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 the California Public Employees Retirement System (often referred to as CalPERS), one of the biggest and most prominent pension funds. It serves more than 1.6 million public employees, retirees, and their families.
CalPERS' reportable stock portfolio totaled $54 billion in value as of Sept. 30, 2013. Public equity recently accounted for 53% of its investment portfolio, with 12% in private equity, 15% in income investments, and 9% in real estate, among other categories.
So what does CalPERS' latest quarterly 13F filing tell us? Here are a few interesting details.
The biggest new holdings are Twenty-First Century Fox and News Corp. Other new holdings of interest include Ambarella (NASDAQ:AMBA), a semiconductor company focused on video with offerings such as sports cameras and surveillance cameras. Its second quarter was strong, with hints of promising new business lines. Revenue surged 35%, and earnings handily topped expectations. Ambarella stock is up more than 160% over the past year.
Among holdings in which CalPERS increased its stake were Odyssey Marine Exploration (NASDAQ:OMEX) and Northern Tier Energy Partners (UNKNOWN:NTI.DL). Odyssey Marine Exploration is down close to 20% over the past year, and it's sitting firmly in penny-stock territory. The company is in the unusual business of looking for and recovering deep-sea shipwrecks (and their often valuable cargo). Its stock is rather heavily shorted, and the company has posted a string of losses and negative free cash flow. Odyssey Marine just reported third-quarter results featuring revenue up sharply due to silver recovered from the 3-mile-deep SS Gairsoppa. This is a speculative kind of investment, facing high exploration costs, international regulations, and the fact that discoveries are not guaranteed.
Northern Tier is a relatively newly public oil-refiner (and a master limited partnership) with a fat dividend yield of 11.9%. All is not perfect, though: The company's dividend payout has been shrinking over the past few years, and much of its performance depends on a single refinery. It's also riskier than many other MLPs because its payouts are less certain. Among other activities, Northern Tier operates more than 160 convenience stores and a bakery that supplies them. Northern Tier just reported downbeat quarterly results, with net income down 55%, and it's not sporting the best investment-grade rating. Northern Tier's general partner stake is being bought by Western Refining.
CalPERS reduced its stake in lots of companies, including Model N (NYSE:MODN) and Yingli Green Energy Holding (NYSE:YGE). Revenue-management software specialist Model N had a good early part of the year, getting a nice pop at its March IPO. But the rest of the year has been volatile, with the stock plunging some 37% in September when management offered a weak outlook and some Wall Street analysts downgraded the stock. The company noted some sales-team challenges in a recent quarterly report, but Model N management remains bullish, noting, "We continue to believe that our market leading products, large market opportunity, proven value proposition, and strong pipeline of opportunities position the company well for the long-term."
Yingli Green Energy, which is based in China and is focused on solar energy, has seen its stock nearly quadruple over the past year. Yingli Green Energy stands to benefit from strong solar demand from Japan, and it just posted third-quarter numbers, with revenue up 63% over year-ago levels and net losses narrowing (yet still wider than expected). Yingli Solar is "the world's largest photovoltaic module manufacturer in terms of shipments and production capacity" and has seen its profit margins grow as solar pricing has been stabilizing somewhat. Still, the company is carrying a worrisome debt load.
Finally, CalPERS' biggest closed positions included Leidos Holdings and BMC Software. Other closed positions of interest include National Financial Partners and Intermec.
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.