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 Eagle Asset Management, a massive money-management arm of Raymond James Financial. Tracing its history back to 1976, the company provides investment services via individual managed accounts, as well as mutual funds.
The company's reportable stock portfolio totaled $17.6 billion in value as of Dec. 31, 2013.
So what does Eagle Asset Management's latest quarterly 13F filing tell us? Here are a few interesting details.
The biggest new holdings are Telus Corporation and Ophthotech Corporation. Other new holdings of interest include InnerWorkings (NASDAQ:INWK). InnerWorkings is a print management and promotions specialist, and its shares have roughly been cut in half over the past year. Much of that drop occurred in November, when InnerWorkings' third-quarter results featured revenue up 16%. Oh, and both revenue and earnings came in below estimates. And management cut expectations for upcoming earnings by more than half. In a conference call at the time, management pointed to major new clients like Energizer and strength in the non-profit sector, too. Problems were blamed on the acquired Production Graphics business and inside sales weakness.
Among holdings in which Eagle Asset Management increased its stake were Sirius XM Holdings (NASDAQ:SIRI) and Synovus Financial Corp. (NYSE:SNV). Sirius XM Holdings recently extended a contract with Nissan, is being included in 70% of new cars, and sees an even brighter future in used cars than in new ones. Bulls see paths to international expansion via streaming, like its growing margins, and view its third-quarter earnings disappointment as a good buying opportunity. Bears worry about competition from free and Internet radio services, such as Pandora. Sirius is rewarding shareholders with massive share buybacks of up to 10.6% of its outstanding shares. It has more than 25 million subscribers and takes in close to $4 billion annually. Sirius reports its fourth-quarter and full-year results on February 4.
Synovus Financial, a 125-year-old Georgia-based bank, is far smaller than its main rivals in the South, and it has recently been losing market share to them, too. On the other hand, its bottom line has been growing and its commercial loan portfolio is strong. (Commercial loans can be more profitable than consumer loans.) Synovus Financial's third quarter revealed continued improvement in credit quality along with loan growth, and its CEO spoke of a switch to offense rather than defense, now that Synovus's TARP debt has been repaid. Loans kept growing in its fourth quarter, too, as credit costs fell, though its mortgage banking business took a hit. The stock yields 1.1%.
Eagle Asset Management's biggest closed positions included SHFL entertainment and Ariad Pharmaceuticals, (NASDAQ:ARIA). Other closed positions of interest include Tower Group International, Ltd. (UNKNOWN:TWGP.DL). Ariad Pharmaceuticals, recently trading in the mid-$7s per share, has traded between $2.15 and $23 over the past 52 weeks, clearly giving some investors a wild ride. Ariad's leukemia drug Iclusig was approved by the FDA, but the FDA later had it pulled from the market, only to reinstate it late in the year, with more restrictive labeling. Some wonder whether Ariad will be bought out, but others see it offering little beyond tax losses carried forward. Meanwhile, it's best not to invest based on rumors. Ariad does have more treatments in its pipeline, but most are based on Iclusig. Still, analysts at BMO Capital Markets recently upgraded Ariad Pharmaceuticals to outperform.
Tower Group International is a small insurance company -- but it hasn't always been so small, as its stock is down some 85% over the past year and has averaged 33% annual losses over the past five years. Tower Group has had to restate several years' worth of earnings, which is, reasonably, unsettling to investors, and a restructuring has lowered its ultimate profit potential, too. Early in January, analysts at Zacks downgraded the stock to strong sell, citing rising losses and a reserve shortfall, among other things. Soon after, it was announced that privately held ACP Re would acquire Tower Group.
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.