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 TIAA-CREF Trust Co. In case you're not aware, TIAA-CREF offers financial services to those in the fields of education, medicine, culture, government, and research. Almost 100 years old, it has a solid reputation, with 98% of its funds earning three or more stars in Morningstar ratings. The TIAA-CREF Trust Co. manages much of TIAA-CREF client money, and its reportable stock portfolio totaled $6 billion in value as of Dec. 31, 2013.
So what does TIAA-CREF Trust's latest quarterly 13F filing tell us? Here are a few interesting details.
The biggest new holdings are the iShares MSCI ACWI Index ETF and the iShares Lehman Intermediate Credit Bond ETF. Other new holdings of interest include NVIDIA (NVDA -1.16%), one of the biggest mobile-application processor companies, which offers investors a new 2.2% dividend yield. It has had some trouble competing with Qualcomm and others in mobile processors, but its new Tegra 4 chip has some excited. Bulls like NVIDIA's entry into the mobile IP licensing business, along with its growing presence in cars and its strong position in gaming, while bears don't think it's enough of a bargain at recent levels.
Among holdings in which TIAA-CREF Trust Co. increased its stake was Gilead Sciences (GILD 0.65%). The company's oral hepatitis C treatment Sovaldi is on the market, with reported cure rates topping 90% in clinical trials. Gilead Sciences is well known for its success with HIV drugs and has also recently reported promising clinical trial results for drugs treating lymphomas and blood disorders. With the stock roughly doubling over the past year, some wonder whether it's time to sell Gilead. Many remain bullish, though, with analysts at Robert W. Baird recently upping their target price and projecting that Sovaldi sales in 2014 might top $5 billion.
TIAA-CREF Trust Co. reduced its stake in lots of companies, including Exelon Corporation (EXC -0.57%), the nation's leader in nuclear energy. Exelon has been hurt by the relatively high cost of nuclear power in an environment of very low gas prices, but it has been boosted by rising electricity prices. The stock yields a hefty 4.3%, but that reflects a 41% dividend cut last year. Exelon's third-quarter numbers were solid, and bulls like its valuation and effective cost-cutting, but some worry about nuclear power's long-term prospects and whether some energy-industry regulation might hurt Exelon. Exelon has not been in the best competitive position in the past few years, but rising natural-gas prices could change that. It reports its fourth-quarter results this week.
Finally, TIAA-CREF Trust's biggest closed positions included Raytheon Company and BB&T Corporation. Other closed positions of interest include Ariad Pharmaceuticals (NASDAQ: ARIA) and Eagle Rock Energy Partners, L.P. (NASDAQ: EROC). Ariad Pharmaceuticals' 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, while others see it offering little beyond tax losses carried forward. 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. It's heavily shorted, but its earnings estimates have been rising.
Eagle Rock Energy Partners, yielding 10.9%, had a lousy 2013, dropping nearly 22% while the S&P 500 gained 32%. Given its heavy debt load, some have worried about its dividend's future. (It was already cut by roughly a third last year.) Many have been heartened, though, by its decision to sell its midstream business to Regency Energy Partners for about $1.3 billion, leaving it a pure upstream master limited partnership. The cash infusion is welcome, but Eagle Rock Energy Partners will have to deploy it wisely, making some tough decisions. A further dividend cut is not out of the question.
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.