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 Caxton Associates, founded in 1983 by Bruce Kovner (who stepped down in 2011). The investment company is known for having relatively few years with negative returns, as well as its average annual gain of about 20% since its inception three decades ago. That's a powerful record. It hasn't done as well recently, though, gaining just 1% in 2011, 2% in 2012, and 16% in the first half of 2013.
Caxton is also known for charging clients dearly for the privilege of going along for the ride. In an industry known for routinely charging 2% of assets annually while also taking 20% of profits, Caxton had long charged 3% and 30%, respectively, though that was reduced some in 2012.
The company's reportable stock portfolio totaled $1.9 billion in value as of Sept. 30, 2013.
So what does Caxton Associates' latest quarterly 13F filing tell us? Here are a few interesting details.
The biggest new holdings are calls on Walgreen and shares of HD Supply Holdings. Other new holdings of interest include Vale S.A. (NYSE:VALE). Brazilian mining giant Vale has been focusing on its most promising opportunities, such as iron, while cutting costs aggressively, paring back on its investments, and selling assets. It also recently took advantage of a chance to cut billions off its $16 billion tax obligations to Brazil. Demand from China seems to be growing, which bodes well for Vale, and India is expected to become a significant consumer of ore, too. Vale is focusing its explorations in Peru, Canada, Australia, and Brazil. With a forward P/E ratio near eight, the stock seems attractive.
Among holdings in which Caxton Associates increased its stake was Gilead Sciences (NASDAQ:GILD), a biotech company that has surged over the past year. Gilead's all-oral hepatitis C treatment, Sovaldi (sofosbuvir) has just received FDA approval and also seems headed for approval in Europe. Investors are looking for it to outsell some competing formulas, despite its hefty price tag of $1,000 per day, or about $84,000 for a full 12-week treatment. Gilead Sciences is well known for its success with HIV drugs, and just got European approval for an HIV treatment. Meanwhile, Gilead also recently reported promising clinical trial results for drugs treating lymphomas and blood disorders, and it's addressing heart disease with cardiovascular drugs Letairis and Ranexa, too. Piper Jaffray recently named Gilead Sciences one of its top stocks for 2014.
Caxton Associates reduced its stake in a number of companies, including 3D Systems (NYSE:DDD). The 3-D printing specialist is seen by some as overhyped and overvalued, but others see the industry holding much promise. 3D Systems posted big growth numbers in its third quarter, but also tempered near-term expectations. 3D Systems' products serve industry, as well as consumers, and the company has been on an acquisition tear. It bought The Sugar Lab, a company developing printable food, and more recently snapped up a small chunk of Xerox, a company with a bit of printing expertise. 3D Systems is significantly shorted, with some bears worried about Hewlett-Packard's entry into the market.
Finally, Caxton Associates' biggest closed positions included calls on put options on the SPDR S&P 500 ETF and calls on Ford. Other closed positions of interest include Cree (NASDAQ:CREE) and ExOne (NASDAQ:XONE). LED lighting specialist Cree saw its stock slump following a quarterly earnings report that featured double-digit revenue and earnings growth along with reduced near-term projections from management. It's not all bad news, though, as some expect the LED market to grow by about 34% annually over the next few years, eventually totaling nearly $100 billion, and Cree is investing heavily in the space. Cree has introduced a 75-watt LED bulb that, while pricey at $24, is considerably cheaper than those of some competitors. Meanwhile, Cree's bulbs have received an Energy Star rating that will give them access to rebates from utility companies. A possible ban of some traditional light bulbs could also boost the market for LED lighting. With a P/E ratio near 67, the stock isn't cheap, but it seems promising over the long run.
ExOne, with a forward P/E of 125 and no current P/E due to negative earnings, doesn't appear to be a bargain. Its third quarter did feature an operating profit, though, and sales, though small, are growing briskly. Within the 3-D printing business, ExOne has an industrial focus, with printers that use sand and metal as raw materials (among other inputs), and not just plastic, as is the case with some rivals. Bears worry about patent expirations and note that it's still young and small -- it sold just 13 printers in 2012 and 17 in 2013, as of last quarter. The company is newly public, too.
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.
Longtime Fool contributor Selena Maranjian, whom you can follow on Twitter, owns shares of Ford and Gilead Sciences. The Motley Fool recommends 3D Systems, ExOne, Ford, and Gilead Sciences. The Motley Fool owns shares of 3D Systems, Companhia Vale Ads, ExOne, and Ford and has the following options: short January 2014 $20 puts on 3D Systems. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.