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 Gabelli Funds, the mutual-fund and closed-end fund arm of GAMCO Investors and familiar to many because of Mario Gabelli, the well-known value investor. Indeed, the folks at Institutional Investor named him Money Manager of the Year in 2011, citing an average annual return of 16.3% for his GAMCO Investors since its inception in 1977. That's darn impressive.
The company's reportable stock portfolio totaled $16.5 billion in value as of June 30, 2013.
So what does Gabelli Funds' latest quarterly 13F filing tell us? Here are a few interesting details.
The biggest new holdings were ExactTarget (which was recently acquired by salesforce.com) and Buckeye Technologies. Other new holdings of interest include Silver Wheaton (NYSE:SLW). Silver Wheaton's stock has been ailing, in part due to falling prices for precious metals. It has a beautiful business model, where instead of engaging in actual (and risky) mining, it simply buys the rights to income from mines in exchange for financing -- but it's not perfect, and the company has been burning cash. Investors have been hopeful over a new deal it struck with Vale for rights to big chunks of Vale's gold production at two mines, but not all of its forays into gold are as promising.
Among holdings in which Gabelli Funds increased its stake was Cypress Semiconductor (NASDAQ:CY), a tech company with an appealing 3.5% dividend yield and a supplier of touchscreen controllers for Kindles, among other things. The company recently blew away earnings estimates, with its PSoC 4 circuits "the fastest overall new product ramp in Cypress's history."
Gabelli Funds reduced its stake in lots of companies, including Energy Transfer Partners (NYSE:ETP). Recently yielding 7%, Energy Transfer boasts roughly 47,000 miles of natural gas gathering and transporting pipelines, as well as other assets it got via its acquisition of Sunoco last year. The master limited partnership is focused on gas and is vulnerable to drops in its price. It's burdened with significant debt, too. Gross margins have been down lately, and free cash flow is negative, as capital spending has increased. Dividend increases have not been bountiful, but management is aiming to improve on that front, in part via restructuring.
Finally, Gabelli Funds' biggest closed positions included H.J. Heinz and Acme Packet, which was snapped up by Oracle. Other closed positions of interest include Westport Innovations (NASDAQ:WPRT) and Zynga (NASDAQ:ZNGA). Westport has been designing engines powered by natural gas, including some heavy trucks. Bulls like its plans to expand in China and the nation's expanding network of fueling stations. But the company remains unprofitable, and it just issued a poor earnings report and lowered guidance, sending its shares down and getting downgraded on Wall Street.
Online gaming specialist Zynga also posted poor results recently, and compounded them by shuttering its real-money gaming plans. The company has been diversifying its revenue stream away from key partner Facebook, but it's in the red. Think twice before jumping into these shares. Watching and waiting might be the best move.
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. 13F forms can be great places to find intriguing candidates for our portfolios.