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 Gardner, Russo & Gardner, a hedge fund company with a record that speaks for itself. Over the past 25 years, according to the folks at GuruFocus.com, it has posted a cumulative gain of about 2,115%, vs. 920% for the S&P 500. Over the past 10 full years, it gained 179%, vs. 100% for the S&P 500.
The company's reportable stock portfolio totaled $8.6 billion in value as of June 30, 2013.
So what does Gardner, Russo & Gardner's latest quarterly 13F filing tell us? Here are a few interesting details:
The only new holding is energy company Dominion Resources (NYSE:D), which yields 3.9%, and has paid 342 consecutive quarterly dividends. Facing a decline in demand for electricity, Dominion is shuttering a nuclear plant. Bulls like its transmissions business and its aspirations for LNG exportation. Dominion has also recently completed a coal-to-biomass plant conversion, and has been beefing up its renewable energy operations, buying solar farms, for example.
Among holdings in which Gardner, Russo & Gardner increased its stake was DuPont (NYSE:DD), yielding 3.2%. There's talk it might spin off its performance chemicals business, and it has been experiencing weakness in agriculture, and demand worries over titanium dioxide.
Gardner, Russo & Gardner reduced its stake in companies such as Hasbro and Washington Post – which was recently bought by Amazon.com founder and CEO, Jeff Bezos.
Finally, Gardner, Russo & Gardner's biggest closed positions included Novartis and Alnylam Pharmaceuticals. Other closed positions of interest include Exact Sciences (NASDAQ:EXAS), Rite Aid (NYSE:RAD), and Corning (NYSE:GLW). Exact Sciences is developing a colon-cancer test, which isn't proving to be as exact as some might have hoped, though it still has value. The company has been issuing new shares, to raise funds for further product testing and development. Some think it might end up bought out. In its second quarter, revenue was flat, and losses shrank.
Rite Aid stock has been soaring lately, and the company is poised to profit from Obamacare, which should deliver more insured Americans demanding more medications. But Rite Aid is still bearing more debt than competitors, and has been addressing that in part by closing some stores. But it's posting growth and net gains instead of losses lately, so there is reason to be hopeful. Its August comps showed improvement.
Corning's second quarter was solid, 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 Corning's partnership with View and its tint-adjusting glass is promising. Some also hope to see Gorilla Glass incorporated in automobiles in the future. The company has upped its dividend recently, and it now yields 2.8%. Its dividend has doubled in less than three years, while the company has been boosting its share repurchase program. Corning's stock seems attractively priced, with a forward P/E near 10. It was downgraded by Oppenheimer last week, from Outperform to Perform.
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.