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 Graham Capital Management, founded in 1994 by Ken Tropin and in the multistrategy macro-oriented hedge fund business. The overall company manages investments for endowments, foundations, sovereign wealth funds, global pensions, investment advisors, and wealthy individuals, among others.
The company's reportable stock portfolio totaled $1.5 billion in value as of June 30, 2013.
So what does Graham Capital's latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are Anadarko Petroleum and calls on Apache. Other new holdings of interest include Kodiak Oil & Gas (UNKNOWN:KOG.DL). 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. It's also increasing its share count and has significant debt, which is likely to grow more as Kodiak continues investing heavily.
Among holdings in which Graham Capital Management increased its stake was National Oilwell Varco (NYSE:NOV), which is dominant in oil and gas drilling and oil-field services equipment. It recently posted second-quarter earnings that showed margins shrinking a bit, which sent shares downward. Its backlog for capital equipment orders jumped 24% over year-earlier levels, though to a record level of nearly $14 billion. The company recently doubled its dividend (yielding 1.4%) and seems an attractive buy to many.
Graham Capital Management reduced its stake in lots of companies, including Ultra Petroleum (NASDAQ:UPL). It, too, just reported its second-quarter results, revealing that it's still an ultra-low-cost producer of natural gas. That helps it not get as hurt by low natural gas prices as many peers. The company also swung to a profit of $116 million, from a $1.2 billion loss last year. It has significant debt, but rising gas prices can help it pay that down.
Finally, Graham Capital's biggest closed positions included the SPDR Select Financial and iShares MSCI Mexico Capped ETFs. Other closed positions of interest include Dendreon (OTC:DNDNQ) and Prospect Capital (NASDAQ:PSEC). Dendreon, maker of prostate cancer drug Provenge, reports its latest results tomorrow, and the stock has risen as bulls expect a narrower loss than last quarter's and hope for approval of the drug in Europe. Bears worry about competing drugs, though.
Prospect is a private equity business development company ("BDC") specializing in funding energy companies and recently yielding 12%. Some worry BDCs as being adversely affected by rising interest rates, but Prospect isn't scared and even expects to profit from them. Prospect's share count has been soaring in recent years, but some feel that the money raised by that will pay off down the road. In a recent presentation, management pointed out, among other things, that its portfolio is diversified across 31 industries, and that senior management has a lot of skin in the game (some $35 million, to be precise).
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.