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 investment advisory firm Douglass Winthrop Advisors. It's of interest because it employs a Foolish (in a good way) "low-turnover, buy and hold strategy" -- and it has been served well by that, too. Since its inception roughly a decade ago, its equities investments have averaged annual gains of 9.1%, versus 8.1% for the S&P 500. Management noted in a recent letter to shareholders, "As committed long-term investors we keep our clients invested through good days and the inevitable bad ones. While this makes for some queasy moments, our clients understand that what really matters are long-term returns net of fees and taxes."
The company's reportable stock portfolio totaled $826 million in value as of June 30, 2013.
So, what does Douglass Winthrop's latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are Kinder Morgan and Loews. Other new holdings of interest include Baidu (NASDAQ:BIDU) and Spectra Energy (NYSE:SE). Chinese search-engine giant Baidu has been hurt by China's economic growth slowing, as well as by tough competition, such as from Qihoo 360. Some had deserted the stock, but it came roaring back with strong earnings for its second quarter, along with a rosy outlook. Many like its profitability and growth prospects, such as in video. Its shares also got a boost recently on news that it's buying a major Chinese mobile apps company.
Natural gas specialist Spectra Energy (NYSE:SE) has been inking some promising partnerships, and recently yielded 3.3%. Times have been tough lately, with low natural gas prices, an oversupply, and few rigs, but as those factors turn around, so should Spectra's fortunes. The company, along with NextEra Energy, was recently awarded a contract to build a $3 billion natural-gas pipeline into Florida. It's also angling to boost dividend payouts via some reorganization.
Among holdings in which Douglass Winthrop Advisors increased its stake were Natural Resources Partners LP (NYSE:NRP) and Deere. It reduced its stake in lots of companies, including Altria and Plains All American Pipeline. Natural Resources is a master limited partnership that owns and manages mineral reserve properties. Instead of mining or otherwise producing coal, oil, or gas, it leases its properties to others, and collects royalty payments, which helps its profit margins. Coal has been a troubled commodity lately, so investors are happy to see the company expanding its oil and gas operations in the Bakken region. The stock recently yielded a whopping 10%.
Finally, Douglass Winthrop's biggest closed positions included Kinder Morgan Management, LLC and Lorillard. Other closed positions of interest include Corning (NYSE:GLW) and Banco Santander (NYSE:SAN). Corning just reported a solid second quarter, with core revenue and earnings rising by double digits, and several business segments, such as telecommunications, life sciences, and display technologies, growing briskly. Its Gorilla Glass is selling well, and generated more than $1 billion in 2012 revenue. Some have high hopes for its partnership with View and its tint-adjusting glass, and also hope to see Gorilla Glass incorporated in automobiles in the future. The company has hiked its dividend recently (it yields 2.6%), and gave a big boost to its share repurchase program. Corning's forward P/E of 11 make its stock seem attractively priced.
Banco Santander yields 8.4%, and has been pressured by weakness in Europe. Unappreciated by many, though, is its geographic diversification, with substantial operations in faster-growing Latin America. The bank's most recent quarter improved on results from the previous quarter. Its stock valuation could be more compelling, but it does offer a huge yield. It recently posted earnings up 29% in the first half of its fiscal year (over year-ago levels), but some want to see even more signs of improving health.
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.