tocqueville Gold Fund and Kinross Gold. Other closed positions of interest include Nuance Communications (NASDAQ:NUAN), a major developer of speech-recognition software that has its technology housed in many iDevices. It has posted some disappointing earnings lately, and is threatened by weak demand, shrinking margins, and intensifying competition. With its seemingly low valuation, though, some see it as a buyout candidate, and bulls like its prospects in health care, where it's helping hospitals and doctors save millions through improved transcription and documentation.
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. Therefore, 13-F forms can be great places to find intriguing candidates for our portfolios.