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 investment advisory firm Douglass Winthrop Advisors. It's of interest because it employs a Foolish (in the good way) "low-turnover, buy and hold strategy" -- and it has been served well by that, too. Since its inception roughly a decade ago, its equities investments have averaged annual gains of 9.1% versus 8.1% for the S&P 500 as of mid-year. (Its year-end shareholder letter didn't include updated numbers.)
The company's reportable stock portfolio totaled $963 million in value as of Dec. 31, 2013.
So what does Douglass Winthrop's latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are Plum Creek Timber and Ecolab. Other new holdings of interest include QR Energy (NYSE: QRE). With a market capitalization near $1 billion and a dividend yield topping 11%, QR Energy is a master limited partnership focused on upstream oil and gas activities. It's liquids-heavy in its operations, with long-term hedging in place. The company's third quarter featured earnings missing expectations, and several analysts have downgraded the stock recently, though a handful have kept it as a Buy. QR Energy's revenue has been growing in recent years, but so has its share count.
Among holdings in which Douglass Winthrop Advisors increased its stake were Intel (NASDAQ:INTC), Altria (NYSE:MO), and Celgene (NASDAQ:CELG). Intel draws attention with its hefty dividend yield of 3.5%. It hasn't upped its payout since 2012, so some are hoping for an increase soon. The company has been posting underwhelming earnings and trying to boost its presence in the mobile world. Its bulls like its dominant market position and growing revenue and earnings. Investors need to take a long-term view with Intel, as it works to develop sizable alternate revenue streams. The company is shrinking its workforce by 5% this year, cutting more than 5,000 jobs, and it's selling its television business to Verizon.
Domestic tobacco titan Altria offers an even bigger dividend of 5.2%. It's facing challenges such as rising taxes, regulations, competition from discount cigarettes, a shrinking smoker base, and even counterfeit cigarettes. Still, Altria is dependable, with its latest quarter featuring revenue up 5% and earnings more than doubling. Bulls are hopeful about its move into electronic cigarettes -- but the FDA might regulate those, too. Meanwhile, following an inquiry, Altria and some peers have agreed to spend a lot on ads saying that they deceived the public about the dangers of smoking. Altria releases its fourth-quarter results on Jan. 30.
Celgene is a biotech company whose stock has averaged annual growth of 31% over the past decade. Contributing to its performance is its successful cancer drug, Revlimid, as well as pancreatic-cancer-treating Abraxane and Pomalyst, targeting multiple myeloma. It also reports fourth-quarter results on January 30, and management has already tempered near-term expectations (though its 2017 guidance is quite rosy). Celgene's pipeline is promising, too, featuring drugs such as apremilast, which fights arthritis, and it has been investing in other companies' promising drugs as well.
Finally, Douglass Winthrop sold out of General Mills (NYSE:GIS) entirely. The company's last quarter was disappointing, with revenue flat and earnings declining. General Mills is looking to emerging markets and new products for future growth. It's even offering snacks through the mail via subscriptions, and it recently announced that it would produce its flagship Cheerios cereal without genetically modified organisms (GMOs). General Mills' stock yields 3.1%, and the company has been paying it without interruption for 115 years.
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.