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 SAC Capital Advisors, run by Steven Cohen. SAC is one of the biggest hedge fund companies around, with a reportable stock portfolio totaling $18.2 billion in value as of June 30, 2013. A company doesn't generally grow that large without performing well, and indeed, Cohen has reportedly averaged returns of roughly 30% annually over two decades.
So what does SAC Capital's latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are T-Mobile US and Clovis Oncology. Other new holdings of interest include MannKind (NASDAQ:56400P706) and EXCO Resources (NYSE:XCO). Biotech concern MannKind has seen its shares more than double in value over the past year, though it has been a volatile ride. Investors have been hopeful that its inhaled insulin product Afrezza will receive FDA approval soon. The stock has enormous potential and recently reported positive phase 3 trial results for Afrezza, but there is also significant risk and controversy surrounding it. Bulls need to remember that approval and strong sales are not yet in place, and a lot of success is already built into the stock's recent price, leaving less upside.
EXCO Resources, an oil and gas company, recently saw its stock slide after posting a 27% revenue gain in its second quarter, but disappointing earnings growth. EXCO spent $1 billion on assets from Chesapeake Energy earlier this year, giving it an entry into the oil-rich Eagle Ford shale region and boosting its existing operations. EXCO has a forced hedging policy, which some worry might hurt it if oil prices rise. The stock offers a 2.7% yield.
Among holdings in which SAC Capital Advisors increased its stake was network performance specialist Riverbed Technology (UNKNOWN:RVBD.DL). Riverbed gobbled up OPNET last year and offers a lot of promise but also considerable uncertainty. Its second-quarter results featured disappointing revenue and sent its stock south. Management cited slow integration of OPNET as one issue, but also pointed to considerable success competing with Cisco Systems.
SAC Capital Advisors reduced its stake in lots of companies, including Nuance Communications (NASDAQ:NUAN), a major developer of speech-recognition software. Nuance's technology is housed in many iDevices. It has been seen as a buyout candidate, and activist investor Carl Icahn has gobbled up many shares. In response, the company recently swallowed a "poison pill," limiting takeover possibilities. While some see the stock as undervalued now, others are bailing on the company, not liking its recent performance or its CEO's compensation package.
Finally, SAC Capital's biggest closed positions included Plains Exploration & Production and Panera Bread. Other closed positions of interest include Penn West Petroleum (NYSE:PWE). Penn West, which drills for oil and gas, has been struggling in an environment of low natural gas prices. Its recent second quarter featured revenue down 33%, though that was ahead of analyst estimates, and earnings improving though remaining in the red. The company has a new CEO and has trimmed about 30% of its workforce in the past year. The stock yields about 4.6%, after roughly cutting its payout in half earlier in the year.
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.