At The Motley Fool, we understand that it often pays to zig when Wall Street zags, but that doesn't mean that we don't pay attention to what leading fund managers are buying and selling. And funds that aren't always in lockstep with the broader market can be a particularly valuable source of insight.
Every quarter, fund managers overseeing more than $100 million must disclose their quarter-end holdings publicly by filing Securities and Exchange Commission Form 13-F. The form lists all U.S.-traded securities the manager held at the end of the quarter. Although the form doesn't disclose the manager's short positions or the manager's intraquarter trades, it can shine a bright light on his or her "long" stock bets. To help us make use of 13-F data, we turned to Motley Fool partner AlphaClone, a research and investment-management firm that tracks hedge fund public disclosures and develops investment strategies based on them.
Q2 2011 update
Until recently, ING Clarion Real Estate Securities was the real estate equity management arm of ING Real Estate, a global real estate company. In July, CB Richard Ellis completed its acquisition of the fund from ING, and going forward, it will operate under the CBRE Clarion Securities name.
You may not have heard of it under either name, but it's worth paying attention to, because according to AlphaClone's back-test simulation, anyone who invested in ING Clarion Real Estate Securities' 10 largest long positions (in equal portions) at the time they were disclosed publicly each quarter would have returned 398% since 2000, versus, uh … nothing for the S&P 500 as of Sept. 14. (Note that this data reflects the holdings of the overall CBRE Clarion Securities company, and not necessarily any one particular fund.)
The total market value of ING Clarion Real Estate Securities' disclosed equity holdings as of June 30, 2011 -- the latest quarter for which data is available -- was $10.4 billion across 72 holdings. The company's 10 largest positions and associated changes in number of shares held as of June 30, 2011 were:
Simon Property Group
(NYSE: SPG)-- increased 13.8%.
(NYSE: VNO)-- increased 8.0%.
(NYSE: EQR)-- increased 8.3%.
(NYSE: PLD)-- increased 272.1%.
(NYSE: MAC)-- reduced 10.2%.
(NYSE: BXP)-- increased 4.4%.
Avalon Bay Communities
(NYSE: AVB)-- increased 16.9%.
Liberty Property Trust
(NYSE: LRY)-- increased 3.1%.
Host Hotel & Resort
(NYSE: HST)-- increased 3.1%.
SL Green Realty
(NYSE: SLG)-- increased 19.5%.
During the quarter, the company also increased its position in Health Care REIT
During the quarter, ProLogis completed its merger with AMB Property; the fund had owned shares of both companies before the merger. Macerich, the only top holding to be reduced, has had many detractors over the years. It still has red flags, such as a shrinking dividend yield and a huge payout ratio, meaning it's paying out much more than it earns. Among other reduced holdings, Chimera remains well regarded, but it does invest in riskier mortgages and will probably suffer some whenever interest rates rise -- which probably won't be soon.
Selected Q2 2011 commentary
Here’s where the firm is winning and losing currently and making new bets:
Boston Properties was a significant gainer for ING Clarion in the quarter, rising 12%. Today, some are worried that the specialist in office properties grew too much recently and may be due for a fall. After all, our economy hasn't exactly recovered all that much yet. The company has a one-star rating (out of five) at Motley Fool CAPS.
Omega Healthcare Investors was a bit of a loser for the company, shedding 4% during the quarter. (Over the past year it has lost more than 10%.) Omega seems like a risky proposition these days, vulnerable to Medicare cuts and seemingly overvalued, with its steep price-to-earnings (P/E) ratio and modest growth prospects. It has its fans, though, and a four-star rating in Motley Fool CAPS.
One of the company's most interesting new additions isn't a typical real estate holding, but a company that builds telecommunication towers. American Tower has the advantage of being able to lease each tower to multiple carriers and is expanding internationally. It sports a three-star rating in the Motley Fool CAPS community.
During the quarter, the company also started new positions in Diamondrock Hospitality and Duke Realty, among many others.
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, and 13-F forms can be great places to find intriguing candidates for our portfolios.
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