Every quarter, many money managers have to disclose what they've bought and sold, via "13-F" filings. Their latest moves can shine a bright light on smart stock picks.
Today let's look at Tocqueville Asset Management, a portfolio manager with a contrarian bent, believing that "the best investment results over time are achieved outside the mainstream consensus" and seeking "undervalued companies that possess long-term earnings power."
The company's reportable stock portfolio totaled $7.9 billion in value as of Sept. 30, 2013.
So what does Tocqueville's latest quarterly 13-F filing tell us? Here are a few interesting details:
The biggest new holdings are CONSOL Energy and Joy Global. Other new holdings of interest include Herbalife (NYSE:HLF), which has been the subject of great controversy among hedge-fund giants, with Bill Ackman calling it a pyramid scheme. It keeps thwarting naysayers, though, recently posting its 19th consecutive quarter of estimate-topping results and 16th consecutive quarter of double-digit revenue gains. Its stock is up nearly 30% over the past year, and yields 1.9%.
Among holdings in which Tocqueville Asset Management increased its stake were Celldex Therapeutics (NASDAQ:CLDX) and OPKO Health (NASDAQ:OPK). Celldex is targeting late-stage cancers and has seen great promise in some of its formulations, with more in the pipeline. Bulls are optimistic about its attempts to treat orphan diseases, as well. Celldex's stock has quadrupled over the past year, so the company has not gone unnoticed.
OPKO Health stock, meanwhile, has more than doubled over the past year, as the company develops diagnostic tests for Alzheimer's disease and a bunch of cancers. It also has pharmaceutical, nutraceutical, and veterinary products on the market in Europe and Latin America. OPKO has been buying companies and growing rapidly, but it's also posting net losses and negative free cash flow -- though it also has ample cash to keep it afloat for quite a while. And unlike many biotechs, it's also generating significant and growing revenue. Still, some worry that it's overvalued at this point. Some FDA approvals will help.
Tocqueville Asset Management reduced its stake in lots of companies, including Molycorp (OTC:MCPIQ) and Windstream (OTC:WINMQ). Rare-earth-materials specialist Molycorp has been struggling due to oversupply in the market, and its shares are near a 52-week low, more than halved over the past year. Revenue has been growing steadily in recent years, but it's still posting net losses. Making matters worse is significant stock dilution. Bulls are hopeful about Molycorp's new CEO and expect demand to eventually increase, but the company is facing cost overruns and has had trouble obtaining financing other than via new share issues. The company has competition, and a rise in production could hurt pricing.
Windstream has seen its stock slide in recent years, as there is considerable uncertainty about its future. Windstream has been shifting its focus away from rural telecom service and toward broadband service and business customers. While its revenue has been rising, earnings have been shrinking. It sports a dividend that has been yielding more than 11%, but it's not crazy to question its sustainability in the face of Windstream's debt. There's still reason to be hopeful, as the company sports positive free cash flow and growth potential, but the stock remains heavily shorted.
Finally, Tocqueville's biggest closed positions included Maidenform Brands and Sprott Physical Gold Trust.
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.